Imagine a presidential election year with major Medicare legislation before Congress. The bill proposes to slash what Medicare pays hospitals, doctors, home health agencies, labs, health-maintenance organizations and drug plans. It raises Medicare payroll taxes and what patients pay per month for physician coverage. It even cuts the types of patient care included, perhaps halving the MRI and CT scans now insured.

This bill comes with special rules to spur enactment. The president must propose the bill in February, and Congress must review and vote on it in the spring and summer — while primaries and party conventions take place.

You’re imagining 2008. That’s when the “cost trigger” in the 2003 Medicare prescription-drug law collides with the program’s rising costs.

General tax revenues (rather than the program’s payroll tax) pay for Medicare doctors, non-hospital services and, starting in 2006, prescription drugs. Administration and congressional analysts expect the percentage of Medicare funds supplied by general tax revenues to jump from about 38 percent now to 43 percent next year, and by 2012 to reach 45 percent — which sets off the cost trigger.

The trigger has a seven-year fuse. In 2006 and 2007, the Medicare trustees will very likely make official predictions under the trigger law that the 45 percent tax threshold will be reached within seven years — by 2012 or sooner. (They already predicted in 2004 and 2005 that the 45 percent threshold would be reached in 2012.) The trigger law requires sweeping cost cuts and revenue increases to be proposed and voted on in the year that follows those first two official warnings. That’s 2008.

According to the Medicare trustees, the program’s hospital fund will to run dry in 2020. While the 15 years until then may seem adequate to fix the program, that’s false comfort because in just three years — 2008 — Medicare must be brought into balance with its financial resources, while the overall federal deficit continues at $400 billion or more. If Congress doesn’t act in 2008, the trigger requires even more draconian measures on the same hurry-up schedule in 2009 or until the problem is fixed.

All of which raises a question that a lot of other people already have asked: Why on earth is President Bush wasting time on Social Security when it’s Medicare that demands attention? As practically everyone concerned with these issues says, the Medicare financial hole is two to four times as deep as the Social Security hole, depending on which figures you compare. And, as explained above, the Medicare cost trigger is a law that demands action soon.

The big picture of how Medicare relates to Social Security is this: A Medicare solution must be in place before any Social Security solution can be trusted. Put another way, a Social Security solution must follow or be part of a Medicare solution.

Bush’s positions on Medicare are that we already dealt with it in 2003 and that the cost solution is managed care. The 2003 law works largely through managed care — by helping senior citizens buy drugs through pharmacy-benefit management firms, which are little “HMOs” that deal only in drugs, and by funneling billions of dollars to regular HMOs so that they can attract millions more Medicare patients to plans for overall care.

But as a cost solution, managed care just doesn’t cut it. Here’s how Medicare will be “managed” under the 2003 law. There will be hundreds of drug plans in 34 different regions. There will be many dozens, maybe hundreds, of overall-care plans in 26 different regions. All the drug and overall-care plans will have their own monthly payments, coverage rules and exclusions, copayments, paperwork rules, etc. All will have their own administrative costs and business strategies, all will buy drugs separately and most will earn profits. Adding these plans to the 300-plus HMOs that already enroll about 12 percent of the program’s patients, next year there will be 600 to 1,000 little versions of Medicare in addition to the “traditional” Medicare program.

According to Drs. Brian Biles of George Washington University and Robert Berenson of the Urban Institute, Medicare HMOs have for years cost more than the traditional program. In 2005, the government is spending 16 percent more per HMO patient than per traditional patient — $1 extra for every $6 of traditional outlays.

That’s because HMOs are much less efficient. Traditional Medicare spends 2 cents of every dollar for administration, while HMOs spend 10 to 20 cents for administration and profit.

We need a whole new approach to Medicare — hopefully well before 2008.

Simon is a healthcare reporter and lawyer in Silver Spring, Md.