The special health care needs of the elderly.

Interest in Medicare, the government's second largest social program after Social Security, reached a new high in 1995, not as part of health care reform, but as a vehicle for deficit reduction and because of a desire by Congress to restructure the program to encourage enhanced choice for beneficiaries and greater use of managed care. Medicaid, a major payer of long-term care and financer of coverage for low-income elderly, also is slated to undergo major restructuring in the next few years. As Congress and the nation debate the future of these key programs for older Americans, a number of critical issues deserve attention. Medicare's costs are very high--but not necessarily unreasonable in the face of the demands on health care services for this part of the population. And even with these high costs, a number of important gaps in coverage remain a problem for seniors. Deductibles and copayments are also high--especially for hospital and skilled nursing services. But pressure for change may well lead to higher, not lower, cost-sharing requirements. Medicare remains a largely fee-for-service program at a time when the national health care system is shifting increasingly to a managed care environment. Moving Medicare in that direction is one likely option for change. While it is desirable to have Medicare move in concert with the rest of the system, a number of issues stand in the way of an effortless move to managed care for the elderly. Moreover, coordination of long-term and acute care services may be even more challenging in such an environment. Medicaid covers long-term care services for older Americans, but only for those who have depleted most of their assets and income. Even when people do become eligible, Medicaid covers primarily institutional care. But little is likely to change this picture in the next few years, and private efforts through expansion of long-term care insurance will likely provide only a partial solution.