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By John D. McKinnon, the Wall Street
Journal The government-run
health-care program also will start paying out more than it is taking in
as soon as this year, compared with last year's estimate of 2013,
according to the Medicare trustees' annual report for 2004. The outlook
for Social Security remained unchanged. The sharp decline in
Medicare's long-term financial health reflects a combination of higher
health-care spending and lower payroll-tax revenues, as well as effects of
last year's Medicare overhaul legislation, which created a
prescription-drug benefit as well as a variety of financial incentives for
managed-care companies to participate in the program. The report shed
further light on the Bush administration's internal indications that the
prescription-drug bill would be more expensive than congressional analysts
thought. Yesterday's announcement
touched off fresh assaults on President Bush's handling of the
prescription-drug legislation -- and his fiscal policy more broadly -- as
the campaign season heats up. "Let's give credit
where credit is due -- it's all due to the Bush administration," said
Rep. Pete Stark (D., Calif.). He said the Republican prescription-drug
bill "lavishes billions of dollars on HMOs" in a futile attempt
to generate managed-care savings. Massachusetts Sen. John
Kerry, the presumptive Democratic presidential nominee, pointed to Mr.
Bush's tax cuts, which he said would doom Medicare if they're made
permanent as Mr. Bush wants. Mr. Kerry's lengthy
analysis didn't spell out his own plan for Medicare overhaul, and also was
light on how Mr. Kerry would alter Mr. Bush's tax cuts, which are set to
expire over the next few years. A Kerry economic adviser said the
candidate would first focus on putting the "fiscal house in
order" by repealing Mr. Bush's tax cuts for people earning $200,000
or more, and by closing corporate loopholes. Mr. Kerry also would reduce
Medicare "giveaways" to HMOs and drug companies, the adviser
said. Conservatives, meanwhile,
said the report shows the need for more changes in the program.
"Medicare's bleak outlook is the unsurprising result of letting tens
of millions of people spend someone else's money," said the Cato
Institute's Michael Cannon. "The only responsible choice is to
finance future Medicare obligations through reforms that encourage
personal savings." Administration officials
added that the bulk of Medicare's financial deterioration stemmed not from
changes in the prescription-drug bill, but from skyrocketing health-care
costs. They also said the trustees' report likely overstates the cost of
the Medicare bill, by underestimating possible savings through preventive
health care and disease management. Treasury Secretary John
Snow again pointed to the Bush administration's proposals for
medical-liability reform, reduction of medical errors and greater
health-care efficiencies through technology. The administration
currently is investigating whether officials deliberately suppressed
concerns about the prescription-drug bill's costs in order to secure its
passage. Health and Human Services Secretary Tommy Thompson said he
believes lawmakers knew generally of the department's concerns ahead of
time, and that providing detailed estimates wouldn't have made any
difference. With the changes in
outlook and the addition of the Medicare prescription-drug benefit, the
present value of the unfunded 75-year liability in Medicare reached $27.7
trillion, while the unfunded liability for Social Security is $3.7
trillion. Meanwhile, administration officials announced that the outlook for Social Security, the other big government safety net for seniors, was basically unchanged. It is expected to run out of money in 2042, the same projection as last year. Copyright © 2004
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