MEDICARE REFORM: Tax Hike Necessary, Says Vladeck

      Former Health Care Financing Administration Administrator Bruce Vladeck said yesterday that the Medicare program cannot be saved without a tax increase, introducing "an explosive new element" into the Medicare debate. Speaking at a policy forum only hours before a meeting of the National Bipartisan Commission on the Future of Medicare, of which he is a member, Vladeck said, "You can't make the numbers add up without taxes. It's as simple as that." The New York Times reports that "Vladeck's comments reflect a view widely held by health policy experts," but his comments met with criticism from Republican members of the panel. House Ways and Means Committee Chair Bill Archer (R-TX) said, "At a time when the government has a surplus, it's unfortunate that some of the President's Medicare commissioners still advocate tax-and-spend solutions to the nation's problems." The Times reports that when former House Speaker Newt Gingrich (R-GA) named four members to the commission in 1997, he "set a precondition for his appointees: they had to promise they would not support a tax increase." Some Democratic commission members were more supportive of Vladeck's comments. Rep. Jim McDermott (D-WA) said, "Sometimes people in politics don't like to speak the truth, but if you are going to provide the high quality of health care we expect in this country, it will cost more." Republicans were suspicious that Vladeck's statement represented a trial balloon from the Clinton administration, but White House spokesperson Barry Toiv said Vladeck "doesn't speak for the administration" (Pear, 1/6).

Delaying Retirement?
      At the commission meeting, a majority of panel members "appeared to lean toward recommending" that the Medicare eligibility age be raised from 65 to 67, although many panelists noted that cost savings from the move would be small. Although raising the eligibility age is projected to save $120 billion over 20 years and $620 billion over 30 years, Commission Chair Sen. John Breaux (D-LA) noted that "it would only eliminate Medicare's youngest and healthiest beneficiaries" (Morrissey, CongressDaily/A.M., 1/6). Distributed over decades, the savings would be relatively small compared to the current annual Medicare budget of $215 billion (MacDonald, Hartford Courant, 1/6). CongressDaily/A.M. reports that much of the discussion centered around a proposed Medicare "buy-in" for workers younger than 67. Sen. Phil Gramm (R-TX) and others expressed support for a means-tested buy-in, noting that "there is a difference between a 60-year-old electrician who finds it tough to find work ... versus a white-collar worker who wants to ... 'spend more time on his boat.'" Panel members also noted that if "the buy-in is too generous, it could have the 'perverse effect' of encouraging more people retire earlier," exacerbating Medicare's problems. Rep. John Dingell (D-MI) spoke out against raising the eligibility age, saying it would hurt companies with older workforces (1/6). McDermott expressed fears that "such a change would hurt people who work at jobs requiring physical labor and minorities with lower life expectancies" (AP/Las Vegas Sun, 1/6).

Post Speaks Out
      An editorial in today's Washington Post notes that while "some Republican members have indicated they will balk at any recommendation that threatens to add to either the long-term deficit or taxes. Unless you believe in an awfully powerful efficiency fairy, that means beneficiaries will have to shoulder a larger share of their health costs" (1/6).

Miscellaneous
      Other issues discussed at the commission meeting:

• Sen. Bill Frist (R-TN) proposed moving several Medicare-funded medical education programs into discretionary accounts, arguing they would "receive more oversight and free up money for Medicare." Vladeck and Sen. Bob Kerrey (D-NE) opposed the plan, saying the "education programs would end up being cut by appropriators," and would hurt rural districts (CongressDaily/A.M., 1/6).
• Commissioners "returned briefly" to discussions on per-beneficiary caps on benefits, with Vladeck saying "he thought that proposal would encounter continued opposition from Democrats unless" specific benefits are guaranteed.
• The commission is scheduled to meet at 9 a.m. today in the Dirksen Senate Office Building to discuss "a health care model that is similar to the current health insurance program for federal employees (CongressDaily/A.M. 2, 1/6).