MEDICARE MANIA

March 1999
		How should the federal government reform Medicare before it becomes unaffordable? Answering your questions are Karen Davis, president of the Commonwealth Fund; Robert Reischauer, a senior fellow at the Brookings Institution; and Stuart Butler, vice president for domestic and economic policy studies at the Heritage Foundation.

The pros and cons of Sen. Breaux's plan. Should the age of eligibility be raised? Would prescription drugs be covered? Federal Employee Health Benefits and Medicare Predicting Medicare's future. Medicare and the budget surplus.     February 25, 1999: Reforming Medicare. The NewsHour's Health Spotlight. Browse the NewsHour's coverage of Medicare The National Bipartisan Commission on the Future of Medicare The Heritage Foundation The Commonwealth Fund supports health issue research The Brookings Institution.	Merton Bernstein of St. Louis, MI says: The "savings" in Sen. Breaux's plan comes from boosting the age of eligibility to age 67. Some "reform"! Robert Reischauer of the Brookings Institution responds: When fully implemented, the increase in the age of initial eligibility called for by Senator Breaux's initial draft proposal would account for somewhere between 16 and 19 percent of the "savings" in the generated by the plan. An increase in the age of initial eligibility would be not be a wise policy unless people remained in the workforce longer and, thereby, could continue to obtain insurance coverage through their employers. This is unlikely to happen since the age of initial eligibility for Social Security will remain at age 62 even as under current law the age at which unreduced benefits increases to age 67. An increase in the age at which people are eligible to receive Medicare coverage that was not matched by an increase in the labor force participation of those age 65 and 66 would cause employers to drop or scale back their retiree health policies because they would have to bear the full costs for their 65 and 66 year old retirees, retirees for whom they now share the costs with Medicare. The ranks of the uninsured would grow. The 65 and 66 year old retirees who are in poor health would have a difficult time obtaining any insurance coverage. Those who could obtain coverage would find that it was very expensive. Stuart Butler of the Heritage Foundation responds: Raising the eligibility does yield relatively short term savings, and is an example of the kind of tough choice we've got to contemplate. Increases in the Social Security retirement age are already in law, and Breaux's plan would phase in a similar increase for Medicare. But the long term savings come from the incentives to slow the growth of Medicare costs. Those savings will be achieved gradually but will be huge over time. That's what the reform is really about. Karen Davis of the Commonwealth Fund responds: · Unlike Social Security, Medicare beneficiaries can not take Medicare at age 62 by paying a higher premium; President Clinton has proposed such a plan, but this is not included in the Commission Chairman's proposal · The proposal indicates that seniors with delayed eligibility will be permitted to participate in Medicare, but the exact details of what they would be required to pay have not been spelled out · An Urban Institute study by Tim Waidman (Health Affairs, March/April 1998) indicates that the total number of Medicare beneficiaries would be reduced by 11.3 percent and total annual program costs by 6.2 percent; approximately 500,000 people ages 65 and ages 66 would become uninsured; costs to Medicaid and other governmental programs for coverage of the disabled would increase (32 percent of the total savings to Medicare); costs to employers under retiree health plans would increase (37 percent of the total savings); the remaining 31 percent of costs would be shifted to the 41 percent of persons who have no supplemental insurance or private Medigap coverage only would