Editorial: Both sides have to give in order to fix Medicare

Democratic leaders complain Republicans are unreasonably rigid on tax increases when it comes to solving the nation’s growing debt issue, but they model the same behavior when it comes to Medicare.

They loathe the House GOP plan to lower Medicare costs by introducing vouchers. They’ve made it clear that the compromise introduced last week by U.S. Sens. Tom Coburn and Joe Lieberman is a non-starter. What they haven’t said is how they would cut Medicare costs and put it on a sustainable path.

As the deadline for lifting the debt ceiling nears, both parties face a choice: compromise on a core issue (taxes for Republicans, Medicare for Democrats) or watch the economy implode as the government defaults on its debt obligations. The parties are resisting the obvious options as they cling to the faint hope that the other side will be the only one that caves in.

This is a perilous and irresponsible game of budgetary chicken. Arun Raha, chief economist for Washington state, told The Spokesman-Review editorial board last week that if Congress spooks the credit markets – even without defaulting – it risks plunging the economy back into recession in the short term and raising credit costs for the long term.

We’ve noted that tax increases must be part of a balanced solution, but Medicare reform has to be included on the spending side, too. With ballooning health care costs and the wave of baby boomers headed its way, Medicare is devouring larger portions of the federal budget. Absent any changes, the hospital insurance trust fund will be insolvent in 2024. Medicare Part A will run a record deficit of $34.1 billion this year.

The Coburn-Lieberman plan isn’t as drastic as that put forth by House Republicans, but it does have tough medicine that beneficiaries will probably have to swallow in some form if Medicare costs are to be controlled. It would save an estimated $600 billion over the 10 next years.

For starters, it would slowly ratchet up the Medicare eligibility age from 65 to 67. The average life span was 70.2 years when Medicare began in 1965. It is 77.7 years now. If health reform isn’t repealed, retirees would have affordable options until they qualify for Medicare. However, if reform is repealed, then the qualification age reverts to 65 and the cost savings are lost.

The plan also banks on more out-of-pocket spending that would include annual caps that are determined by income level. Wealthier Americans would have a higher limit. High-income folks would also pay more for Medicare Part B premiums and for prescription drugs, neither of which are currently covered by the payroll tax. The subsidies come from general revenue, which exacerbates the deficit problem.

Like the Coburn/Lieberman proposals or not, they are serious measures. It is not enough for Senate Majority Leader Harry Reid or House Minority Leader Nancy Pelosi to just say no. They need to propose their own solutions or rally their side to compromise.