MISSOURI COMMENTARY: CLINTON, GOP SWITCH ON MEDICARE

Leave it to the actuaries to confuse the political equation. The centerpiece of the fall election was to be the great Medicare debate. Bill Clinton was to stand at the ramparts protecting Medicare against the Republicans who wanted to gut the program and use the savings to fiance a tax cut that primarily benefited the rich.

For their part, the Republicans were to attack from the bulwark of fiscal prudence, invoking their own version of a new Medicare -- forget, if you please, this stuff about the savings going for a tax cut.

Up pops the chief actuary of Medicare, Richard Foster, declaring that the program had a worse financial year than expected in 1995. It fell into modest red ink. Trouble is that red in wasn't predicted to hit until 1997.

Medicare costs escalate 8 percent a year. Medicare revenues increase 4 percent a year. With mathematical skills considerably below those of Albert Einstein, one can see the problem down the road. For Medicare, the trust fund exhausts its surplus in 2002 (or maybe a year sooner) and becomes a catastrophe in 2013 when the baby boom generation starts drawing its benefits.

Had the Republicans not co-mingled Medicare reform and tax cuts, they would have been able to claim the moral high ground as the protectors of the solvency of the system.

Had Clinton dusted off some of his old rhetoric of the 1994 health care debate, he might have been the guardian of this legacy of the Great Society. Time and again, in 1994, Clinton pointed to the crisis in the American medical care system. The system, of course, includes Medicare. The essence of his complicated plan called for shifting people into health care alliances, large managed care organizations wherein competitive pressure within the system would drive down the costs.

But the Republicans will not surrender the tax cuts and Clinton will not now accept drastic changes in Medicare. It's close to a sacred form of health care coverage. Fee-for-service medicine -- pick your own doctor, go to the doctor when you want, go to all the specialists and laboratories the doctor may select -- is inherently incapable of cost constraint. Yet, back in 1994 when they opposed the Clinton health package, the Republicans claimed that fee-for-service medicine was a God-given American right to be preserved at all cost.

Everyone, Republican or Democrat, knows that a publicly funded fee-for-service system can't last forever. For now, the most touted answer is managed care -- although it has some serious imperfections. Typically, managed care is an HMO consisting of a group of physicians who provide services at volume rates. The physician networks and participating hospitals receive a set monthly fee for every subscriber assigned to their practices or likely to be admitted to their hospitals.

The primary care physicians get a fee -- called a capitation fee -- and various specialists have contracts with the HMO to do specified work. All the fees and contractual arrangements are significantly lower than the fee-for-service method. That's the good part.

What's not so good is that every time a capitated doctor performs a service or admits a patient to a hospital, it costs him something. It's to his and the HMOs economic advantage not to refer the patient to a specialist or not to admit the patient to a hospital. The doctor is the "gatekeeper." On the one hand, this may be good to control the frivolous utilization of expensive medicine. On the other hand, the financial well-being of the physician and the HMO are in potential conflict with the interests of the patient.

In one of those wonderful flip-flops that can come in politics, the Republican Congress, faced with trying to produce ways to cut Medicare costs, has opted in part for Clinton's old managed care concept. With some sweeteners and inducements added, they want to draw large numbers of the 37 million Medicare recipients into managed care. (Only four million are in managed care today.) Clinton somehow doesn't seem as excited about the managed care concept now as he was two years ago.

So far Clinton has won the political debate. For a popular program -- and Medicare is hugely popular -- the status quo is the more comfortable political position. But as the Medicare actuary Mr. Foster shows, the status quo cannot last forever. Regardless of the illusions of the '96 election campaign, the next president and the next two Congresses will have to deal with the problem. The Medicare ills won't evaporate.

~Tom Eagleton of St. Louis is a former U.S. senator from Missouri.