Medicare Plans Fail to Figure on Baby Boomers

For all the partisan acrimony and special-interest Angst over the GOP’s Medicare reform plans, even the most far-reaching proposal--set for House passage today--would only postpone a financial crisis likely to make the current stakes seem like child’s play.

And, in the view of experts, unless far more drastic actions are taken than those now being contemplated, Medicare could collapse under a 20-year wave of baby boomers entering the federal health insurance program for seniors, starting in 2010.

“The problem with Medicare isn’t the next seven years. The problem with Medicare is when all the baby boomers retire,” Sen. Bob Kerrey (D-Neb.) said Wednesday.

And that time bomb, experts say, can be averted only by Draconian measures that now are barely hinted at by most politicians: tax hikes, service cuts, higher payments by the wealthy and, as Senate Republicans have proposed, an increase in the eligibility age from 65 to 67.

“There really is a limited number of choices,” said Gail Wilensky, a respected Medicare expert who advised President George Bush on health care issues.

“We have some very tough choices that need to be made,” added Kerrey, who chaired the recent Bipartisan Commission on Entitlement and Tax Reform.

Yet, given the white-hot rhetoric that has engulfed the current debate--as well as last year’s debacle over President Clinton’s health reform effort--Congress is unlikely any time soon to address the long-term viability of Medicare, analysts say.

“It’s just very hard for people to focus attention on these problems that are 10, 15 years off,” said Robert Blendon, a public opinion expert at the Harvard School of Public Health.

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Instead, Democrats and Republicans say, Congress likely will create a high-profile, bipartisan commission to tackle Medicare’s long-term problems, which have been virtually obscured by the pending GOP drive to reduce Medicare spending by $270 billion over seven years.

“It’s the only way it can be done,” Sen. John D. (Jay) Rockefeller IV (D-W. Va.) said of the commission approach.

The task of such a commission, however, would be all the more difficult if, as expected, the seven-year Medicare savings that emerge from the current controversy fall significantly short of the GOP’s $270-billion target, which both Clinton and congressional Democrats contend is way too much.

Republicans say that their Medicare agenda is the centerpiece of their drive to achieve a balanced budget by 2002 while preserving the short-term solvency of Medicare’s hospital trust fund.

But congressional Democrats argue that just $89 billion in Medicare savings would ensure the immediate solvency of the trust fund. They also charge that much of the GOP’s $270 billion in savings is intended to finance a $245-billion tax cut, mostly for the well-to-do. Clinton’s plan yields $124 billion in Medicare savings over 10 years.

Republicans insist that their plan is the most realistic because it would keep the hospital trust fund solvent until 2011.

Demographers say that the country’s aging population will begin to accelerate sharply in 2010, when the first wave of baby boomers reaches 65.

And by 2030, a full 20% of the population will be covered by Medicare, compared to 12.8% now, according to the Census Bureau.

Put another way, by the middle of the 21st Century, the number of workers contributing payroll taxes to Medicare beneficiaries will have declined from today’s ratio of 4 to 1 to a ratio of 2 to 1, according to the 1995 Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund.

Moreover, with an elderly population increasing in 35 years to more than 66 million, the concomitant increase in demand for medical services is likely to cause significant medical inflation, thus exerting further financial pressure on Medicare, according to a study by the 20th Century Fund, an economic and health care think tank in New York.

The bill that is expected to be adopted today by the Republican-dominated House would create a Commission on the Effect of the Baby Boom Generation to study the problem and recommend actions to Congress. It appears to be one of the few undisputed elements in the broad Medicare reform bill.

To achieve $270 billion in savings over seven years, the legislation reduces the annual rate of growth in payments to providers from the current 10% to 6.5%. In addition, the plan seeks savings by encouraging seniors to enter into less expensive managed-care health organizations.

The House plan also increases monthly premiums for the voluntary Part B insurance for doctor visits from the current $46.10 to about $90 by the year 2002.

With the House vote on Medicare reform less than a day away, Capitol Hill was alive on Wednesday with seemingly endless speeches, press conferences and assorted events designed to demonstrate either support for or opposition to GOP legislation.

Although the vote’s outcome is not in doubt, House Republican leaders, led by Speaker Newt Gingrich (R-Ga.), continued a series of closed-door meetings with their rank-and-file to nail down support.

Gingrich agreed, for instance, to boost payments for hospitals and health plans in rural areas but discarded a break for chiropractors.

He likened the process to “Christmas shopping,” adding: “Any time you are in the last 48 hours before a major vote, 17 people show up who suddenly figure out you need their vote and they have this one thing they haven’t gotten yet.”

Rep. Bill Archer (R-Tex.), chairman of the Ways and Means Committee, said that rural health plans now would be guaranteed a minimum payment of $250 a month for each senior citizen they sign up for the new, private MedicarePlus managed-care plans. Later Wednesday, Gingrich said he had agreed to increase it to $300 a month to placate balky rural Republicans.

The previous formula called for payments to be $200 or less in some rural counties. The payments range as high as $600 to $700 a month in urban areas with the highest medical costs.

Meanwhile, House Republicans decided to abandon controversial plans to strike federal laws that protect the income, savings and property of spouses and children of people whose nursing home stays are subsidized by Medicaid.

Under the previous GOP plan, states could have forced adult children to pay for nursing home care of their parents or required spouses to use all their savings, sell their houses or devote most of their income to paying for the nursing home.

“We should not risk a single American going to the poorhouse just because a spouse or parent had to enter a nursing home,” Rep. Thomas J. Bliley Jr. (R-Va.), chairman of the Commerce Committee, said in a statement on the changes to the GOP Medicaid reform blueprint.

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Times staff writer Elizabeth Shogren contributed to this story.