AMA admits Medicare needs major overhaul

January 15, 1995|By Knight-Ridder News Service

SAN FRANCISCO -- The powerful American Medical Association for the first time is calling for an overhaul of Medicare, including taxing well-off elderly people who receive Medicare benefits to ease the burden on younger, poorer taxpayers.

Dr. Lonnie Bristow, president-elect of the AMA, said the soaring costs of Medicare were "a train speeding out of control."

Unless those federal costs are contained, and waste and overuse of medical services curtailed, "there won't be any Medicare at all for the next generation," Dr. Bristow warned Friday in a speech to San Francisco's Commonwealth Club.

"It will take nothing less than a transformation to turn Medicare around," he said.

Medicare is the federal program that pays for hospital and doctor bills for the 36 million Americans age 65 and older. It has long been regarded as a political sacred cow. Never before has the AMA called for such major changes in the program.

Dr. Bristow, a San Pablo, Calif., physician, said that "Band-Aid" solutions, such as decreasing Medicare payments to doctors and hospitals, are not enough to save the system from going bankrupt.

Previous attempts to make substantial changes to Medicare have been resisted by the nation's elderly.

A spokeswoman for the American Association of Retired Persons said the organization had not yet reviewed the AMA's proposal and had no immediate response.

Republicans have set Medicare as a prime target for budget cuts.

The cost of the Medicare program has soared in recent decades and threatens to swallow an ever-greater portion of the federal budget. Dr. Bristow said it takes up 12 percent of all federal spending. Medicare's share of federal spending will increase to 18 percent in 10 years unless changes are made, he said.

At the same time, the baby-boomer generation is on the edge of eligibility for Medicare. As this group retires, the program could collapse at the time most people are expecting to receive benefits, he said.

Dr. Bristow proposed several changes. They include:

* Asking people to start medical savings accounts that could be tapped for part of the cost of medical care in their retirement years.

* Making financing more equitable by asking those who have a lot of money to pay more for their medical coverage than those who don't.

* Removing price controls to open up Medicare to price competition.

DTC * Simplifying the bureaucracy and rules.

* Eliminating wasteful "defensive medicine" practiced by doctors worried about lawsuits.

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