MARGARET WARNER: When moderator Jim Lehrer asked the two presidential candidates about Medicare in their debate Sunday, he touched on one of the most sensitive issues of the presidential campaign.
JIM LEHRER: Mr. President, Sen. Dole has come pretty close in the last few days accusing you of lying about his position on Medicare reform. Have you done so?
PRESIDENT CLINTON: Absolutely not. Let's look at the position. First of all, remember that in this campaign season, since Sen. Dole has been a candidate, he has bragged about the fact that he voted against Medicare in the beginning in 1965, one of only twelve members. He said he did the right thing then. Hew knew it wouldn't work at the time. That's what he said. Then his budget that he passed, along with Speaker Gingrich, cut Medicare $270 billion, more than was necessary to repair the Medicare Trust Fund.
JIM LEHRER: Sen. Dole.
SEN. BOB DOLE: Well, I must say I look back at the vote on Medicare in 1965, we had a program called Elder Care that also provided drugs and was means tested so people who needed medical attention received it. I thought it was a good program. But I've supported Medicare ever since. In fact, I used to go home and my mother would tell me, say, Bob, all I've got is my Social Security and my Medicare, don't cut it.
MARGARET WARNER: It's not surprising Medicare is such a bitter issue in this election. After all, the fight over congressional Republican plans to make major savings in Medicare was the most partisan and nasty part of the budget battle last year.
REP. SAM GIBBONS, (D) Florida: (October 1995) [technical network difficulty]--what is the hurt to us--to do all this?
REP. NUSSLE: Will the gentleman yield?
REP. SAM GIBBONS: Happy to yield.
REP. NUSSLE: I would refer the gentleman to the trustee's report, page 3.
REP. SAM GIBBONS: Well, I won't yield for that. I've read that, and I've read that--
REP. NUSSLE: Well, it says in here, "prompt, effective, and decisive actions"--
REP. SAM GIBBONS: I have the floor, and I will not yield to you for a filibuster.
REP. NUSSLE: Well, you were asking a question.
REP. SAM GIBBONS: I've read the trustee's report, and, in fact, I've read all 28 of 'em, Mr. Nussle.
REP. NUSSLE: Well, you may not want to hear it, but it says, "prompt, effective, and decisive action."
REP. SAM GIBBONS: Mr. Nussle, I have not yielded to you anymore. If you want some time, you get it.
MARGARET WARNER: Republicans had seized on a report warning that the Medicare Trust Fund would go broke in the year 2002. Their response was the Medicare Preservation Act, which would save $270 billion in Medicare spending over the next seven years. Seniors would pay gradually higher monthly premiums, and affluent seniors would pay more, while hospitals and doctors would receive less in Medicare reimbursements.
REP. WILLIAM THOMAS, (R) California: (October 1995) What Republicans have said is that this is a problem that the entire society shares, that the beneficiaries have to share in the solution. Taxpayers have to share in the solution, and the providers have to share in the solution.
MARGARET WARNER: But along with trying to reduce spending on Medicare, Republicans also were pushing a $245 billion tax cuts. Democrats immediately linked the two.
REP. PETE STARK, (D) California: (November 1995) Twenty-six million Americans will become uninsured as a result of this $270 billion--Marie Antoinette would have called it a decapitation--you don't want to call it a cut--it's a reduction--and for the 26 million people who are going to lose their insurance, 9 million people get 80 percent of the tax cut.
MARGARET WARNER: The impasse over Medicare and other budget items triggered the temporary shutdown of the government last winter, and polls showed damaged the Republicans politically. In the spring, congressional Republicans came back with a new 1997 budget plan that relied on far more modest savings in Medicare, $158 billion over six years. President Clinton countered with a budget that made $116 billion in Medicare savings, but the two sides never came to an agreement. Instead, with the presidential campaign in full swing, President Clinton began to turn the congressional Republicans' position on Medicare against his challenger, Bob Dole.
COMMERCIAL SPOKESMAN: American values, do our duty to our parents, President Clinton protects Medicare, the Dole-Gingrich budget tried to cut Medicare $270 billion.
