Friday, January 16, 1998

President's Medicare plan won't work

By JOSEPH PERKINS / Newspaper Enterprise Assn.

With an eye toward the November midterm elections, which, based on a historical trend, portend losses in Democrat congressional seats, President Clinton has decided to play the Medicare card.

Egged on by fellow Democrats, the lame duck is hopeful he can trump Republicans by making it appear they want to deny health care for the needful elderly and "near-elderly."

So the president trotted out a plan last week that would drop the age at which Americans are eligible for Medicare from 65 to as young as 55. Any person aged 62 to 64 would be able to "buy" their way into Medicare, as well as any person 55 and older who has lost his or her job and lacks health insurance.

It was fitting that Clinton invoked the memory of another Democratic president, Lyndon Johnson, when he unveiled his Medicare proposal. Back in 1965, when Medicare was enacted by Johnson and a Democratic Congress, White House number-crunchers confidently projected this health-care entitlement would cost no more than $8 billion a year by 1990.

As it turned out, Medicare actually cost American taxpayers $112 billion in 1990, which means Johnson's forecasters were off by a whopping 1,400 percent.

So now Clinton is claiming his plan to radically expand the Medicare entitlement will be "self-financing," requiring no new tax dollars. According to his proposal, early retirees, aged 62 to 64, would pay monthly premiums of $300 for their Medicare coverage. Those 55 or older who bought into Medicare would pay monthly premiums of $400 a month.

But if the president's plan truly would be self-financing, why limit it to early-retirees and the near-elderly? Why not make it available to Americans of all ages who are willing to pay the premium? It wouldn't cost the government anything.

The reason the White House didn't make such a proposal is that the president's number-crunchers know his quixotic plan really would not pay for itself. One needn't be a Nobel laureate in economics to see the numbers don't add up. There's simply no way to provide Medicare coverage for as little $300 or $400 a month without taxpayer subsidies.

Indeed, each Medicare beneficiary cost the program $5,652 last year. That means each 62- to 64-year-old who signed up for the Clinton plan, paying $3,600 a year for Medicare benefits, actually would cost taxpayers more than $2,000 a year. Each person 55 or older who signed up, paying $4,800 a year in premiums, would cost more than $800.

And that's assuming the several hundred thousand 55- to 64-year-olds who bought their way into Medicare were reasonably healthy. But the reality is that the healthiest retirees and near-elderly can already obtain a modest-priced private insurance policy. So most of those who sign up for the Clinton plan likely would have expensive, pre-existing medical conditions.

So the government will receive a yearly premium of $3,600 or $4,800 from a patient, while paying out, say, $45,000 for a heart bypass operation or $25,000 for a knee replacement or $45,000 for chemotherapy treatments.

Another outrageous assumption built into the Clinton plan is that Medicare costs will remain constant over time. The reality is that the health-care entitlement's costs continue to rise each year by more than double the rate of inflation. Indeed, since Clinton's first inauguration, Medicare outlays have increased a staggering 40 percent, from $151 billion in 1993 to $211 billion in 1997.

So what if Medicare costs continue to rise at the same clip?

Would either the White House or Congress be willing to raise premiums commensurately and risk offending the 55- to 64-year-olds who, by that time, would have grown accustomed to their new government entitlement?

Of course not. They would bow to the powerful seniors lobbies and maintain premiums at a level that doesn't remotely pay for the Medicare benefits received. And taxpaying Americans would make up the difference.

Clinton is trying to make political hay during this election year by promising to expand Medicare coverage at no cost whatsoever to the federal treasury. But as a wise, non-politician once cautioned: If something sounds too good to be true, it probably is.

Joseph Perkins is a columnist for the San Diego Union-Tribune.