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For example, by 2030, under the plan, typical 65 year olds would be required to pay 68 percent of the total cost of their coverage, which includes premiums, deductibles, and other out-of-pocket costs, according to CBO.Ìý That compares with the 25 percent they would pay under current law, CBO said.

The GOP budget proposal also would raise the eligibility age for the politically popular program – and repeal big chunks of the health care overhaul law approved by Congress last year.

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ÌýRyan, Van Hollen Duel On Medicare Spending In Proposed GOP Budget

ÌýHouse Republican Budget Plans: What It Means, What’s Next

Budget Committee Chairman Paul Ryan of Wisconsin unveiled the fiscal 2012 budget at a packed press conference where he was flanked by Republican members of the budget panel.Ìý The proposal comes amid growing concern over the federal budget deficit and is part of an overall GOP effort to reduce federal spending by at least $5 trillion over the coming decade.

“Washington has been making empty promises to Americans fromÌýa government that is going broke,” Ryan said. Unless something is done, “the red ink is going to destroy our economy.”

Besides overhauling Medicare, his 10-year budget proposal also would give states more control over Medicaid, the state-federal program for the poor, but cut the amount states would receive for the program from federal coffers by hundreds of billions of dollars over a decade.

Americans would not be required to buy health insurance, under the proposal – and employers would not have to offer it either.Ìý States would not be on the hook to setÌý up new insurance marketplaces.Ìý

The changes immediately drew criticism from Democrats and advocates for the elderly and the poor.ÌýMany zeroed in on proposed changes to the Medicare program.ÌýThe Ryan proposal would do away with the traditional Medicare program and shift beneficiaries into private insurance plans in 2022, under a model called “premium support.”

Plans And Proposals

• CBO Outlines ‘Key Features’ Of Ryan Budget Proposal
• Resources & Proposals For Curbing Medicare Cost Growth
• Understanding Rep. Ryan’s Plan For Medicare
• Health On The Hill: What It Means, What’s Next
• Video: Ryan, Van Hollen Duel On Medicare Spending In Proposed GOP Budget

Medicare enrollees would be given a set amount from the government to purchase private plans. Those plans would cost considerably more than traditional Medicare, the CBO says, partly because Ìýprivate plans pay hospitals, doctors and other providers more and have higher administrative costs. At the same time, enrollees would also pay a higher percentage of the overall cost of their coverage.

“What CBO is saying is beneficiaries would pay much less under traditional Medicare for two reasons.Ìý The overall cost of the plan would be much cheaper and they would pay a lesser share of that less costly plan,” said Edwin Park of the left-leaning Center on Budget and Policy Priorities.

Ryan’s proposal also would scrap the health care law’s Medicaid expansion and repeal a voluntary long-term care insurance program as well as cancel an advisory board created in the law to recommend changes to Medicare spending.

Ryan appears to have retained the health law’s Medicare payment cuts to hospitals and Medicare Advantage plans.ÌýÌý

Chip Kahn, president and chief executive officer of the Federation of American Hospitals, said that Ryan’s plan to repeal the law’s coverage expansions but keep the provider cuts “will severely impact access to essential medical care for seniors, as well as the lowest income Americans.”Ìý In last November’s Ìýelections, Republicans criticized the Democrats for the Medicare provider cuts, saying they would jeopardize seniors’ access to care.ÌýÌý

“They’ve taken those savings — the same ones that they’ve criticized — in their plan,” Budget Committee ranking member Rep. Chris Van Hollen, D.- Md. said, adding that “the health care reforms enacted in the Affordable Care Act, which they say they’re repealing, they’re not repealing at all.”

The CBO highlighted key features of the proposal, based on information from Ryan’s staff and its own analysis, including:

— Starting in 2022, the eligibility age for Medicare would increase by two months per year until it reached 67 in 2033.

— The so-called “doughnut hole” in the Medicare prescription drug benefit – in which beneficiaries pay 100 percent of drug costs – would continue under the Ryan plan.Ìý The health law passed last year calls for the coverage gap to be ended by 2020.

