The Bigger Problem--Bush's
Medicare Rx Isn't Funded
The Washington Post
The Bigger Problem
Monday, December 27, 2004; Page A28
THE PROGRAM NOW consumes one-eighth of the federal budget; in
10 years that share is expected to grow to one-fifth. It will
consume more money this year than enters the Treasury through
payroll taxes. By 2019, if current spending patterns hold, the
trust fund that finances the biggest part of the program will be
out of cash.
The program is not Social Security but Medicare. Those
frightening figures emerged during what might be called the
Medicare Moment of President Bush's economic summit -- an
official pause to recognize the problem and then crisply move on.
"My role is to say: 'Remember health care, remember Medicare,' "
said Dr. William Roper, dean of the University of North Carolina
School of Medicine. Indeed, the figures tell the story. Medicare
is a bigger problem than Social Security: its hospital care trust
fund is on track to go bust two or even three decades before the
Social Security surplus runs out; its unfunded liabilities dwarf
those of Social Security -- $27.7 trillion over the next 75
years, compared with $3.7 trillion liability for Social
Security.
So why is the administration devoting its attention to Social
Security rather than grappling with the bigger problem? One
answer may be that, as ambitious as the administration's plans
for private accounts may be, "fixing" Social Security is by far
the easier task. Medicare faces the same relentless demographic
pressures as Social Security -- plus the burden of rapidly rising
health care costs. Another may be that grappling with Medicare
will require thinking about the nation's irrational health care
system as a whole, a task for which the administration and
Congress appear to have little stomach.
Indeed, the gaping Medicare hole was dug even deeper last year
with the adoption of a new prescription drug plan for seniors.
The administration initially sought to link moves to constrain
Medicare costs with the prescription drug benefit, but the
legislation ended up with a supersized new benefit and
slimmed-down cost-containment measures that mostly take effect --
if they work -- years down the road. The Government
Accountability Office estimated earlier this month that the drug
benefit will cost $8.1 trillion over the next 75 years -- and
that's if politicians resist the temptation to fill in the
"doughnut hole" gap in coverage. Comptroller General David M.
Walker called the drug plan "one of the largest unfunded
liabilities ever undertaken by the U.S. government."
You wouldn't know it from Mr. Bush, though, and that's the
truly scary part as he presses for Social Security reform. "We
did take on Medicare, and it was the Medicare reform bill that
really began to change Medicare as we knew it," he said at his
news conference Dec. 20. "It introduced market forces for the
first time, provided a prescription drug coverage for our
seniors, which I believe will be cost-effective. I recognize some
of the actuaries haven't come to that conclusion yet, but the
logic is irrefutable."
Actually, none of the actuaries have come to that conclusion;
their only disagreement is about how mammoth the cost will be.
And while the president is right that in some cases paying for
prescription medication saves money down the road, we disagree in
suggesting that the drug benefit will even come close to paying
for itself overall. Mr. Bush's rosy scenario notwithstanding, Dr.
Roper's admonition -- "remember Medicare" -- is precisely on
point.
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