COMMERCIAL SPOKESMAN: The Oval Office, if it were Bob Dole sitting here, he would have already cut Medicare $270 billion.
MARGARET WARNER: Polls show voters have been swayed by charges that Republicans are out to gut Medicare. So Bob Dole has come out with his own Medicare ad.
COMMERCIAL SPOKESMAN: Which plan puts more money in the pockets of seniors? Under Bill Clinton's plan, our huge federal government will grow another 20 percent, costing us plenty. The Dole plan--our government still grows but only 14 percent to protect Medicare and Social Security.
MARGARET WARNER: But Sunday night was the first time the two candidates argued publicly face-to-face over Medicare.
PRESIDENT CLINTON: My balanced budget plan puts 10 years onto Medicare. We ought to do that. Then we can have a commission. But Sen. Dole's plans are not good for the country.
SEN. BOB DOLE: Stop scaring the seniors, Mr. President. You've already spent $45 million scaring seniors and tearing me apart. I think it's time to have a truce.
MARGARET WARNER: Now a discussion on the policy and politics of all this with Judy Feder, a former health official in the Clinton administration who now teaches at Georgetown University, Deborah Steelman, a health care consultant and former Reagan administration budget official, who was also an adviser to the Dole campaign, and Martha Phillips, executive director of the Concord Coalition. Welcome all of you. Martha Phillips, start with you. Lay out in the simplest possible terms what really is the problem we're looking at here. Is it something we can think of in two parts?
MARTHA PHILLIPS, Concord Coalition: Well, basically the problem is that Medicare is a very large government program, and it's growing very rapidly. It's growing at nearly 10 percent a year, and some people have said it's sort of the Pac Man chewing its way through all the other spending in the government budget. It, uh, has in some ways two parts in that we have immediate problems. We are already dipping into the interest in the hospital insurance trust fund part of Medicare, and soon we'll be using up the principal, and after that, the payroll taxes will not be sufficient to pay for hospital insurance. And on the other side, we've got doctors' insurance, which is also very expensive and continuing to grow rapidly and use taxpayer dollars.
That's the short-term problem. That's the easy part. The long-term problem and the hard part is that we have a demographic tidal wave coming down on us. The baby boom is soon going to be the senior boom. Today 13 percent of Americans are on Medicare. Uh, when the baby boom generation is fully retired, it will be about 25 percent of Americans on Medicare, and Medicare costs per enrollee will more than double. I mean, they're growing very, very rapidly. And we simply right now do not have any plans for how we're going to afford that, or how we're going to scale it back to levels that we can afford, and at the same time provide the quality of care for seniors that we all would like to have.
MARGARET WARNER: All right. So let's look first at the--what we call the short term, the easy part. Debby Steelman, in the spring, as we outlined here, the Republicans on the Hill had won let's say 158--$158 billion over six years. The Clinton plan won 16. Both candidates are sort of running on those. How different--they don't seem like that much difference in money terms. What are the basic differences between the two?
DEBORAH STEELMAN, Health Care Consultant: The basic difference between the numbers associated with the two plans is the fact that the Clinton administration would use what I believe is an accounting gimmick, where they would take some of what's in the hospital insurance trust funds, some of the spending that's currently occurring there, and move that over to the physician side, so it would no longer show up on the trust fund report; it would no longer show up as a problem in bankruptcy. That's the main difference in spending. There were also significant differences. That's the only real significant difference in the spending side. Everything else is very similar. There were significant differences in terms of opening up the program to more choice. Right now, there's no way for seniors really to improve their benefit package unless they go to an HMO, and that's a good choice, but the Dole plan would have more choice, a wider range of choice, and the Clinton plan would not. It would restrict it to managed care plans.
MARGARET WARNER: How do you see the differences between those two?
