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RESCUING MEDICARE // CAN THEY PULL TOGETHER AND PULL IT OFF?

An elderly woman, frail and emaciated, lay unconscious in the cardiac care unit of Auburn Memorial Hospital in Syracuse, N.Y. Eight bags of clear fluid hung above her bed, slowly dripping food and medicine into her arms through three intravenous tubes.

Another tube was pushed into her mouth and held in place with crossed pieces of tape. It connected her to a respirator. Thin wires attached her to a heart monitor.

Standing just outside the room, hospital administrator Christopher Rogers gazed at the helpless patient. Her gaunt, expressionless face was turned toward him. A steady beep, beep, beep tracked the ebb and flow of her life.

"You tell me," he said gesturing toward the tangle of tubes and wires and machinery. "How do I deliver services more efficiently for her?"

That question is essentially the same one policy makers in Washington confront as they try to rescue Medicare from bankruptcy. They want to preserve health care benefits for millions of elderly citizens. But unless they find ways to curb costs _ or the will to raise taxes _ the 31-year-old program will go broke in four years.

Medicare reform is expected to be among the first issues President Clinton and the Republican Congress tackle when the new term begins. After a government shutdown, a strident campaign and months of harsh partisan rhetoric, Clinton and Congress face the same problem they did two years ago: Medicare spends more money than it takes in.

Whether they can put aside political differences and hurt feelings to shore up the program remains unclear. Republicans, who attempted a Medicare overhaul in 1995, are still smarting from Democratic attacks on their plan and insistent that, this time around, Clinton take the lead.

Clinton, meanwhile, is treading carefully. He has suggested establishing a bipartisan commission to devise Medicare reforms, but hardly committed to that or any other course.

What Clinton and Congress ultimately do _ or fail to do _ will affect Americans of all ages: the 37-million elderly and disabled who now depend on the program; the 125-million workers who support it; and the generation of children who will shoulder the burden when current workers retire.

If left unchanged, the federal government would have to raise more than $1-trillion in new taxes over the next seven years to guarantee the program's survival, according to the trustees who oversee Medicare.

Families earning $45,000 a year would see their annual federal taxes jump by nearly $1,600 just to keep Medicare afloat. And the burden would only grow as 77-million members of the baby boom generation begin retiring in the first decade of the 21st century.

"The public is in steadfast denial, but the system is collapsing underneath them," said Robert E. Moffit, a domestic policy expert at the Heritage Foundation, a conservative Washington think-tank.

Created in 1965 as one of Lyndon Johnson's Great Society initiatives, Medicare has become a cornerstone of the American welfare state and one its most politically popular entitlements. Over three decades, Medicare helped transform old age from a time of insecurity, sickness and poverty into one of comfortable retirement, better health and longer life.

It is a two-part program. The first part, financed by a dedicated payroll tax, guarantees hospital care to all Americans 65 and older. The second, a voluntary insurance plan, covers doctor visits, lab tests and other services. Participants pay 25 percent of the premium; taxpayers pick up the rest.

When Medicare was enacted, the average 65-year-old could expect to live another 14.6 years. Today, the life expectancy of a 65-year-old American is 17.5 years.

You only have to visit the Wagon Wheel Senior Citizens Center in Syracuse to see the impact of Medicare. There, scores of elderly gather each day to socialize, play cards and other games, and share their meals. They chat happily about children and grandchildren and maybe a winter vacation. They also talk about joint replacement surgery, heart bypass operations and prescriptions that cost thousands of dollars a year _ procedures and medicines available to them only because of Medicare.

"Medicare is the best medical insurance in the world," said Roy Littlefield, 73, during a visit to the senior citizens center. "People our age get in trouble, medically, and we need it."

But Medicare's success is also at the root of its problems. With Americans living longer than ever, the growing elderly population has put demands on the system that its originators never imagined.

Between 1980 and 1995, Medicare costs grew at an average annual rate of more than 11 percent, ballooning from $32.1-billion in 1980 to nearly $160-billion in 1995. Medicare now consumes nearly 11 percent of the federal budget, double its share in 1980.

More ominously, Medicare is spending more money than it takes in for the first time in its history. It lost a record $3.3-billion in July. Medicare trustees estimate the program will go broke in 2001.

