Breaux-Thomas Medicare plan is sound, deserves support

By R. Morris Coats

Bayou Business Review, p. 25

Several months ago in this column I expressed concern over the future of Social Security. The problem is that Social Security has always been financed by current workers and with a growing proportion of those over 65 relative to those younger than 65, either benefits will have to be cut, taxes raised or retirement age will need to creep up.

The same financing problem faces Medicare, and we see the problem coming. To address the Medicare problem, President Clinton appointed a bi-partisan commission to study the Medicare problem and recommend a solution. Louisiana's own Senator John Breaux was named as Statutory Chairman of the commission, while Representative Bill Thomas (R-CA) was named as the Administrative Chairman of the commission. Bobby Jindahl, after his successes with Louisiana's public healthcare system, was hired as the executive director of the commission.

Senator Breaux and Representative Thomas came up with a plan to save Medicare, while at the same time, increasing options available to seniors (the Breaux-Thomas plan and information about the commission can be seen on the internet at http://medicare.commission.gov/medicare/index.html). Their plan has three basic parts. First, it makes optional privately provided plans available to seniors that includes a basic low-cost plan but would be paid by a voucher from Medicare, what Breaux and Thomas call a Premium Support System. Second, it raises the age of eligibility over a number of years from 65 to 67. Third, it combines the current Medicare Part A with Medicare Part B into one plan with one financing source.

Under the Breaux-Thomas Premium Support System, the government pays a particular amount toward the purchase of a plan chosen by the senior citizen. This amount is based on the average cost of plans actually chosen by seniors. All private plans available would have to meet Medicare standards. Plans with costs higher than the government subsidy would be paid out of the senior's pocket.

The Premium Support System combines Medicare's government-protected minimum level of health care for our seniors with market-based competition and innovation. It should be mentioned that the Premium Support System is designed after the health benefit system that Congressmen and federal employees now enjoy.

Under this Premium Support System, a higher cost plan would be available that would pay not only for hospital charges and doctor visits, but also pay for prescription drugs. This plan would be available for all seniors, but would be fully paid for by Medicare for seniors with incomes less than a thirty-five percent above the poverty level. This means that our poorest elderly would be helped with paying for prescription drugs, and our more affluent (those above the threshold) would be able to get prescriptions filled at the discounted rates that would be available through the buying power of the country's largest health insurers.

Currently, there are slightly fewer than four workers per retiree in the U.S. In twenty years, there will be fewer than three workers per retiree. With fewer workers providing the goods and services used by more and more retirees and paid for with tax dollars paid mostly by workers, the cost per worker will go up by about fifty percent. With far greater longevity, eventually retirement age will have to be pushed back a few years or the tax burden on workers will become intolerable. Under the plan, anyone 65 or 66 would be able to get Medicare coverage, but they would have to pay the full cost of the premiums.

The combination of Medicare parts A and B seems to merely simplify Medicare's financing compared to the present disjointed system.

The Breaux-Thomas plan is sound. It increases benefits and options to seniors. Also, it does not rely upon uncertain future surpluses for financing as President Clinton has proposed, but puts Medicare's financing on solid ground .

The plan, however, has not gotten the support of the President and so there has been little support for the plan by Democrats in Congress. It is alleged that President Clinton has withheld his support from the Breaux-Thomas plan to give Gore more to run on in 2000. Say it ain't so, Bill, say it ain't so.