* $400 to $600 billion in healthcare savings possible
* Hits likely for Medicare beneficiaries and care providers
* Medicare changes could be politically safe for lawmakers
By David Morgan
WASHINGTON, Dec 5 (Reuters) - With rival Democratic and
Republican deficit plans increasingly focused on Medicare,
experts say the two sides could be edging toward common ground
on important changes to the popular health insurance program for
seniors and the disabled.
None of the changes are assured and any specific decisions
would come only after resolution of the "fiscal cliff," the
combination of tax hikes and spending cuts that's driving the
But several ideas that have circulated among policymakers
for years are frequently mentioned as the parties get more
serious, and ever more specific, about how to control the
exploding costs of so-called entitlement programs including
The proposals most often discussed that would directly
affect Medicare's 52 million beneficiaries are more
means-testing, meaning higher costs for wealthier retirees, and
raising the Medicare eligibility age from 65 to 67.
Other proposals on the table would reduce payments for
hospitals, nursing homes, drug makers, insurers and physicians.
Medicare, a $590 billion-a-year program long seen as an
untouchable third rail in U.S. politics, has been augmented but
rarely trimmed. A change in eligibility would not alter
traditional benefits. But Medicare would not be available to all
senior citizens aged 65 and older for the first time since the
program's creation in 1965.
While Medicare has formidable allies who oppose program
changes for beneficiaries, including liberal Democrats, large
segments of the public and AARP, the powerful lobby for older
Americans, deeper sacrifices have moved closer to the center of
the public debate over the budget deficit, with some top
Democrats leaving the door to compromise ajar.
Cutbacks, along with spending reductions for other
healthcare programs including the Medicaid program for the poor,
could produce $400 billion to $600 billion in savings over 10
years as part of a deficit-cutting agreement Congress and the
White House must reach to avoid the so-called fiscal cliff.
Potential Medicare savings, combined with the $716 billion
in reduced payment increases for healthcare providers in the
program enacted under President Barack Obama's healthcare
overhaul, could come to more than $1 trillion over the next
"It's going to hit everybody," said Joseph Antos, health
expert with the conservative American Enterprise Institute.
Senate Minority Leader Mitch McConnell, in a Wall Street
Journal interview, said an increase in the Medicare eligibility
age would be a prerequisite for Republican willingness to accept
higher revenues -- though not higher tax rates -- as part of a
Asked during a television interview on Tuesday about
McConnell's proposal, Obama said that McConnell and John
Boehner, the Republican House of Representatives speaker, "know
that I'm prepared to make some tough decisions on some of these
issues," quickly adding that he can't ask Medicare beneficiaries
"to sacrifice and not ask anything of higher-income folks."
SAFE ROAD TO RE-ELECTION?
One of the president's closest allies in the Senate,
Illinois Democrat Richard Durbin, broached the subject last week
in a speech urging his left-leaning fellow party members to
accept the notion of Medicare changes.
"If anybody wants to talk about a later eligibility age for
Medicare, what I want to hear is the assurance and guarantee
that people ... will have access to affordable healthcare and
insurance" before they reach the age, Durbin said.
Some Medicare defenders have put forward plans to reduce the
program's spending without affecting beneficiaries. The Center
for American Progress, a liberal think tank, has proposed
trimming nearly $40 billion in healthcare costs simply by
requiring product-makers, service providers and insurers to
submit to competitive bidding.
Alice Rivlin, a White House budget director under President
Bill Clinton and a leading voice for bipartisan solutions in the
current deficit debate, says there is potentially a lot of
common ground between Republicans and Democrats, particularly on
healthcare. "But at the moment, it's hard to know what they're
talking about. All we're really seeing is numbers," she said.
The contours of the healthcare debate have been shaped in
part by Obama's 2013 budget proposals, which would trim more
than $350 billion from Medicare and Medicaid, and unspecified
demands for $600 billion in healthcare reductions from House
Raising the age of eligibility could save $148 billion in
Medicare spending over the next 10 years, according to the
non-partisan Congressional Budget Office. But critics say the
change would only shift costs onto employers and beneficiaries,
some of whom might have to forego coverage.
The savings would represent a 50 percent increase over the
$300 billion in Medicare c ost-cuts outlined in Obama's 2013
budget, which officials describe as the basis for the White
House bid to reduce healthcare and entitlement spending by $400
billion over 10 years.
The Obama budget would save $28 billion by increasing
Medicare premiums for wealthier beneficiaries. But the lion's
share of savings would come from changes in payments to drug
makers and providers.
Meanwhile, Republican lobbyists, looking to help healthcare
providers avoid further Medicare cuts, are also pushing to unify
Medicare deductibles and co-insurance rates, and possibly limit
the use of private insurance known as Medigap, in exchange for
establishing a ceiling on beneficiary out-of-pocket costs. There
are different deductibles and co-insurance rates for different
segments of the program and the push is to establish a single
deductible and single co-insurance rate, presumably at higher
rates than people pay now.
"The amount of the spending-reduction targets will determine
how far they go in terms of spending cuts and more fundamental
changes to Medicare, and secondarily what they do to Medicaid,"
said Drew Altman, president of the non-partisan Kaiser Family
"Whatever they do, they'll call reform, because it sounds
better. But really they're talking about cutting spending."
A Harvard analysis of polling data found that 47 percent of
Americans favor a higher eligibility age for Medicare and 54
percent are in favor of more means testing, suggesting that
lawmakers who are up for re-election in 2014 may not suffer
greatly by altering the equation for Medicare beneficiaries.
"In a world where things are not wildly popular in general,
these are the least unpopular things you can do," said Robert
Blendon of the Harvard School of Public Health. "It's a safe
(Editing by Fred Barbash and Eric Beech)
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