Medicare boost renews concerns about social programs costs. Never-ending price spiral intimidates legislators - no matter how small initial expense may seem
Washington's decision to raise some of the medicare costs of the elderly illustrates a grave concern among many conservatives and moderates: namely, that any social program, however modest its beginnings, almost inevitably will cost more and more as the years roll by. ``You can't have a little program any more,'' says Douglas Besharov, a resident fellow at the American Enterprise Institute who studies medical issues.
Experts say this concern, probably more than any other, is what prevents enactment of some social programs, even though they are designed to meet almost universally acknowledged needs.
The best current example is the cost of financing long-term medical care, usually for elderly Americans, in nursing homes. The federal government pays almost none of it under the medicare program, which is Uncle Sam's major program designed to help pay for the medical needs of the elderly. Medicare does, however, pay for about $70 billion in other health costs each year.
One government program, medicaid, does pay for about half of the billions in nursing-home care each year. It's jointly financed by the federal and state governments. But to be eligible for medicaid people must spend almost all of their own resources, except mainly for part of the value of their homes. The difficulty with this approach, it is widely agreed, is that the surviving spouse of a medicaid patient is left in poverty as a result.
This year Congress is likely to approve a proposal, originally made by the Reagan administration, that would allow medicare to pay the costs of long-term care in hospitals, when skilled medical care is required. But the measure would continue the current practice of not paying for the costs of custodial care in nursing homes, the bulk of the long-term care in the United States.
``Everyone is afraid,'' Mr. Besharov says, ``that if we open the door to long-term nursing care, medical expenses could fly off the chart - there's no limit'' in sight.
The best example of the problem, he says, is the federal program to finance the costs of kidney dialysis. When proposed in 1965, its cost was estimated at between $100,000 and $250,000 a year. But by 1972, it cost $1.5 billion annually. ``Rightfully,'' Besharov says, ``no one trusts these estimates'' of program costs.
A similar cost spiral may be in the making. Under the medicare program, the federal government has just approved paying for heart transplants for Americans who meet a rigid set of limiting specifications. The government estimates that the annual cost will be $10 million. Besharov says that is unrealistic: His estimate is $680 million.
Further, once the program is in effect, understandable pressure is expected to expand it, Besharov notes, so government would pay the costs for people who do not meet the current guidelines. If the program were expanded in response, costs would escalate.
The federal government's current proposals for higher medicare rates are expected to be announced formally by the end of the month. Remaining essentially unchanged is Part A of medicare, under which the government pays for bills submitted by hospitals, after a deductible of $520, which patients pay.
At issue is Section B of medicare - that pays physicians' bills. Coverage under this section is optional, and well over 90 percent of elderly Americans take it. Under this program the government pays three-fourths of physicians' bills, and the elderly indirectly pay the final fourth through premiums. It is the premium that is to be raised: from its current $214 a year to approximately $297.
The increase has generated immediate opposition from groups representing the elderly. Their particular concern is the elderly poor.
``For people below the poverty line,'' says Ronald F. Pollack, ``that increase ... is going to be a fairly significant bite into their little income.'' Mr. Pollack is executive director of the Villers Advocacy Associates.
``The reason that the premium is going to go up,'' Besharov says, ``is that the underlying service is costing more money.'' For several years medical costs have risen faster than inflation. But if the poor ought not to pay more of the higher costs, someone - or some government - will have to. The unanswered question is who.