Medicare Alert Sounded By Overseers Financial Picture About Same, But 2001 Bankruptcy Nearer

Federal trustees of Medicare reported Thursday that the trust fund that covers hospital costs for the elderly is still in precarious financial condition, and unless Washington acts immediately the trust fund will go bankrupt in 2001.

“The good news,” said Health and Human Services Secretary Donna E. Shalala “is that the health of the Medicare trust fund has not gotten worse. The bad news is that the year 2001 is one year closer.”

She said seniors should be reassured that there is no immediate crisis, because $120 billion remains in the fund, enough to pay “all claims in the near future.”

But she and Treasury Secretary Robert E. Rubin said that the long-term needs of Medicare must be addressed by both the White House and Congress.

In the short term, President Clinton has proposed cutting the growth of the program by $100 billion over the next five years to push back the projected bankruptcy date to 2008, a proposal congressional Republicans are evaluating.

The idea is to buy time while both sides consider long-range reforms, but so far neither side has settled on a long-term solution.

Republicans assailed the administration even before the annual report of the trustees was made public.

“The trustees continue to tell us every year that Medicare desperately needs our attention. Yet nothing gets done,” said Sen. William V. Roth Jr., R-Del.

Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee, said after the report was released that the trust fund will have lost $16 billion by the end of this year as the “price of inaction.”

Two years ago, congressional Republicans pushed through a Medicare bill that sought to cut costs by allowing seniors to choose managed care or medical savings accounts. It had an emergency fail-safe feature to cut payments almost across the board if the plan failed to meet its targets. But President Clinton vetoed the measure, which was attacked relentlessly in the last congressional campaigns. Its elements have not been mentioned again.

In their report, the Medicare trustees, who include four administration officials and two people from the private sector, urged action, but not specifics. The document, compiled annually, covers the financial health of the Medicare trust fund, which is designed to pay hospital costs for the 38 million elderly and disabled Americans covered by the federal health insurance program.