"There's not a whole lot of time to enact changes," said Brian Hickey, a spokesman for the Coalition to Save Medicare, a group of health care industry executives and senior citizens. "The public, however, has been left with the misperception that Medicare can continue without changes."

That perception was fueled by an election campaign that saw Democrats relentlessly attack GOP proposals as designed to undermine and eventually destroy Medicare. Many Republicans believe those attacks _ which they considered misleading and unfair _ almost cost them control of Congress.

In reality, Clinton's proposals to keep Medicare solvent were strikingly similar to plans passed by the Republican Congress. Both would have preserved current levels of benefits and propped up Medicare for at least eight years. Both would have gained much of their saving by capping reimbursements to hospitals and other providers. And both would have introduced more health care choices and competition into the system.

Analyses by the House Ways and Means Committee and the Congressional Research Service, a non-partisan wing of the Library of Congress, showed how close they were.

In this year's budget proposals, according to Ways and Means analysts, Clinton sought to save $124-billion from Medicare by 2002 while Republicans sought $168-million in savings. Clinton wanted to cut the growth of Medicare spending from about 10 percent a year to 7.5 percent; Republicans called for 7.4 percent growth rate.

Under Clinton's plan, the money spent on each beneficiary would have risen from $5,223 this year to $7,227 in 2002. Republicans would have let it increase to $7,174 _ a difference of $53. Insurance premiums would have grown from $42.50 per month in 1996 to $67.20 a month in 2002 under the president's proposal. Republicans would have increased premiums to $77 a month in 2002.

At a recent news conference, Clinton acknowledged he and Republican leaders came close to agreement on Medicare reform during last year's balanced budget negotiations.

"The obvious answer here," Clinton said, "is just go forward where we left off, with the Republican position and our administration's position, and I think we could have an agreement in next to no time."

The White House, however, is providing no other details about a possible compromise. Officials at the Health Care Financing Administration, which runs Medicare, said they won't talk about the program's future until the president proposes a budget in February.

Many domestic policy experts say political leaders can't wait much longer. They lament that Clinton and Congress failed to reach agreement in the last session of Congress.

"It is a matter of making moderate adjustments now or wrenching adjustments later," said Robert Reischauer, a scholar at the Brookings Institution, a liberal Washington think-tank. "The pain is unavoidable."

Elderly Americans worry the pain will mean fewer benefits, less choice, and higher premiums. Recently, at the Wagon Wheel Senior Citizens Center, regulars talked about lifetimes of work, the difficulties of surviving on a fixed income, and the precariousness of their positions.

"Most of us, when you get to this point, you have something," said Dominick Fragola, 73, a retired truck driver. "But that can disappear overnight in a hospital."

Rogers, the Auburn Memorial Hospital administrator, worries small hospitals that rely heavily of Medicare payments will disappear. He estimates Auburn could lose up to $7-million over the next seven years under so-called reform proposals.

Such a loss would not only curtail services, Rogers said, but threaten the survival of Auburn Memorial, the only hospital in Cayuga County. The next closest hospital is in Syracuse, 29 miles away.

"If you have a heart attack right now, I'm not going to get you to Syracuse," he said. "If you don't have access, you don't get health care."

In 14 years at Auburn Memorial Hospital, Rogers has experienced the rapid changes in health care: the rise of managed care and health maintenance organizations, the shift to outpatient services and the never-ending drive to cut costs.

He's also watched the county's population grow older, its economy struggle and the number of uninsured expand as plants close and companies cut back. Most tragically, Rogers said, he has watched health care transformed from a basic right to a commodity.

In a world of big insurance companies, huge health care conglomerates and powerful political lobbies, the problems of Auburn Memorial Hospital and the 80,000 people it serves seem to matter little anymore.

"We're a community hospital and we're responsible for everyone, from the richest guy with a big house on the lake, to the poorest guy who is homeless," Rogers said. "All I can do is ask the politicians, "Before you pursue any legislation, please measure the consequences at Auburn Memorial Hospital.' "

Newhouse News Service

Rob Gavin is a Washington correspondent for the Syracuse Post Standard/Herald Journal.

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