JUDY FEDER, Georgetown University: I think there is a difference in the dollars. Both plans would slow growth or cut Medicare spending. Uh, but the President's plan would keep that slowdown in line with the rate of growth in private sector health care costs, what Medicare buys, whereas, the Republican plan would cut it much more than private costs. The other difference which Debby was alluding to, is--and I would describe differently--is on structure. The Republican plan would cap Medicare, uh, regardless of what's happening on costs, and thereby shift costs to beneficiaries if what they'd need to buy--
MARGARET WARNER: You mean--let me interrupt you--
MS. FEDER: Mm-hmm.
MARGARET WARNER: --cap Medicare, you mean cap the amount the government puts into it.
MS. FEDER: Cap the amount that the government pays, and then as health care costs more, as it is projected to do so, the liability of--the problem in paying for it shifts to seniors.
MS. STEELMAN: I believe that the Clinton plan ignores the fundamental reality that Martha has spoken to. We have to reduce the rate of growth in this program. We have much more expensive health care and many more seniors. We have to step up to that plate. To say that you want to reduce the growth in the program and then not really do anything but more fee reductions, not really change the structure of the program, is not doing any of the job. What the Dole plan would do is simply say let's do this program some real service, let's make sure beneficiaries can really rely on it by making wealthy seniors pay more, by offering choices to people so that they can get out and use money they're already spending in the private market. For example, 75 percent of seniors today have MediGap. That costs a lot of money--between a thousand and two thousand dollars per policy. Why not allow seniors to wrap that into the Medicare product and buy one insurance plan? It would simply try to restore some common sense, I think, to the program.
MS. FEDER: Well, Debby, I think that when you talk about choices, that that's not quite the way it would look to a senior who's buying health insurance. Right now in both plans, seniors have a choice of managed care plans or the traditional Medicare plan. Under the Republican budget, they would have been given a fixed amount to choose a private plan, and the plan would have allowed the private insurance plan to charge them over and above what Medicare paid, which would be restricted toward the cost of that plan. So as health care plans cost more--
MS. STEELMAN: But that's not just choice. That's not being a force. For example, if a senior wanted to buy a Cadillac insurance policy and use their MediGap money and wrap it into one project, that shouldn't be a problem. There would be plenty of plans, as well as current law Medicare available to seniors under the Republican plan.
MARGARET WARNER: I think we may be getting into a level of detail that our viewers might find hard to understand. Let me just ask Martha Phillips this. The President said that his plan--and I assume he means also the Republican plan, since the savings are greater--would take care of the problem for the next 10 years. Is that true?
MS. PHILLIPS: Well, that is the bone of contention. The Congressional Budget Office has looked at three plans, sort of generic plans, save $100 billion, save $200 billion, or save $300 billion, and their plan that saves $100 billion, they thought would buy one more year, and $200 billion would buy you three more years. So since both of the Dole and the Clinton plans fall in that range, it's hard for me to understand where the 10-year claim comes from. But the administration feels very strongly that their 10-year claim is correct, and, um, you know, it's hard to say.
MARGARET WARNER: Let's turn to the longer-term problem now, the baby boomer crunch, and, Martha, outline--there's really a fairly short list of available options, is there not?
MS. PHILLIPS: There are only so many places to go to solve this problem, and I think one reason that you're hearing so many candidates, including the two presidential candidates, talk about commissions, is that none of the choices are terribly pleasant. You know, we can pay more tax, but there's no tax base now on the HI tax that comes out of your payroll. You're fully taxed on the whole amount, 3 percent, and most working people owe more in payroll tax than they owe in income tax, so more taxes is not a very viable option. Raise the age for eligibility. Boy, that's a very, very tough--
MARGARET WARNER: UP to what?
MS. PHILLIPS: Well, you know, it's now 65. Some people are talking about raising it on up even to 67, which is where the Social Security eligibility age is going. Congressional Budget Office costed an age 70 option. But, again, a lot of people are very concerned about that. You can keep squeezing down on the doctors and the hospitals, but after a point and after they've run out of ways to game the system to get the money they need to keep their, uh, institutions going, uh, they're not going to want to take care of Medicare patients if they don't get enough reimbursement. So that you can only do up to a point. You can charge more premium. Well-to-do retirees, the country club set, ought to pay for their health insurance that they're getting, $5,400 a year is what these Medicare insurance polices cost now.
