Medicare Hurting For Funds

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WASHINGTON, D.C.: Medicare is in worse financial shape than either the President or Congress expected, according to new government data. J.F.O McAllister of TIME reports: "Everybody recognized that the trend was reversing, and that the Trust Fund would begin to lose money, but the Administration expected that to happen later." The Hospital Insurance Trust Fund, which pays for hospital, nursing home and hospice care, lost $35 million in 1995. Analysts had predicted last April that the $130 billion fund would grow by $4.7 billion last year, and did not expect that demand would exceed revenue growth until 1997. The earlier-than-expected loss is due to a surge in Medicare hospital admissions after several years of declines, and a drop in income from payroll taxes. The Clinton Administration expected Medicare to remain solvent until 2002, and has staunchly resisted the changes GOP leaders have demanded to make the system financially sound. The troubling new figures should strengthen the GOP hand. While current budget proposals by both President Clinton and Congressional Republicans could bolster Medicare finances through 2011, McAllister says, "The real problem is that right after that, the Boomers hit." Without significant changes, the Medicare system is not prepared for the strain of providing benefits to the huge Baby Boom generation. For one thing, the payroll taxes of the too-small generation of workers behind it are not expected to be adequate. Neither political party, McAllister notes, is yet willing to play with that political dynamite.