Medicare and entitlements

It’s become an annual ritual — almost as much a herald of springtime in Washington as the cherry blossoms along the Potomac: President Bush advances a plan for entitlement reform, and Democrats in Congress proclaim it “dead on arrival.” It happened with Social Security reform three years ago, it happened with the president’s proposed savings from Medicare last year, and now it’s about to happen again with the new and enhanced Medicare proposals that the White House has delivered to Capitol Hill. But things are a bit different this time — for better and for worse.

The worsening news comes from the Medicare trustees themselves, whose latest report details the precarious financial situation of the trust funds that finance Medicare expenditures. The trustees warn that Medicare faces collective unfunded obligations of more than $74 trillion — more than six times the current size of the American economy. And those obligations are not getting smaller; they keep increasing. The Government Accountability Office estimates that for each year that Medicare and Social Security entitlements go unreformed, their projected shortfall grows by an additional $2 trillion.

The implications of these warnings from the trustees could not be more stark to the 200 million Americans under age 54 — who, according to the latest trustees’ report, will not be able to retire with full Medicare benefits. The Medicare Part A trust fund is scheduled to be “exhausted” — in plain English, flat broke — in 2019. This means that tens of millions of Baby Boomers face an uncertain retirement rife with questions about the future of health care.

If there is a silver lining to be found amid the darkening fiscal clouds, it lies in statutory provisions that ensure that proposals to curb Medicare spending will live to see the light of a fair vote in Congress. Fortunately, my Republican Study Committee colleagues and I added a little-known provision into the Medicare Modernization Act of 2003 — the overarching law that added prescription drug benefits to Medicare — that requires the independent Medicare trustees to issue a funding warning if Medicare expenditures are projected to grow to levels that will take away from other important national priorities. The president has now responded to that warning by submitting proposals that will help save the Medicare system by slowing its growth and empowering concerned Americans to demand comprehensive entitlement reform.

The president’s budget constituted a good first step toward Medicare reform, proposing to slow the growth of Medicare by nearly $178 billion over the next five years. Contrary to the mythical rhetoric of congressional Democratic leaders, the president’s budget proposal would not “cut” Medicare. Instead, his proposal allows Medicare to grow by 5 percent, instead of the 7.2 percent currently projected. Since most providers would continue to receive increased reimbursements from the federal government, the level, number and intensity of services provided would still continue to grow. And therein lies one of the keys to true Medicare reform: ensuring that budgetary savings derive from wise choices by patients and doctors about the most cost-effective treatment options.

In addition to the White House budget proposals, there are additional, more comprehensive solutions that have the potential to yield greater savings and slow the growth of the health costs that threaten to cripple our future. Solutions that would restructure Medicare cost-sharing and increase means-testing for wealthy beneficiaries would ensure the program’s sustainability by making beneficiaries more cost-conscious. Solutions like medical liability reform that would reduce providers’ costs associated with legal claims, saving money for Medicare and the general public. Solutions that would transform Medicare into a health care system similar to that which members of Congress have so that all seniors receive better care at a lower cost.

The president’s proposals have advanced the discussion of Medicare reform, and the trigger mechanism which we instituted five years ago provides Congress with a golden opportunity to conduct a thorough, stem-to-stern review of the way seniors receive health care and ensure that we can maintain our promises to baby boomers and future retirees alike.

The current race for the White House is teaching us many things about the American people. They are clamoring for change and yearn for leaders who will not only speak the truth about the problems facing our nation but work to provide solutions to them. Congress has an opportunity to do just that without waiting for a new president.

We have 2 trillion — that’s 2,000,000,000,000 — reasons to act on comprehensive entitlement reform, and to act this year. The American people expect no less.

Rep. Jeb Hensarling of Texas is chairman of the Republican Study Committee.