Medicare emerging as prime target in US 'fiscal cliff' talks

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 discussion.

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

Medicare.

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 decade.

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