http://www.buffalonews.com/149/story/311329.html
Face the coming crisis
Congress, candidates must find ways to secure Social Security, Medicare
Updated: 03/30/08 6:47 AM
Trustees for the government’s two largest benefit programs now have warned — again — that Social Security and Medicare are facing “enormous challenges,” with Medicare likely to be hit far more quickly and severely.
There is an urgent need for Congress and the next president to show some political courage and tackle this problem, instead of just punting it once more into the future. At some point on this graph of disaster, the line marking declining resources in each program will drop past the line marking increasing, baby-boom-fed demands. And there will be human, not just political, pain.
President Bush failed to fix either program, and so did Congress. In fact, Congress acted to increase costs — adding a medicinal drug benefit to Medicare that was politically popular, but mollifying the politically powerful pharmaceutical industry by banning negotiations for drug-purchasing volume discounts.
What’s frustrating now is that a Democratic Congress indicated it would address these issues once in power, but instead the Democrats are pushing the issue into the next Congress and onto the desk of the next president.
So once again, a yearly analysis simply points to trouble. The Social Security trust fund will be depleted by 2041, and reserves in the Medicare trust fund — used to pay hospital benefits — are projected to be wiped out by 2019.
This is the same conclusion reached in last year’s report, except for the warning that financial pressures will begin much sooner. The key threshold, when the programs begin paying out more in benefits each year than they collect in payroll taxes, is projected to be reached this year for Medicare and in 2017 for Social Security.
The calamity will build, as the population bulge of the baby boom draws more health and retirement benefits and leaves behind a smaller work force to pay into the systems.
Unless Congress begins to work now to fix this problem, more of today’s children are going to have to make tough decisions in balancing care for seniors and their own children’s education.
Reform measures have been proposed, but there has been little action. Sen. Chuck Hagel, R-Neb., proposed Social Security legislation that included 4 percent privatization, upward adjustments in the retirement age to reflect greater life expectancy, reductions in early-retirement benefits and a lifting of the cap on Social Security taxable income. Democrats accuse Bush of wasting time on a plan to allow younger workers to direct their payroll tax contributions into private investment accounts.
The Brookings Institution, a policy think-tank, also has offered recommendations, including that the new president adopt a broad agenda of reform. That could include incremental market and regulatory reforms; continuing to use the financial clout of Medicare and Medicaid to promote systemwide health care improvements through, for example, adoption of clinical practice guidelines and disease management for costly chronic conditions; and using marketplace clout to improve price-setting by carefully implementing pay-for-performance strategies, competitive bidding and direct price negotiations.
Veterans Affairs, for example, has the power to negotiate prices while buying medications for its hospitals. Medicare doesn’t, under the drug-benefit law. That should change.
The reams of reports saying exactly that could paper all of Washington, but delay has been more politically palatable. No more. Medicare and Social Security should be prominent on the presidential campaign agenda, and the current Congress should be looking at ways to avoid the crunch and the pain that more delays would make inevitable.
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http://www.sacbee.com/110/story/820215.html
Editorial: Medicare crossroads
Published 12:00 am PDT Sunday, March 30, 2008
While assuring the long-term solvency of Social Security is manageable (as we outlined in a previous editorial), 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.