Revisiting the Medicare crisis

Medicare covers hospital admissions and outpatient services for 37 million elderly people, making it the biggest insurer in America, spending $200 billion. It is financed by a 2.9% payroll tax paid half by employers and half by workers. Donna Shalala, the secretary of health and human services, said that the fund was shrinking more rapidly because of higher than expected costs for home health care, skilled nursing, and hospices; because doctors and hospitals were performing more complex and costly procedures; and because revenues were less than expected.

Last year, the republican Congress sent President Clinton a bill to balance the federal budget in seven years. He vetoed the bill largely because he thought the proposed $270 billion cut in …