Medicare Insolvency Overshadowed By National Economic Downturn In Public Eye, Experts Say

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Public Health
Article Date: 31 Mar 2008 - 6:00 PDT

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U.S. residents are focusing more attention on the national economic slump than the potential insolvency of Medicare reported by program trustees on Tuesday, according to experts at a panel discussion on Wednesday, CQ HealthBeat reports. The panel was hosted by the American Enterprise Institute (Cooley, CQ HealthBeat, 3/27).

According to the trustees' report, the Medicare hospital insurance trust fund will become insolvent by 2019, the estimate given last year. The trustees projected that Medicare spending will increase from 3.2% of gross domestic product in 2007 to 10.8% in 2082, which is slightly less than trustees predicted last year. They also issued a "Medicare funding warning," which will require the next president to propose a plan to reduce the program's use of general tax revenues (Kaiser Daily Health Policy Report, 3/26).

Panelists proposed several recommendations for the Bush administration and Congress to consider to maintain solvency in Medicare, including educating people on costs, giving physicians incentives to improve quality and raising the eligibility age, which currently is 65 years old. However, panelists said public concern about the long-term fiscal health of Medicare is low, CQ HealthBeat reports.

Joseph Antos, a panelist and health care scholar at AEI, said, "This week, bad news for Medicare ... and after a day or two of perfunctory reporting, we're not going to hear about it again." He added, "The average person has difficulty imagining how the Medicare crisis would affect him or her. The trust fund numbers are just numbers, after all; they don't concretely convey what would happen to them or their grandchildren in terms of lost opportunities, worse health care or reduced standard of living" (CQ HealthBeat, 3/27).

CNN's "The Situation Room" on Thursday reported on presidential candidates' responses to the trustees' report. The segment includes comments from Eugene Steuerle of the Urban Institute, Republican candidate Sen. John McCain (Ariz.) and Democratic candidates Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.) (Chernoff, "The Situation Room," CNN, 3/27). Video of the segment is available online. A transcript also is available online.

Editorials
Several newspapers published editorials related to the trustees' report. Summaries appear below.

• Akron Beacon Journal: "You don't need a crystal ball to predict the thrust of the reports the trustees of Social Security and Medicare put out every year: We have to shore up the finances of the entitlement programs for seniors or they will break under the strain of increased demand and declining revenues," the Beacon Journal writes in an editorial. The editorial concludes that "without an overhaul that would restrain spending and high inflation throughout the entire health care system, proposed changes limited to the federal program for seniors would amount to little more than swatting at the elephant" (Akron Beacon Journal, 3/27).
  
  
• Charleston Daily Mail: Even though the nation's leaders "have known for a long time that the payroll taxes" used to fund Medicare and Social Security "will not be enough to sustain" the programs as "77 million baby boomers retire," they still "avoid making decisions -- especially in election years," according to a Daily Mail editorial. The Daily Mail continues, "They also know that the longer the nation avoids making changes to these programs, the larger tax increases and benefit cuts will have to be." The editorial concludes that "unless the public demands that responsible changes are made soon, the future clearly promises huge tax increases for younger Americans and huge benefit cuts for their parents and grandparents" (Charleston Daily Mail, 3/27).
  
  
• New York Times: "Medicare's problems get scant attention on the campaign trail but will demand strong corrective action by the next president," a New York Times editorial states. The editorial continues that "political rhetoric often focuses on 'run-away entitlement programs,'" but it is "important to recognize that Medicare's financial woes are not intrinsic to Medicare" and that the "relentless rise in health care costs are driving up premiums for private health insurance and employer-based coverage as well." The New York Times concludes that Medicare will not be "'fixed' until those costs are brought under control" (New York Times, 3/28).
  
  
• Virginian-Pilot: "Mum was the word Tuesday from President Bush and the three candidates trying to get his job as the latest and grimmest report ever was released on the shaky state of Medicare and Social Security," the Virginian-Pilot writes in an editorial. The Virginian-Pilot continues that fixing the "programs most Americans rely on to get through their senior years seems like a great goal for any aspiring candidate"; however, "raising taxes and cutting health care and retirement benefits aren't going to win any campaign slogan contests." The editorial concludes, "For years, presidents and would-be presidents have set Medicare and Social Security aside as problems someone else can handle in the future," but now, that "someone must be the next president" (Virginian-Pilot, 3/28).
  
  
• Washington Times: "When you hear talk about 'unfunded liabilities' or 'unfunded obligations' for Medicare and Social Security, the bottom-line cost in today's dollars is $42.9 trillion," a Washington Times editorial states, adding that the amount is "more than three times last year's gross domestic product of $13.8 trillion." The editorial continues that "Congress and the White House have repeatedly failed to address the problems in a responsible, bipartisan manner" even "as the trends have been crystal clear for years." The editorial concludes, "Regrettably, none of the presidential candidates -- sitting senators all -- has even begun to responsibly address the $42.9 trillion in unfunded obligations" (Washington Times, 3/28).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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