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WBFO brings you NPR's live coverage of the Republican National Convention tonight from 9pm-11pm.

Trustees: Medicare Funds Will Be Depleted By 2017


It's MORNING EDITION from NPR News. Renee Montagne is in on assignment today. I'm Steve Inskeep.

Even in a time of trillion dollar bailouts, it can be hard to get your brain around the costs we have coming. President Obama's administration says the Medicare program is running out of money faster than expected. So is Social Security. Neither program is taking in money quickly enough to handle all the baby boomers heading their way. And in a moment, we'll get a diagnosis from David Wessel. We began with the plan to add even more expenses to overhaul health care for the rest of us.

NPR's Julie Rovner reports.

JULIE ROVNER: About the only person who was upbeat about health care yesterday was the president himself. Here's what he said at a photo op after meeting with a group of business leaders to talk about how they've managed to cut their worker's health care costs.

President BARACK OBAMA: We're doing some stuff on health care because I think the country is geared up. Businesses are geared up. Families are geared up to go ahead and start solving some of our extraordinary health care system problems.

ROVNER: Down the block, Treasury Secretary Timothy Geithner was far more somber as he delivered the bad news about the state of Medicare's finances.

Secretary TIMOTHY GEITHNER (Department of Treasury): Medicare's Hospital Insurance Trust Fund is projected to become exhausted in 2017, two years earlier than projected in last year's report.

ROVNER: Health and Human Services Secretary Kathleen Sebelius said the news about Medicare should make lawmakers redouble their efforts on a full health system overhaul.

Secretary KATHLEEN SEBELIUS (Department of Health and Human Services): The only way to truly slow Medicare spending is to slow overall health care spending to comprehensive and carefully crafted legislation.

ROVER: Over at the Senate, that's pretty much what the Finance Committee was trying to do at the last of three public sessions prior to writing an actual health care bill. First, however, advocates of a single payer government-financed health system disrupted the proceedings for the second week in a row.

Unidentified Woman: …Americans for 30 years.

Senator MAX BAUCUS (Democrat, Montana; Chairman, Senate Finance Committee): Here we are. You know, standard recess until the police can restore order.

Unidentified Woman: We want single payer at this table.

ROVNER: And for the second week in a row got themselves arrested at the direction of Committee Chairman Max Baucus of Montana. Baucus, however, insisted he wasn't purposely excluding those who back a single payer plan.

Sen. BAUCUS: It's a long haul process. And so those of you in the audience who are not panelists and wish to be heard, I urge you just to contact my office. We'll figure out a way to talk to you. I'll figure out a way to listen to you. I'll be there personally.

ROVNER: But when the protest died down, senators took on and even more contentious issue: how to finance what could be a $1.5 trillion price tag for the health bill they're about to write. Several of the experts summoned to advise the senators had the same suggestion. This came from health economist Gail Wilensky, who advised for Republican presidential candidate John McCain.

Dr. GAIL WILENSKY (Health Economist): The first one is to go after the tax treatment of employer sponsored insurance. It's regressive, it's inefficient and it's a lot of money.

ROVNER: She's referring to the fact that workers don't pay tax on the value of health insurance provided by their employers. McCain campaigned to eliminate that tax break last year, so it's not surprising Wilensky would be for it. But here it was also being endorsed by MIT political scientist Jonathan Gruber, considered far more of a liberal.

Professor JONATHAN GRUBER (Political Scientist, MIT): This is a large amount of dollars we're talking about. It's about $250 billion as of a year two ago, making it the second largest federal health care program in America.

ROVNER: Now Chairman Baucus was quick to make clear he wasn't going to go as far as Senator McCain did last year and suggests getting rid of the tax exclusion entirely.

Sen. BAUCUS: To be honest, I don't think we're going to repeal the exclusion. That's just not going to happen.

ROVNER: But he left he door wide open for possible changes that stopped short of getting rid of the exclusion. For example, one possibility, said John Shields of the number-crunching Lewin Group, would be to make people pay taxes on only the most expensive health care policies.

Mr. JOHN SHIELDS (The Lewin Group): The tax exclusion for health benefits, if we were to cap that at, say, the average amount per worker right now, you'd raise about $700 billion in revenues over 10 years.

ROVNER: Meanwhile, back at the White House, officials continued to stress that the president doesn't like the idea of potentially taxing health insurance benefits. But they also said that redoing the health care system, including Medicare, is a long process, and this is just the beginning.

Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.