Date: Tue, 4 Nov 2003 11:28:36 -0800
Subject: qotd: Is starving Medicare the fix we need?
The New York Times
November 4, 2003
White House Backs Limits on Spending for Medicare
By Robert Pear
The Bush administration joined House Republicans on Monday in pushing a Proposal that would force Congress to vote on possible cutbacks in Medicare
if the costs of the program, including new drug benefits, grow faster than
expected.
The plan would also set limits on the use of general tax revenue for Medicare.
Senate negotiators have offered a similar proposal, labeled a “bipartisan Senate staff option.” This suggests that some cost-control mechanism is likely to be in any Medicare bill that emerges from Congress, despite objections from many Democrats and advocates for the elderly.
Both proposals would fundamentally change the financing of Medicare. They would also make it more difficult for Congress to enhance drug benefits,
raise payments to doctors or provide coverage for more outpatient services.
Under the latest proposal from House Republican negotiators, Medicare would
be declared “programmatically insolvent” if its trustees found that general tax revenue would account for more than 45 percent of Medicare spending at any point in the next seven years. If the trustees made such a prediction for two consecutive years, the president would have to propose ways to reduce the dependence on general revenue.
That could be done by cutting benefits, increasing beneficiary premiums form raising payroll taxes.
…the General Accounting Office, the investigative arm of Congress, said that Medicare’s growing reliance on general revenue imposed a mortgage on future generations.
Comment: Affordability of health care is a concern of most Americans. We need structural reform to ensure that costs will remain reasonable. A universal, integrated system would eliminate administrative excesses and provide a process to improve resource allocation by reducing inappropriate utilization. A well funded system, with structural integrity, would ensure access to comprehensive, affordable services for everyone.
But the process proposed for Medicare abandons rational cost containment, substituting flawed “starve the beast” economics. Capping the Medicare contribution from general revenues shifts funding to payroll taxes and to premiums and cost sharing paid by beneficiaries. This is both a shift towards more regressive funding of the program, and a shift towards the consumerist movement in health care.
Medicare currently pays only half of the costs of health care for the beneficiaries. Shifting more of the costs to moderate and low income individuals further threatens affordability for the majority of the beneficiaries, especially for those with greater needs. Because of the burden of higher costs, wage earners and beneficiaries would be pressured to accept even greater reductions in Medicare’s benefit package. Slowly starving the Medicare beast is cruel policy.
The fundamental premise that Medicare is no longer affordable is flawed. There are some things in life which we are quite willing to fund. And health security is one of them.
Unfortunately, it appears that the brain trust in Congress that is advancing this agenda is “programmatically insolvent.”