MARGARET WARNER: And just to explain that, every senior regardless of income right now pays the same $42 a month.
MS. PHILLIPS: Right.
MARGARET WARNER: And they get this.
MS. PHILLIPS: Which, by the way, we just reduced from $46 a month last year because of this wrangling between Congress and the administration, we actually rolled it back, and lastly, um, as we were discussing a moment ago, the idea of going into managed care, some, some way to stop the open-endedness of this system where any patient can come in and get reimbursement for any service that any physician will provide, regardless of how much it costs compared to what degree of improvement in your, in your health status it's likely to produce. Nobody else or hardly anybody else, other than perhaps CEO's in our society, have that kind of package. The rest of us are finding ourselves increasingly in group care or managed care, and people are asking the question about whether the treatment is really worth what it costs. We've got to do that for seniors as well.
MARGARET WARNER: Well, Judy Feder, let me ask you, I don't hear either of the candidates going and talking about options like that.
MS. FEDER: Oh, I think that the candidates, you can see a difference in the candidates in the short-term and they have both talked about commissions for the longer-term.
MARGARET WARNER: Yes.
MS. FEDER: And I think you need to look at the directions in which they are talking about going now. Uh, both of them are talking about expanded choice of plans. Under the Republican plan, there would be a much more aggressive move toward people moving toward--
MARGARET WARNER: As Debby Steelman just laid out.
MS. FEDER: --managed care, as Debby said, and there would be in addition a move toward seniors paying more, uh, if they choose to retain certain options that they now have. So there are concerns about that. I think that in terms of also the longer-term, we could hear whether it is a president talking about it, or it is Congressman Archer, the Republican leader of Ways and Means talking about it that there is an issue over the longer-term of having to look at all the array of options, uh, that Martha mentioned, and looking at the beneficiaries, at the providers, at the taxpayers, you have to look at them all.
MS. STEELMAN: This is the reason that Bob Dole is actually uniquely qualified to come in at this point in crisis. He was there in Social Security in 1983 when Social Security faced exactly the same kind of crisis and exactly the same sort of bad options, and he put together on the commission a bipartisan result that nobody liked but everybody liked, and that's what has to happen in Medicare and--
MARGARET WARNER: So you think it's--but he--have you heard him talk about any of these options--
MS. STEELMAN: Absolutely, about a commission that would do exactly--
MS. FEDER: A commission.
MS. STEELMAN: --exactly what Martha says because you can't do--as the Republicans found out this year and as President Clinton found out two years ago--you can't make major social insurance changes like this on a partisan basis. People insist on bipartisanship, as they should, and a commission like the 1983 Social Security Commission, when we actually fixed the problem not just for ten years but for thirty is the model that we have to look to.
MARGARET WARNER: Let me get your view on this commission idea because it did work for Social Security.
MS. PHILLIPS: There are commissions that are formed so that you don't have to deal with the problem. Oh, this is too hard, we'll refer it to a commission, and we saw a commission on entitlements that's pretty much what happened, and then there are commissions that you form because you really want to deal with the problem. And in the case of Medicare, the numbers are so compelling, you know, we are just about at the breakpoint where we simply have to do something to deal with the short-term problem, and the long-term problem is people who've already been born and we know what the costs are going to be, so there's no choice about dealing with Medicare, and I think, you know, if it takes a commission to get the kind of bipartisanship that we need and to extricate Medicare from tax cuts and to take it away from balancing the budget, both of which are important topics in their own right, but Medicare just to preserve Medicare needs attention and I think you--you set up a commission to focus on that, and the other two large important issues will come along behind and take care of themselves.
MARGARET WARNER: Well, thank you all very much. We have to leave it there.
MS. FARNSWORTH: Still to come, an HMO battle in California, news around the clock, and a David Gergen dialogue.