Medicare Hike Signals A Long, Hot Summer

Whether or not the US Senate's proposals for significant changes in Medicare are signed into law in the near future, the signal they send is clear: Reform of the program is coming.

An upper chamber coalition of conservative Republicans and moderate Democrats has now suddenly raised the debate about the huge entitlement program to a new political level. They've stood up and agreed with something that deficit-fighting proponents have long insisted upon: If changes are not made in federal health care for the elderly, the nation's fiscal well-being will be in jeopardy.

Without reform "Medicare is headed for the cliff," in the words of Sen. Kent Conrad (D) of North Dakota.

The stage is now set for a three-way tug of war - among the House, Senate, and the White House - that will play out in the conference committee that will meet after July 4. If the Senate proposals are jettisoned at that time, however, they are sure to return after a bipartisan commission to study Medicare completes its work, since almost every previous study has recommended similar measures.

Change in the program was foreshadowed by persistent warnings that the Medicare trust fund is on the road to bankruptcy in 2001 if nothing is done. Congressional leaders and President Clinton sought a short-term fix through the bipartisan balanced-budget deal, which calls for slowing Medicare spending growth by $115 billion over five years.

Congress and the president also agreed to give Medicare recipients more choice in types of plans; to transfer the home-health-care program from the Medicare trust fund to the general fund; to phase in a small premium hike for doctors' services; and to create new benefits.

But the budget bills in both houses of Congress contain provisions that go far beyond the measures outlined in the budget deal and attempt longer-term reform, something that Mr. Clinton, liberal Democrats, and senior-citizens' group say should take place only after a planned bipartisan commission studies the issue and reports back.

Impact of the changes

The Senate voted Tuesday to gradually raise the eligibility age for Medicare from 65 to 67 over a 24-year period. People now 59 and older would see no change in their eligibility date. For others, the age would rise one month per year, so that a 44-year-old today would be eligible for Medicare at age 66, while those 36 years old and under would be eligible at 67. Led by Sens. Bob Kerrey of Nebraska and John Breaux of Louisiana, 12 Democrats joined 50 Republicans to pass the measure.

In addition, senators voted 70 to 30 to require wealthier seniors to pay increased premiums for doctors' care, starting with individuals making $50,000 a year and couples making $75,000. Set for $540 next year, the premiums would then rise $32 for every $1,000 in income, up to $2,160 for individuals making more than $100,000 and couples making more than $125,000. The Senate also approved a $5-per-visit fee for home health care.

The House bill contains none of these provisions, and it is far from certain that the lower chamber would agree to them in a conference committee. "There are differences of opinion even among the members ... on whether this is a good or bad idea," says House majority leader Dick Armey of Texas. "I don't know how it will turn out after we work it through." An even bigger question is Clinton's position: While he has indicated some support for changes in the past, now is not the time he had in mind, and White House officials have complained that the changes violate the budget deal.

Opponents angrily denounce the proposals as an "attack on Medicare." "I don't happen to be one who thinks you have to increase the ages or increase the taxes" to save the program, says Sen. Edward Kennedy (D) of Massachusetts. And Sen. Tom Harkin (D) of Iowa called the age hike "unconscionable."

But supporters of the measure argue that with the huge number of baby-boomers set to retire between 2010 and 2030, there is no time to waste.

"The problem is we have a system that is in the tank as far as being able to survive if we don't do anything," says Senator Breaux. "Everyone wants us to fix Medicare, but nobody wants us to do anything to fix it."

The premium increases also make the program fairer, proponents argue. "Why should working people making $35,000 a year be paying for wealthy people who make $100,000 to get Medicare," asks Senate majority leader Trent Lott of Mississippi.

A divided House

House members were set to vote yesterday on their own version of the budget bill, which contains other Medicare provisions the White House doesn't like.

As it went to the floor yesterday morning, it doesn't insure disabled immigrants who legally entered the country before Aug. 23, 1996; it caps punitive damages in medical malpractice cases at $250,000; and it creates another 500,000 Medical Savings Accounts (MSAs) - tax-exempt savings plans into which seniors could put their Medicare money and out of which they could pay qualified health-care expenses.

The Senate bill trimmed the MSA "experiment" to 100,000 people.