Medicare proposal targets affluent seniors

WASHINGTON — The federal government would charge affluent seniors more for drug coverage and require doctors and hospitals to use electronic medical records under proposals released Friday by the Bush administration to corral rising spending in the Medicare program.

The provisions, quickly criticized by congressional Democrats, come in response to a forecast by the trustees who oversee Medicare that by 2013 more than 45 percent of Medicare's spending will come from general tax revenue, as opposed to dedicated payroll taxes and premiums paid by beneficiaries. Under a 2003 law, the White House must propose legislation to limit Medicare spending if the trustees pull that "trigger" for two consecutive years, as they now have done.

Medicare, which serves 44 million seniors, cost the government $437 billion last year, and general revenue funded about 41 percent of that. By 2013, it is expected to cost $678 billion, with the general-revenue share climbing to 45.1 percent.

In a letter Friday to House Speaker Nancy Pelosi, D-Calif., Health and Human Services Secretary Mike Leavitt outlined the proposals and wrote that Medicare is on an "unsustainable path" because of rising health-care costs and the aging of baby boomers. In its 2009 budget this month, the administration proposed slowing Medicare spending by $178 billion over five years but did not include those measures in Friday's proposal.

"Left unchanged, within 35 years Medicare would eat up every bit of the federal budget as we now know it," Leavitt said in a conference call with reporters. "We know that's not likely to happen, so one of two thing will occur: We'll either raise taxes in some future Congress, or they will have to do serious surgery to Medicare. ... We're quickly moving away from the point that we can solve this problem. We need to act on it."

Under President Bush's proposal, beneficiaries with annual incomes over $82,000 ($164,000 for couples) would be charged higher premiums for drug coverage, known as Part D. A similar requirement already exists in Part B, which covers visits to the doctor. The proposal would reduce government spending by $3.2 billion over five years, Leavitt said.

The administration also wants to shorten the time frame during which patients can file medical malpractice suits and limit damages for pain and suffering to $250,000 per incident. A third provision would give the HHS secretary the power to require use of electronic health records and tie payments to quality of care. Officials did not estimate those cost savings.