If Medicare is to survive, wealthy must share its cost

The greedy geezer of the month is Pat. (I’ll leave out her last name.) It pains these fingers to type out “greedy geezer,” but sometimes the words just jump out. Older folks often don’t appreciate the enormous generosity of Medicare. They don’t understand that it is a gift from working Americans, many of whom have no health coverage of their own.

Pat was profiled in a recent issue of Business Week. Pat is 82. She and her husband have retired to Englewood, Fla., and enjoy an annual income of $80,000 a year. This is roughly double the median family income in their county. Pat says she’s big on President Bush for cutting her income and dividend taxes. But she doesn’t love his talk about bringing the “ownership society” to Medicare. “I don’t want to control my own Medicare account,” she says.

Pat is no fool. Medicare accounts would limit the taxpayer subsidy for her health spending. In a year of high expenses, the account could run dry, and Pat might have to pay for more of her medical needs. Under the current system, the limit is the U.S. Treasury.

Let us look in awe at the world of Pat and her husband. They enjoy a relatively big income. Even though 16 percent of the children in Florida have no health coverage, the taxpayers still pick up most of this couple’s medical bills. The new Medicare prescription-drug benefit will further swell their good fortune.

Pat and her husband can fully enjoy the high life because America is borrowing money to fund both their tax cuts and their health benefits. Tomorrow’s workers will ultimately pay for today’s debt. And they will stagger under the added weight of the baby boom generation, now nearing retirement. Something will have to give, and that something will be Medicare as we know it.

And guess what. That’s the plan. Many conservatives see a budget crisis as a good way to force the smash-up of Medicare and other government programs. The Bush administration’s reckless tax cuts and spending spree are setting the stage nicely.

Bush may or may not see things that way. In any case, he’s got Pat’s vote this November. As for Pat, she’ll be gone when Medicare cracks apart. What’s in it for her to help preserve someone else’s benefits?

Democrat John Kerry is more fiscally conservative than Bush. That means he’s less likely to compound the problem of paying for the Baby Boom’s retirement by driving up deficits now.

But Kerry is far from perfect. His recent pandering on Medicare premiums has been most unappetizing.

Kerry calls the scheduled hike in premiums, to $78.20 a month, an outrage that must be rolled back. We are talking here about premiums for Medicare Part B, which pays for doctors’ visits, x-rays and other services. (Part A covers hospital bills and is funded by deductions from workers’ paychecks.) A big rise in Part B spending prompted Congress in 1997 to insist that beneficiaries pay 25 percent of the program’s costs. (General tax revenues cover the rest.) So this premium increase is automatic.

Bush notes that Kerry voted for the provision he is now condemning. This is true: Kerry should zip his lips.

But what makes Kerry especially frustrating is that he was right to vote for the formula. It helps protect taxpayers from explosive Medicare spending. Furthermore, Part B is voluntary, so anyone who thinks it’s a bad deal simply doesn’t have to join it.

Actually, the premium isn’t rising fast enough. The Concord Coalition, a bipartisan group of budget hawks, has long called for making the premiums cover 30 percent of Part B costs, as they did in 1995. In fleshing out this good idea, the coalition also suggests some means testing. That is, upper-income beneficiaries would pay higher premiums than others.

The coalition defines “upper income” as couples with incomes of $75,000 or higher. Pat and her husband make the grade.

Given her pleasant situation, Pat should not feel unduly burdened. She and her husband can use some of their tax cuts to pay for their own health care. The taxpayers think that’s fair, and so should Pat – unless she wants to get really greedy about it.

Froma Harrop is a Providence Journal columnist. Contact her by writing to fharrop@projo.com.