— The private plans offered to Medicare enrollees starting in 2022 would have to comply with a standard for benefits set by the Office of PersonnelÌý Management, and would have to charge the same premiums for all enrollees of the same age.

— The premium support payments would vary depending on the health status and the incomes of the beneficiaries.

The CBO report also said that in 2022 the average government payment for a 65 year old in Medicare would be $8,000. In each successive year, it would increase to reflect inflation and the enrollee’s age. Patients’ share would rise sharply. Higher-income beneficiaries would get a lower premium support payment.

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The t, created just after the law passed, is about to be folded into the federal Medicare agency, signaling a major organizational shift just months after the office was created, administration officials said.

In addition, Michael Hash, who has been serving as a top White House health adviser, has taken the reins of the Office of Health Reform at the Department of Health and Human Services. Hash succeeds Jeanne Lambrew, Ìýwho has been director of the office since May 2009 and has played a central role on the health law. Lambrew, a former aide to President Bill Clinton, will stay on at HHS as an adviser to Secretary Kathleen Sebelius.

Also, Dr. Ezekiel Emanuel, a health care adviser in the Office of Management and Budget and brother of former White House chief of staff Rahm Emanuel, departed earlier this week,Ìýan administration official confirmed.ÌýHeÌýreturned to his job at the National Institutes of Health, where he leads the Department of Bioethics.ÌýHe was temporarily detailed to the White House in 2009.

The insurance oversight office was headed by , who battled with insurance companies both as a Missouri official and a class-action litigator. He’ll become a senior adviser to Sebelius.

The office will become part of the Centers for Medicare and Medicaid Services, and will be managed by Marilyn Tavenner, deputy administrator of CMS.

HHS officials, in emails to reporters, said that the insurance office was created to quickly develop new policies, and that now that it’s time to implement those strategies, “it makes sense to house this Office within an operating division. It not only builds upon existing expertise in managing operations but it also will result in a more efficient use of resources.”

Given the heated politics of the health care law, some analysts suggested that the administration was trying to protect the office by making it part of the larger Medicare agency. Republicans, who in the November elections won control of the House, have scheduled a vote on repealing the health law for Wednesday and have threatened to cut off funding to individual programs if the repeal effort fails, as expected.

“This looks like another defensive move by an administration anticipating tough challenges from a Republican House,” said , a health care consultant and former RepublicanÌýaide on Capitol Hill.

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Such subterfuge won’t be necessary beginning Sept. 23. A provision of the new health care lawÌýthat bars insurers from denying coverage of children up to 19 with preexisting medical conditions takes effect. But parents of sick children may still find other challenges, including the availability and cost of the coverage.

“You may have policies that are available to you, but will it be affordable? The reality is it may not be,” says Brian Webb, manager of health policy and legislation for the National Association of Insurance Commissioners.

Jennifer Howse, president of the March of Dimes Foundation, says that while she strongly supports the provision, she’s worried that the policies “may be prohibitively expensive,” in part because federal subsidies and limits on out-of-pocket costs won’t kick in until 2014. She’s also concerned that some insurance companies have decided to discontinue the sale of policies for children only. Child-only policies make up about 8 to 10 percent of the individual insurance market.

For years, insurers – principally those in the individual insurance market — have denied coverage to children, as well as adults, with medical conditions. In some cases, they have accepted them but refused to cover their preexisting conditions for a set period. Now, such practices are banned for children, and will be prohibited for adults in 2014.

The Department of Health and Human Services, which is writing the regulations implementing the law, estimates that 31,000 to 72,000 uninsured children with preexisting conditions will gain coverage due to the provision between now and 2013. And 90,000 insured children will get coverage for preexisting conditions that have been excluded from coverage, the department estimates.

Ìý

The new rules apply to all employer-sponsored health plans and new individual policies. The vast majority of the uninsured children who will benefit are in families that buy policies on the individual market; most employer-sponsored plans cover people with preexisting conditions, though they sometimes delay coverage of the conditions.

ÌýThe administration has estimated that the cost of getting insurance for a child will likely be no more than double the standard rate, and in some other states, less than that. Jennifer Tolbert of the nonpartisan Kaiser Family Foundation says that “while families will likely have to pay more to cover a sick child who had previously been denied coverage, the benefits of having a child insured are significant.” (KHN is part of the foundation.)

