PHILADELPHIA -- With Congress in recess this week, the whole country has turned into a town meeting on whether Social Security is on the verge of collapse and how soon and by what methods we need to fix it. But even during these debates, there is uniform acknowledgement that Medicaid and Medicare, which provide health insurance for the poor and the elderly, are in much worse shape than Social Security and are going to require quicker fixes and demand harder choices. Indeed, after listening to some of the assessments, fixing Social Security begins to sound like the proverbial low-hanging fruit.
“Medicare is a much bigger problem,” said Republican Senator Rick Santorum at a forum held here on Feb. 22. “It is six times the problem of Social Security.” Last week, House Minority Leader Nancy Pelosi suggested that the Social Security debate was doomed until everyone could agree on the same set of facts and figures. A comparison with Medicare may be the best chance for that to occur. Both sides agree that the fiscal issues facing Medicare and Medicaid are urgent.
All of this might, for some people, raise the following question: Why in the hell are we talking so much about Social Security?
The recent trajectory of the Social Security debate shows how you can control the debate by setting the agenda. The huge ideological clash over reforming Social Security seems to have to do with the establishment of private or personal investment accounts, which the president favors and which Democrats oppose. And Democrats seem to be winning the early rounds, convincing people that the president is on the wrong track, but it will not be long before they have to come up with a reasonable alternative to his proposal. If they don't, they will lose -- even though the proponents of private accounts, most notably the president, have not said exactly how these accounts will correct Social Security's path to insolvency in 2042.
Medicare, on the other hand, is headed for a much closer iceberg. The Medicare trust fund pays for hospitalizations and short-term nursing-home stays for nearly 42 million recipients. Government officials say it will be out of money by 2019, and that's an estimate based on shaky assumptions about the rising costs of health care.
Faced with huge budget deficits, the president is proposing cuts in funding for those programs. And the Medicare Payment Advisory Committee recently advised Congress that it could save more than $10 billion over the next five years if it cuts back an increase in Medicare payments expected to begin in 2006. The committee also urged a freeze in payments to nursing homes and home-care agencies to cut costs.
With the 2006 introduction of a prescription-drug benefit passed in 2003, Medicare's burdens are very much in question. The contentious drug benefit only barely gained congressional approval because so many lawmakers thought the price tag of $395 billion over 10 years was too high. Alarmingly, recent revisions to those estimates now put the cost of the benefit at between $725 billion and $1 trillion.
The problems in Medicaid, which pays for hospital care for about 50 million of America's poor, are even more dire, collapsing under the pressures of poverty and rising health-care costs. There are, for example, 8 million more people living in poverty in the United States today than there were in 2000. Five million more have lost their health insurance, and it falls to Medicaid to pick up the slack. As a result, Medicaid spending has increased more than 60 percent since 1999, to more than $300 billion a year. And the Congressional Budget Office estimates those costs will continue to rise at an average rate of almost 8 percent a year for the next decade. States pick up 40 percent of Medicaid costs, and the swelling Medicaid rolls have governors, both Democratic and Republican, much more focused on that entitlement program than on Social Security.
Iowa Governor Tom Vilsack declared last week to The New York Times, “The current Medicaid system is not sustainable.”
Without federal help this year, states will see an increase of more than 10 percent in Medicaid costs. In the end, however, the real insecurity is among the poor people who see services disappearing because states are doing everything to cut benefits and eligibility.
In the very large shadow of the Social Security debate, discussions have begun on Capitol Hill about how to deal with the crisis in Medicaid, but there is little chance of anything coming to fruition this year -- because, of course, now it's time to talk about Social Security.
Terence Samuel is the chief congressional correspondent for U.S. News & World Report. His column about politics appears each week in the Prospect's online edition.
