Washington A newly released study by the White House National Economic Council and Domestic Policy Council bolsters President Clinton's Medicare budget proposal, which he claims "uses competition and the best private sector practices" to control costs and "provides funds to give every older American ... a choice of affordable coverage for prescription drugs."

The state-by-state study breaks down the demographic and health care challenges that will face the Medicare program over the next few decades.

"This report is the most compelling evidence to date that we must strengthen and modernize Medicare for the long run, including adding a voluntary prescription drug benefit," Clinton told reporters. "With our economy strong, our budget balanced, our people confident, now is the time to deal with this important issue. The budget I propose does just that while maintaining our surplus and paying down our debt over the next 13 years to make us debt-free for the first time since 1835."

The study yielded some interesting findings, particularly in reference to Medicare's future enrollment. According to the study, elderly individuals will compose at least one-fifth of the population in 30 states by 2025, compared with no states today. This translates to about 62 million Americans being at least age 65 in 25 years, more than double the current 35 million mark.

"The (Medicare) trust fund is projected to go broke now by 2015, and the new report I am issuing shows why," Clinton said. "Not only will the senior population nearly double over the next 25 years, but already today, in 40 of our 50 states, one in 10 Medicare beneficiaries is 85 years of age or older. This is the fastest-growing group of seniors. And they require the greatest amount of care. And they will spend...almost a quarter of their lives on Medicare."

Demographically, the study shows that there are more women Medicare beneficiaries (57 percent) compared with men (43 percent). It also shows that in 15 states more than half of beneficiaries live in rural areas and that poverty among the elderly has been reduced by nearly two-thirds since Medicare's inception.

The entire White House report can be accessed on the Internet at www.whitehouse.gov/WH/New/html/20000229.html. -J.P.P.

Washington Medicare benefits are inadequate and should be changed, according to a new report from the National Academy of Social Insurance that addresses the long-term challenges Medicare faces and the issues involved in putting together a workable reform plan. The report, Restructuring Medicare: Next Steps, not only makes recommendations that are intended to pave the way for long-term reform, but it also provides a structure in which discussions about Medicare's future can move forward.

One of the issues that the report addresses pertains to Medicare benefits. Even though the health care industry has experienced some significant changes over the years, Medicare benefits have essentially remained unchanged since being implemented in 1965, the report said.

"Improvements in the Medicare benefits package are necessary not only to provide beneficiaries with protection from financial destitution...but also to allow health care providers to manage more effectively the kinds of health care problems found in the beneficiary population," the report stated.

In order to rectify this situation, the report recommends that HCFA be given greater flexibility in designing, testing and implementing new approaches for managing chronic illnesses, such as disease management programs that may include benefits not usually covered by Medicare. The report also presents certain enhancements to the benefits package that it believes would be needed.

"The benefits should more closely approximate the coverage that beneficiaries seek through supplementary insurance now, i.e. some coverage of prescription drugs, catastrophic coverage for total Part A and Part B and somewhat lower Part B co-payments," the report said.

In addition, a successful restructuring of Medicare depends on decisions about what Medicare pays for and what has to be purchased separately by beneficiaries.

"One set of goals could be to structure a benefits package that will better fit beneficiary needs, can be made understandable to beneficiaries so that they can make informed choices about buying the insurance they need and respond to incentives to use health servicescarefully, and can be used in a way that minimizes administrative expenses," the report stated.

Reimbursement is also touched on in the report, which concludes that certain difficult issues, especially the distribution of health risk in Medicare markets, will have to be addressed for reforms to be successful.

"The most robust methods currently available for Medicare," the report stated, "are those based on diagnostic encounter and administrative information detailing diagnosis and service use."

The report also endorses HCFA's ongoing efforts to implement a risk adjustment system, in compliance with the Balanced Budget Act of 1997 provisions. But at the same time, the report expresses concerns about the ability of available risk adjustment systems to protect beneficiaries, adding that research anddemonstrations are needed to evaluate the potential of certain methods-such as partial capitation-to structure appropriate payments to providers.

The report can be accessed at NASI's Web site at www.nasi.org. -R.P.