|
The following editorial appeared in the Sacramento Bee on Sunday, March 30:
While assuring the long-term solvency of Social Security is manageable, Medicare is another story. The financial challenges facing this 43-year-old health care program for the elderly reflect problems in the nation's health care market.
In both the public and private sectors, health-care costs are escalating at rates far above inflation. On average, between 1970 and 2006, Medicare spending increased by 8.7 percent per person each year, while private health insurance spending increased by 9.7 percent per person.
The next president and Congress face a serious challenge in how to assure affordable health care coverage, not just for the elderly, but for everybody.
But the most pressing issue is Medicare.
In their latest report, the trustees in charge of Social Security and Medicare project that the Medicare Trust Fund (which comes from the Medicare payroll tax of 1.45 percent of wages), can pay 100 percent of scheduled hospital, nursing home, short-term home health and hospice care benefits only through 2019. If Congress and the president do nothing, Medicare after 2019 will be able to cover only 78 percent of scheduled benefits. So creating a fix is urgent.
A separate fund, the Supplementary Medical Insurance Trust Fund, pays for doctor visits, medical equipment and prescription drugs. This is funded directly by the elderly with out-of-pocket premiums (the standard premium is $96.40 per month) and from general revenues. These premiums and revenues already are adjusted each year to cover expenditures, so the supplementary trust fund is never in shortfall. The problem here is that Medicare is increasing as a share of the federal budget as health care costs have been increasing overall. So the next president and Congress must address a host of issues going forward:
• The Medicare payroll tax has not been increased since 1985.
• The flawed structure of the prescription drug benefit begun in 2006 means that private insurance companies in the program are paid 13 percent more on average than under regular Medicare.
• The Bush tax cuts of 2001 and 2003 are straining the federal budget, including the portion of Medicare that is paid out of general revenues. Those tax cuts expire in 2008 and 2010, providing room for a discussion of the future of government health spending.
A 17-member Bipartisan Commission on the Future of Medicare met in 1998-1999, but ended in March 1999 without making any recommendations. No proposal got more than 10 votes, showing the difficulty of compromise.
Gathering the political will to assure Medicare's long-term solvency will not be easy. But it's crunch time. A fix cannot be postponed much longer if Americans want Medicare to continue for future generations. |
