Medicare, Medicaid cuts may be part of averting fiscal cliff

Expectations are high. President Barack Obama and House Speaker John Boehner, R-Ohio, say they want to avert the fiscal cliff, that toxic mix of expiring tax breaks and automatic spending reductions set to begin in January. If Republicans make concessions on taxes, Democrats and the president say, they’ll move on entitlements, such as Medicare and Medicaid, as part of a larger deal to reduce the federal deficit.

But we've been here before. Bipartisan coalitions have produced numerous ideas on how to change entitlements and taxes, but the recommendations go nowhere.

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"Definitely the term 'entitlement reform,' as I always say, rolls off the tongue so easily," said G. William Hoagland, senior vice president of the Bipartisan Policy Center and a former staff director of the Senate Budget Committee and a top budget aide to former Senate Majority Leader Bill Frist, R-Tenn. "It's hard to get any savings in (Medicare and Medicaid) unless we’re talking about a reduction in benefits or a reduction in reimbursement rates."

"When you get beyond the rhetoric, it’s going to be very difficult," he said.

Lawmakers are wrestling with finding a balance between asking beneficiaries to pay more for Medicare services and reducing payments to Medicare providers, such as hospitals and nursing homes. Those providers, who are already expecting their Medicare payments to grow at a slower rate over the next decade as part of the 2010 health law, likely would fight additional cuts. And beneficiaries, many who are on fixed incomes, will not want to pay more for Medicare services.

Either decision could have sweeping effects on the program. "You don’t just get to turn a dial and have it not resonate, We need to think about our risk pool, we need to think about how the program works," said a Democratic staffer on the Senate Finance Committee.

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Experts maintain that changes in entitlements are bound to be part of any "grand bargain" to reduce the deficit. "It is hard to imagine a deal without Medicare savings," said Tricia Neuman, director of the Kaiser Family Foundation's Program on Medicare Policy (KHN is an editorially independent program of the foundation.)