Dr. Clif Cleaveland, Commentary

Without prompt action by Congress and President George W. Bush’s administration, Medicare will soon begin a financial decline from which it cannot be rescued.

Every candidate for national office owes us a clear plan for restoring Medicare to solvency. We must presume that a candidate who ignores this responsibility favors collapse of this vital program.

Medicare currently insures 44.1 million Americans. As the baby-boomer generation begins to reach age 65 in 2011, an additional 76 million Americans will join the Medicare ranks over the ensuing 18 years. For the great majority of current and future Medicare dependents, there is no alternative program to meet their health care needs.

In March the Social Security and Medicare Boards of Trustees issued their annual report for 2008. The report states, “The financial difficulties facing Social Security and Medicare pose enormous challenges. The sooner these challenges are addressed, the more varied and less disruptive their solutions can be.”

For the second consecutive year, the trustees, who include the secretaries of the Treasury, Health and Human Services, and Labor departments issued a warning about the financial status of the Medicare Hospital Insurance Trust Fund (HITF). Uncontrolled health-care costs and a steady increase of Medicare enrollees place HITF in an unsustainable state.

Currently, the fund draws 45 percent of its annual outlay from general tax revenues. By 2013 HITF assets will fall below annual expenditures. By 2019 HITF will be depleted. The so-called “uncovered mandate” of HITF, that is the deficit between the promises and the resources of HIT, is in the tens of trillions of dollars.

The Trustees describe two solutions to restore HITF to solvency over a 75 year period. The Medicare payroll tax could be increased from 2.9 to 6.44 percent, a 122 percent increase. Alternatively, HITF could reduce outlays be 51 percent. Some combination of increased taxes and reduced payments could be employed. Higher deductibles and co-payments are additional options. None of these choices are appealing so political leaders avoid discussing them. The longer, however, we delay the repair of HITF finances, the more difficult the solution becomes.

Medicare was signed into law in 1966, midway through my residency in internal medicine. Prior to that time, I had seen repeatedly how medical expenses could devastate the finances of retired people.

I recall especially the plight of an elderly farm couple, who like most seniors of that time had no health insurance. He had kidney failure. Dialysis would extend his life but cost them their farm. His wife opted for dialysis. Another wife was torn as she considered the continued hospitalization of her husband with a severe stroke. Continued intensive care would wipe out their savings. Retired sick people were placed in impossible dilemmas.

To achieve support of physicians, Medicare placed few limits on pay-outs when the program was first launched. Therein lay the eventual undoing of the HITF. As medical costs have exceeded the overall rate of inflation in recent years, HITF has been drained.

Another problem is posed by regional differences in the pay-outs of HITF. For example, HITF costs per beneficiary in Florida are two times higher than in Minnesota. The clinical outcomes are the same in the two states. Yet Medicare has only one premium structure for the entire country.

In effect, low-cost states subsidize the care of Medicare recipients in high-cost states. These options need to be considered.

* A single payment schedule for Medicare benefits, thus erasing absurd regional variations.

* Managed care to restrain costs. Medicare Advantage programs are a tentative move in this direction; although the Federal government must pay hefty bonuses to companies who offer this option.

* Identify futile care. Too many seniors spend their final months of life in intensive care units attached to life-support machinery when there is no prospect for regaining meaningful life.

* Eliminate waste, fraud, and abuse within the system.

* Simplify paperwork.

The survival of Medicare, like all health insurance programs, ultimately depends upon controlling the costs of medical services. Despite leading the world in per capita medical expenditures, our country lags in almost every measure of health outcomes. We spend more for less by far than any other industrialized nation. Resolution of this issue will require years. Meanwhile, Medicare must have immediate attention by our elected national leaders.

Contact Clif Cleaveland at cleaveland1000@comcast.net.