Medicare's health

BY FOCUSING on Social Security, President Bush is slighting a far more urgent problem -- the financing of Medicare. Medical insurance for elderly and disabled people is, like Social Security, an essential federal program that deserves strong support by the president and Congress.

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However, trustees of both systems report that the Social Security trust fund will not run a deficit until 2042, while the trust fund that pays for hospital care (Medicare Part A) will be out of money by 2019. Despite Bush's alarmist talk, Social Security requires no major restructuring.

Medicare Part B, which pays for outpatient services, is also under stress, as shown by the steep increase this year in the premium that is taken out of enrollees' Social Security checks. The premium picks up 25 percent of the cost with the rest coming from general revenues.

In 2003, Congress recklessly added a prescription drug benefit, due to take effect next year, without allowing the government to bargain directly with drug companies. As with Part B, beneficiaries will pay premiums that will defray 25 percent of the cost, with general revenues accounting for the rest.

Faced with criticism that his drug cost projections were low-balled, Bush said yesterday that he will eventually devise a Medicare plan. Little-noticed sections of the prescription drug law suggest that Congress believes that higher premiums are the answer.

Congress instructed the trustees to issue a warning whenever general revenues, as opposed to premiums and payroll taxes, exceed 45 percent of total Medicare costs. With drug projections soaring, trustees may have to issue the first warning in two or three years. Once that is out, the president must provide Congress with a proposed solution.

The drug law also mandates that as of 2007, Part B enrollees with annual incomes above $80,000 will experience a gradual escalation in their premiums. Not many people fit in that category, and they can afford the expense, but if Congress extends the increase to other income levels, it will have a severe impact on living standards for many elderly.

Healthcare costs are growing faster than the economy. Medicare funding troubles are part of a wider problem. Medicare administrators ought to do everything possible to eliminate unnecessary procedures and promote preventive medicine. Congress ought to allow them to negotiate drug prices. Costs will still rise as the baby boomers retire.

Certainties about retirement are dissolving as employers abandon secure pensions and insurance to supplement Medicare. This society ought to marshal the resources to keep Medicare a bedrock of affordable protection for its senior population, even if new revenues are required. A tax increase spread throughout the population would safeguard Medicare and spare millions from an old age of increasing hardship.