Medicare And the Fiscal Cliff: To Cut Or Not

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"It's clear that it would reduce federal spending and it can do so in a very immediate sense, depending on how it's phased in," Tricia Neuman, director of the Medicare Policy Project at the Kaiser Family Foundation said in an interview with NPR. "However, while federal spending will go down, costs to others will go up. In fact, total spending will rise."

And, according to a January 2012 Congressional Budget Office report: "Many of the people who would otherwise have enrolled in Medicare would face higher premiums for health insurance, higher out-of-pocket costs for health care, or both."

The same report, however, noted that raising the eligibility age from 65 to 67 would cut the program's cost by $148 billion from 2012 to 2021.

Related: Will the Mortgage Deduction Survive the Fiscal Cliff?

During the 2011 debt ceiling negotiations, President Obama also expressed support for means-testing Medicare, which would save money but lead to higher payments by wealthier Americans. Essentially, those with the "means," pay more.

"I've said that means-testing on Medicare -- meaning people like myself -- you can envision a situation where, for somebody in my position, me having to pay a little bit more on premiums or co-pays or things like that would be appropriate," Obama said at a July 2011 news conference.

Last week, however, White House spokesman Jay Carney declined to say whether the administration had put means-testing on the table again in this round of negotiations although Republican House leaders included it as part of their proposal on Monday.

"I'm not going to get into the specifics and negotiate line items on what those reforms might look like as part of an overall package," Carney said at a Nov. 26 White House briefing.

Many Capitol Hill Democrats have been reluctant to back proposals that would result in benefit reductions, and some top Democrats like House Minority Leader Nancy Pelosi, D-Calif., argue that entitlement programs should not be part of the fiscal cliff negotiations at all.

"Those issues -- Social Security, Medicare, Medicaid -- they should be in their own realm," she said at a Nov. 17 news conference.

But if both sides are serious about squeezing a proposed $400 billion from Medicare as part of a comprehensive deficit-reduction deal, Pelosi and other wary Democrats will have to find room to compromise.

Read more about the Fiscal Cliff:

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Related: Why changing Medicare is so controversial.

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Related: Ending charitable deduction would help budget, hurt charities.

Related: Meet a 'small business' at center of 'fiscal cliff' debate.

Related: Corporate tax loopholes and the 'fiscal cliff'.

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