White House talks on deficit may lead to major Medicare cuts

Topics: Recession/Downturn, Market Trends, Strategy, Medicare, Reimbursement, Finance

July 8, 2011

A high-level White House meeting on Thursday included President Obama's proposal to significantly cut Medicare in hopes of reaching an agreement on the national debt.

Officials briefed after Thursday's meeting said Obama and the eight Democratic and Republican leaders were not able to bridge the divide on the issues of entitlement spending cuts or new tax revenue, but they agreed to set a goal of developing the largest possible package with savings of up to $4 trillion.

In recent days, the administration and Democrats have considered GOP-backed proposals that would cut tens of billions of dollars from Medicare and Medicaid, but they have said that the amount of the cuts will be dependent on Republicans' willingness to accept the tax increases. Congressional negotiators said the proposed cuts in entitlement spending could target payments to some health care providers without affecting the quality of care or the structures of the two programs.

The Obama administration recently set a July 22 deadline for lawmakers to reach a deal on budget and deficit-limit legislation, which would facilitate an increase to the federal government's current borrowing cap of $14.3 trillion. Lawmakers have until Aug. 2 to raise the federal debt ceiling.

According to the Washington Post, Obama challenged the leaders to "embrace an ambitious but politically painful strategy" to make changes to entitlement programs and raise revenue. After the meeting, Obama said the group would return to the White House on Sunday to "start engaging in hard bargaining that's necessary to get a deal done."

Ahead of Sunday's meeting, House Minority Leader Nancy Pelosi (D-Calif.) is scheduled to meet with Obama on Friday to discuss entitlement spending and strategies to advance the debate on the debt limit. In recent weeks, Obama has held similar private meetings with other top congressional leaders, including House Speaker John Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) (Sonmez, "2chambers," Washington Post,7/7; Montgomery/Kane, Washington Post, 7/7; Landler/Hulse, New York Times, 7/7).