Wealth Versus Health

SYNOPSIS: More on fuzzy math and deception by the Bush Administration

The Bush administration really, really dislikes sharing information with Congress. Dick Cheney refuses to release the records of his energy task force; Tom Ridge won't testify on homeland security; and last week Thomas Scully defied a subpoena from the Small Business Committee.

Who? What? If you are an American over 65, or are considering becoming one, you should pay more attention. Mr. Scully, you see, is the director of Medicare and Medicaid. The specific issue on which he refused to testify payments to providers of portable X-ray machines sounds arcane. But the real story here is the collision between tax-cut myths and fiscal reality, with Medicare caught in the middle.

The background is the recent surge in health care expenses. During the 1990's the rise of H.M.O.'s put a squeeze on medical bills; now there is nothing left to squeeze. So H.M.O.'s are sharply increasing their payments to health-care providers, and the federal programs overseen by Mr. Scully are under pressure to follow suit. Since these programs cost more than national defense, we're talking about a lot of money here.

Still, if medical care is a priority, which it surely is for the voters, why doesn't the government simply provide the necessary resources? You already know the answer: it's hard to reconcile realistic spending increases with plans for more tax cuts.

Last year the administration claimed that it could easily cut taxes without tapping the Social Security surplus. Those claims were false, but Sept. 11 provided cover: who cares about lockboxes when we're in pursuit of evildoers?

True, skeptics have raised a few questions. Given that we face a major new demand on the budget, shouldn't we reconsider a tax cut proposed in more peaceful times? (Instead, the administration wants to make the tax cut permanent.) Don't taxes normally go up in wartime, as a matter of shared sacrifice? And isn't it a little strange, given all the martial rhetoric, that the administration's recent 10-year budget proposal allocated more money to a second round of tax cuts ($665 billion) than it did to new defense spending ($625 billion)?

But as the cartoonist Tom Tomorrow has explained, the answer to all such questions is, "Why do you hate America?" A patriotic public is in no mood to question its leader's policies.

The really amazing thing is that raiding the lockbox wasn't enough. In the name of fighting terrorism the administration has in effect diverted $2 trillion of Social Security surpluses, previously pledged to debt reduction, to cover the revenue losses from tax cuts. But realistic projections now show permanent deficits in the federal budget as a whole. This threatens the administration's story line, which says that now is the time for even more tax cuts.

So there is intense pressure within the administration to dress up the fiscal picture by underestimating future spending health-care spending in particular. Robert Greenstein of the Center on Budget and Policy Priorities writes that the administration's budget "assumes an extraordinarily low rate of growth in Medicare costs." And since it would be hard to justify low projections of future cost growth if current costs are surging, there is also intense pressure to keep actual Medicare payments low, despite rapidly rising costs in the private sector.

And that brings us back to Mr. Scully's defiance. Any health-care professional will tell you that Medicare's payment rates are increasingly inadequate. Many physicians now turn away Medicare patients; and service providers, like the companies that do X-rays at nursing homes, are going out of business. When Mr. Scully discovered that he would have to face some of those service providers, he walked out. You can't blame him (except that he was breaking the law). After all, he's under orders to keep those numbers down.

The real lesson here is that things add up. The administration has been able to push tax cuts that mainly go to the wealthiest few percent of Americans, because the downside seems abstract; the middle class doesn't understand that those cuts will eventually starve programs that it counts on, like Medicare.

But the downside has already begun. There is a direct link between the administration's affluent-friendly tax cuts and the growing crisis of Medicare underfunding; it really is a case of their wealth versus your health.

Originally published in The New York Times, 4.19.02