Medicare: Now It's The Gop's Turn To Squirm

Republicans thought they had inoculated themselves from political trouble with the powerful senior-citizens lobby by pledging last fall to keep budget-cutting knives away from Social Security. Too bad they forgot to include Medicare.

The government's $175 billion health-care program for 37 million elderly has replaced Social Security as the Democrats' sure-fire political weapon. With dreadful timing, the GOP began talking of curbing Medicare's growth by $300 billion over seven years just weeks after the House passed $345 billion in tax cuts that will mostly help the top 12% of U.S. taxpayers.

Gleeful Democrats claim the Medicare dilemma lays bare the contradictions that have existed all along in the GOP Contract With America: You can't balance the budget, cut taxes, and still protect popular entitlements from major reductions. That's particularly true for Medicare, the largest pot of available budget-cutting funds now that the Republicans have put both Social Security and Pentagon spending off-limits. Another complication: Medicare officials on Apr. 3 warned that the program could go bankrupt by 2002. So it's no wonder Republicans are begging President Clinton for bipartisan negotiations to repair the program's finances--and GOP budget-balancing hopes.

"FULL CONFUSION MODE." The likelihood of a quick compromise and rescue? Nil. With the Republicans in disarray, the Democrats don't want them to stop squirming--at least not yet. "This is going to be the big political issue of the year," predicts Norman J. Ornstein of the American Enterprise Institute. Concedes a GOP senator: "It's a very volatile and exploitable issue and a loser for the Republicans."

That does not bode well for solving Medicare's big structural problem--costs that soar 10% a year. And panicked Republicans can't agree on a cure. House Speaker Newt Gingrich (R-Ga.) on Apr. 28 promised not to use Medicare savings to balance the budget. Meanwhile, the Senate and House Budget Committee chairmen plan to do the opposite. "They're in full confusion mode," says one health-industry lobbyist.

The temptation at the White House is to sit back and enjoy the GOP's plight. But Clintonites risk a backlash if they put smart politics above good policy. Advocates of seniors worry about Medicare's insolvency and will be leaning on the Democrats to rescue the program. "The idea that Medicare should be used for other purposes is a mistake," says Stanford G. Ross, a Democratic trustee of the Social Security funds. Solving Medicare's shortfall "is going to take bipartisanship and a mechanism to fix the system in a way that gives both parties credit."

The answer may be a commission similar to the 1983 group that saved Social Security from bankruptcy. That panel grew out of a similar firestorm--Democrats had assailed President Reagan for trying to cut old folks' pensions in 1981--and provided political cover for both parties to fix Social Security.

Senate Majority Leader Bob Dole (R-Kan.), who supports a commission, wants to solve the problem quickly so it won't mar his 1996 Presidential campaign. But the White House is insisting that reform of private-sector health care--which the GOP scuttled last year--be linked to any Medicare repairs.

That means an ambitious, long-term fix can't be completed until 1996, maybe even past the election. In the short term, modest cuts and reforms, such as spurring the use of managed care, must be agreed upon so a budget can be crafted. With the prospect of millions of seniors angry at Washington for playing politics with their benefits, doing nothing is just too risky.

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