THE CURRENT DEBATE on Medicare and Medicaid is really a battle over the budget, with each side hoping the other will say "uncle" before the government collapses. Despite the political rhetoric, the real battle isn't about health care all, but rather about the budget.
The Republicans' cuts in Medicare and Medicaid are needed to offset their $245 billion tax cut, which will benefit mainly those earning more than $100,000 a year.
But rather than focusing on tax cuts, the Medicare and Medicaid debate should revolve around four things: maintaining the solvency of the trust fund, controlling costs to seniors, preserving the right to choose one's own doctor, and providing basic health care.
The issue driving the Medicare debate is the solvency of the trust fund. The trust fund affects only Part A of the Medicare program, which is hospital insurance. All sides in this debate agree that we must extend the solvency of the trust fund. It is important to understand that Medicare is only partially funded through the trust fund, and the current seven-year solvency is not unusual. Congress has taken steps to "save" Medicare by making periodic adjustments many times over the past decade, most recently in 1993.
However, $270 billion in Medicare cuts are not necessary to achieve that goal, and in fact many of those dollars in the Republican plan do not affect solvency at all. It will take about $90 billion in reductions to extend the solvency of the trust fund through 2006.
Cuts and rising costs
The Republicans constantly tell us that they are not cutting Medicare at all, and that in fact Medicare spending per recipient will increase from $4,800 in 1995 to $6,700 in 2002. What they refuse to disclose is that with the rising cost of health care for our nation's senior citizens, $6,700 will not pay for the services that $4,800 buys today. Don't forget that under the Republican proposal, private health care plans will be able to charge beneficiaries more to make up this difference.
In addition, under the Republican plan, Part B premiums for Medicare physician coverage will nearly double to $87 a month in 2002. Few people realize this, but all seniors will pay this increased Part B premium whether they stay in traditional Medicare or choose a private option.
Ironically, the projected increase in health care costs is based on Congressional Budget Office (CBO) figures. Republicans insist on using CBO figures in the budget debate, but prefer to ignore their effect on future Medicare spending. By the year 2002, the Republican plan could impose, on average, $1,100 a year in additional health care costs on every one of the 34 million American seniors who depend on Medicare.
On premiums alone, this plan increases costs by a couple of hundred dollars more per year than the other proposals on the table. But to compare the plans only by comparing premiums is to miss the larger point. The Republican plan charges higher premiums while cutting back on coverage. When we ask the American people to compare competing Medicare proposals, we must be sure to give them accurate information.
We also must give them the fine print. On the issue of preserving choice of provider, Speaker Newt Gingrich has assured Americans that they will be free to remain in traditional Medicare. In reality, doctors will flee the program because they will find the limited reimbursement rates for Medicare burdensome and the financial rewards much greater if they "opt" out of private, fee-for-service plans. The result will be fewer choices, especially for older, sicker Americans.
In addition to providing health insurance to about 18 million low-income children, Medicaid provides care on which nearly 70 percent of seniors in nursing homes today depend. In fact, more than two-thirds of the dollars spend on Medicaid go to the elderly and disabled.
On each of these issues, and others, President Clinton and Speaker Gingrich are locked in a battle over prirorities that neither can win unless there is a compromise. Such a compromise already exists. It is known as the Coalition Budget, which has the support of a bipartisan group of Democrats and Republicans. This alterntive would balance the budget in seven years. But by eliminating the tax cuts, the plan achieves a balanced budget without slashing Medicare, Medicaid, education and the environment -- programs the American people care about.
Instead, the Coalition Budget restores $100 billion in Medicare costs and $80 billion in Medicare cuts compared to the Republican budget. That makes the difference between doing unacceptable damage to these crucial programs and enacting reforms that make sense in terms of overall health care and budget policy. Typical of the compromise approach, the Coalition Budget woud maintain Medicaid as an entitlement program with spending caps per beneficiary to control costs. It also would raise Part B premiums but at a lower rate than the Republican plan, while preserving quality care for our seniors.
As Congress makes historic changes in Medicare and Medicaid, we must remember what it was like in the days before these programs. In the early 1960s, 50 percent of seniors were unable to obtain health coverage. Insurance providers had little interest in covering older, sick Americans who would cut into their profit margins.
Today, thanks to Medicare and Medicaid, all America's seniors have health insurance and can afford nursing homes, and our poor children receive basic health care. How Congress and the president resolve their differences over the budget will be critical to the ability of these programs to continue to meet the needs of the American people. We should look to the Coaltiion Budget as a workable compromise that will balance the budget without walking away from our commitment to those who are most vulnerable.
Benjamin L. Cardin, a Democrat, represents Baltimore's 3rd District in Congress. He is a member of the House Ways and Means Committee's health subcommittee, which has jurisdiction over Medicare.