THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, September 13, 1995 TAG: 9509130008
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 52 lines
Medicare is on the road to financial ruin if reforms are not made. Costs are rising faster than revenues to pay for them. The reasons are largely demographic and technological. Modern medical care is expensive, and since seniors are living longer they consume more of it.
The ways to save the system are finite. Last year, Democrats proposed means-testing benefits for some recipients and encouraging seniors to enter managed-care plans. Republicans were critical then but urge similar steps now.
It's about time entitlements were doled out on the basis of ability to pay. It makes no sense for the country to go deeper in debt so prosperous Americans can receive the same low-cost government benefits as the indigent.
Specifics are yet to be nailed down, but House Speaker Newt Gingrich has suggested a means test for the government subsidy for Medicare, Part B. It pays for doctor bills and lab tests. Households with income over $125,000 would be affected.
A Senate plan is said to propose increasing the fee for Part B. It's now $46.10 a month for all recipients. The Senate might raise it to $90 for households earning more than $60,000. At that level, less than 10 percent of beneficiaries would be affected.
Gingrich says the House plan would include a second change. Presently, Part B recipients must pay 31.5 percent of the cost of their care; the insurance pays the rest. But current law calls for the percentage seniors pay to drop to 25 percent. With the system facing insolvency, it makes no sense to liberalize benefits. The House plan would keep the percentage at the present level.
In order for Republicans to achieve a balanced budget by 2002, they have to save $270 billion from projected Medicare spending. By their own admission, the modest House reforms will save only $190 billion. The missing $80 billion is supposed to come from shifting seniors to less costly managed-care plans, as Clinton proposed earlier.
Suggesting entitlement cuts is often regarded as tantamount to touching an electrified third rail. There are 38 million Medicare beneficiaries today, a sizable interest group to risk offending. Lobbying groups, such as the American Association of Retired Persons, can be expected to oppose reforms like means testing.
But allowing entitlements to grow unchecked has created the deficits that now cripple the country. Republicans can't afford to buckle. Their assault on the deficit is necessary, and means testing and managed care are weapons they should employ in the fight to restore fiscal sanity to the federal budget. by CNB