Medicare's ailing hospital fund could be preserved from bankruptcy partly by moving home health-care expenses to a companion fund, Health and Human Services Secretary Donna Shalala said Thursday.
Republicans opposed such a move, calling it "financial gimmickry.""If we move obligations and responsibilities of the trust fund and say `Now, we are going to pay for them out of the general treasury,' we have increased the operating deficit," said House Ways and Means Chairman Bill Archer, R-Texas, at a hearing of his committee.
But Shalala said it would be appropriate to shift the $55 billion, since other, similar nonacute health-care costs already are paid for out of a portion of the Medicare budget funded with general revenues.
Shalala said senior citizens would not have to pay higher premiums with such a shift.
"We should not alarm our beneficiaries," said Shalala, who appeared with Treasury Secretary Robert Rubin for questioning about Medicare problems.
Medicare's board of trustees - of which Shalala and Rubin are members - reported Wednesday that the hospital fund would be broke by 2001 if no changes are made.
Archer said Thursday: "The trustees' more likely pessimistic projection states that 1999 will be the Medicare's last year. Alarm bells should be going off across America."
"Stop scaring seniors," said Rep. Pete Stark, D-Calif., to the Republicans on the committee. "Twenty-five times, trustees have told us that at some date in the near future Medicare would run out of money - and we have always done what was necessary to keep the program functioning."
He accused the GOP of using the trustees report "to cry `the sky is falling.' " in order to propose "radical restructuring of Medicare."
At a news conference releasing the report Wednesday, Shalala said: "By taking some costs out of Part A, as part of our own financing plan, it allows us to - along with some other changes - extend the program into 2006."
The trustees also recommended establishing an advisory commission to guide the restructuring changes that probably will be needed to save Medicare beyond 2006. Republicans agree with this idea.
Beneficiaries pay 25 percent of the cost of Part B with monthly premiums and the other 75 percent comes from general government revenues. The premiums are adjusted annually to reflect costs of the program.
In response to Shalala's proposal, Sen. Bob Dole, President Clinton's likely opponent in November, said: "The solution cannot be a shell game, moving money from one part of Medicare to another. A tax increase is also not the answer."
Rubin said the president was proposing $116 billion in Medicare savings to keep the program solvent until 2006, while the Republicans' last proposal was $168 billion in savings.