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Medicare's future should be universal health care

by Carol Kirschenbaum and John Walsh


Perhaps no issue loomed larger in the '96 elections -both Presidential and Congressional-than did the fate of Medicare. Led by President Clinton, Democrats of every stripe excoriated Republicans for their plans to eviscerate Medicare. But is the position of Democrats substantively different from that of the Republicans? What was this "plan" of Clinton's? In point of fact it was a set of massive reductions almost identical to those championed by the Republicans, and it would take us in the direction of cutting back on the provision of health care for seniors.

The '96 Clinton "plan" calls for $116 billion in Medicare cuts over the next six years. At election time Congressional Republicans were calling for cuts of $158 billion over the same period. By 2002 when both sets of proposed cuts would be completed, they would have almost the same effect. According to a report issued last year by the non-partisan Congressional Budget Office and reported in the Boston Globe, the Republicans would strip away $1000 on average from the presently projected benefits for the average senior in the year 2002. Clinton would tear away $800 in benefits allotted to each senior-nearly as much. Both would be very large cuts. In 2002 both the Republican and Clinton proposals leave seniors with per capita benefits which are substantially diminished. So if the Republican cuts are to be considered massive, then so are those in the original Clinton plan.

On the very day after his inauguration, Clinton went even further, calling for $135 billion in Medicare cuts. That number is even larger than his campaign plan and would reduce per capita annual benefits to seniors by about $900 in 2002. But this newest proposal is in fact a relatively small adjustment. The reductions Clinton is now proposing are little different from the ones he supported in '96, and they are little different from the Republican proposals.

Most senior citizens can ill afford cuts in Medicare. The average senior now spends 21% of his or her income out of pocket on health care, because Medicare does not pay all the bills. Republican and Democratic politicians alike contend that managed care can trim such out-of-pocket costs and at the same time yield savings in the Medicare budget. But managed care is not turning out to be a solution for the health care problems faced by seniors. A study last October in the Journal of the American Medical Association concluded that elderly, chronically ill patients enrolled in HMO's had significantly worse medical outcomes than a similar population in traditional Medicare. Moreover, "Medicare HMO's" have not yielded the promised savings for Medicare. Such HMO's, the Medicare reimbursements of which are based on the "average" senior's medical expenses in a given region, are adept at "cherry picking" to screen out sicker seniors. Since these HMO's are paid for the "average" senior and whereas they enroll those who are healthier than average, they are in effect overcharging Medicare. As a result, every time a senior shifts to a Medicare HMO, Medicare must pay out 6% more yearly, an increase that the taxpayers must bear, providing more profits to the HMO and less available funding for traditional Medicare patients who as stated are generally sicker.

In fact traditional Medicare is still the most efficient way of delivering first-rate health care to seniors, operating as it does with an administrative overhead of less than 2%, far better than any private insurer. No doubt Medicare could be made even more cost-effective. So by all means let's do so, but let's use the savings to make Medicare coverage more comprehensive and eventually more universal.

We hear from politicians in both parties that there is no escaping large Medicare cuts, because, they tell us, the system is in "crisis." But this "crisis" is largely manufactured. In the short term, up to the year 2002, there is no shortfall requiring massive Medicare cuts, and the system can be preserved with minor adjustments through this period. In the long-term, however, there is a problem with ballooning health care costs generally-and that includes Medicare costs. This cost crisis is upon us despite the fact that 43 million Americans lack any form of health insurance and at least one third of the population is inadequately covered. There is a proven way to contain costs and provide first-rate universal coverage, and that is a system of national health insurance. Medicare is the first step in such a system, and to cut Medicare is to move away from that goal. We need leaders who do battle for this idea of national health insurance in the general arena of public opinion, not politicians who pay lip service to that ideal only before receptive audiences.

The Republicans and Democrats quarrel incessantly with one another, and perhaps from their inside-the-Beltway perspective, they really believe they are different. But when it comes to Medicare (as with so many things), both Parties are headed in the wrong direction.


Carol Kirschenbaum, MD, is a member of the NC chapter of Physicians for a National Health Program. John Walsh, MD, is a member of PNHP living in Massachusetts.


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