Medicare Proposal Targets Affluent Seniors

By Christopher Lee
Washington Post Staff Writer
Saturday, February 16, 2008

The federal government would charge affluent seniors more for drug coverage and require doctors and hospitals to use electronic medical records under proposals released by the Bush administration yesterday to corral rising spending in the Medicare program.

The provisions, quickly criticized by congressional Democrats, come in response to a forecast by the trustees who oversee Medicare that by 2013 more than 45 percent of Medicare's spending will come from general tax revenue, as opposed to dedicated payroll taxes and premiums paid by beneficiaries. Under a 2003 law, the White House must propose legislation to limit Medicare spending if the trustees pull that "trigger" for two consecutive years, as they now have done.

Medicare, which serves 44 million seniors, cost the government $437 billion last year, and general revenue funded about 41 percent of that. By 2013, it is expected to cost $678 billion, with the general-revenue share climbing to 45.1 percent.

In a letter yesterday to House Speaker Nancy Pelosi (D-Calif.), Health and Human Services Secretary Mike Leavitt outlined the proposals and wrote that Medicare is on an "unsustainable path" because of rising health-care costs and the aging of baby boomers. In its 2009 budget this month, the administration proposed slowing Medicare spending by $178 billion over five years but did not include those measures in yesterday's proposal.

"Left unchanged, within 35 years Medicare would eat up every bit of the federal budget as we now know it," Leavitt said in a conference call with reporters. "We know that's not likely to happen, so one of two thing will occur: We'll either raise taxes in some future Congress, or they will have to do serious surgery to Medicare. . . . We're quickly moving away from the point that we can solve this problem. We need to act on it."

Under President Bush's proposal, beneficiaries with annual incomes over $82,000 ($164,000 for couples) would be charged higher premiums for drug coverage, known as Part D. A similar requirement already exists in Part B, which covers visits to the doctor. The proposal would reduce government spending by $3.2 billion over five years, Leavitt said.

The administration also wants to shorten the time frame during which patients can file medical malpractice suits and limit damages for pain and suffering to $250,000 per incident. A third provision would give the HHS secretary the power to require use of electronic health records and tie payments to quality of care. Officials did not estimate those cost savings.

While Congress is required to consider the legislation, Democrats on Capitol Hill pronounced it "dead on arrival." Several said a better way to trim Medicare costs would be to reduce payments to the private Medicare plans administered by insurance companies that are more costly than the standard benefit -- an idea the administration opposes.

"The president's idea for 'improving' the program is to stick the beneficiaries with more of the bill," said Rep. John D. Dingell (D-Mich.), chairman of the House Committee on Energy and Commerce.

"The administration has trumped up a phony crisis in Medicare to justify proposing deep cuts in quality health care for seniors while giving massive subsidies to HMOs and other insurance companies," said Sen. Edward M. Kennedy (D-Mass.), chairman of the Senate Health, Education, Labor and Pensions Committee.

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