The cost of coverage could depend on where the family lives. “Some states are looking at limiting the amount that a plan can charge an individual family for enrolling a child with a preexisting condition,” says Sabrina Corlette, a research professor at the Health Policy Institute at Georgetown University. Insurers could also decide to spread the risk among a pool of applicants, which would lower premiums.

Ìý

Other states take a hands-off approach to insurance rates. “So if you have somebody coming with juvenile diabetes, they’ll be rated based on that fact,” says Webb of the NAIC. “It could be very unaffordable.”

Under the department’s regulation, insurers will set up open-enrollment periods – a specific period when children with preexisting conditions can be enrolled. The goal is to make sure that parents don’t sign up their children only when they get sick. That causes “adverse selection,” and can doom an insurance plan. But it’s not clear exactly how the open enrollment period will work – or what would happen if families wanted to sign up their kids outside the open enrollment period.

An administration official said the department is trying to protect children but also wants to insure that carriers don’t abandon the market because of financial perils.

Ìý

Some parents have had to make difficult decisions to try to get coverage for their sick children. Last November, Nicole Romano, 33, gave birth to her son Grayson three months early. He weighed one pound, eight ounces, and has required intensive medical treatment. In May, Ms. Romano, who lives in Myrtle Beach, S.C., and was working at a small advertising agency, lost her health care coverage when her boss ended it for all employees.

She and her husband decided it would be too expensive to add her and their two children to his coverage, so she applied for a family policy in the individual market. The insurer accepted her and her six-year-old daughter, but rejected her premature son, saying he didn’t reach height and weight requirements.

Ìý

So “we pay everything out of pocket,” she says, including equipment such as an apnea monitor; a device to measure the oxygen level in Grayson’s blood and home oxygen tanks. In July, when Grayson got sick, the couple ran up $3,500 in medical bills.

Meanwhile, Ms. Romano decided to switch jobs, in part to get her son enrolled in a group health plan. She and her children will get coverage beginning in November. But given the new requirement that insurers cover sick children, she wonders whether she should try to could get a better deal on the individual market.

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The latest found that 43 percent of Americans viewed the law favorably – down from 50 percent in July – while 45 percent held unfavorable views.Ìý(Kaiser Health News is a program of theÌýfoundation.) That means public opinion is back to where it was in May, despite months of effort by the administration to talk up the benefits of the new law.

But before Republicans rejoice, they might look at another part of the poll, which found that the likely impact of the law on the November elections hasn’t changed much in recent months, despite spirited attacks on the law. Registered voters remain split in three roughly equally-sized groups: voters likely to oppose a candidate who supported the law; those likely to support a candidate who backed the law, and those who say their vote won’t be affected one way or the other.

“Public opinion on health reform has been stuck in a fairly narrow band and is not changing dramatically,” said Drew Altman, president and CEO of the Kaiser Family Foundation. He added that it’s not clear whether the law will play a significant role in the election, considering the public’s overriding concerns about the troubled economy and unemployment.

Indeed, asked to name the two issues they hope to hear about from congressional candidates, voters most often mentioned the economy, with health care coming in a distant second. The third issue was immigration.

Not surprisingly, there continues to be a sharp partisan divide on the health care issue, with 68 percent of Democrats supporting the law and 77 percent of Republicans opposing it. But Republicans have an edge in intensity: 62 percent feel “very” unfavorably toward the bill, compared to 33% of Democrats who feel “very” favorably, according to the poll.

Some parts of the law are more popular than others, the poll showed. For example, about three-quarters of Americans support providing subsidies to low- and moderate-income Americans to buy coverage, while 70 percent look unfavorably on the requirement – known as the individual mandate — that nearly all Americans buy health insurance or pay a fine.

The survey was conducted Aug. 16 through Aug. 22, among a national representative random sample of 1,203 adults, most of whom said they are registered to vote. The margin of sampling error for the total sample is plus or minus 3 percentage points, although the margin of sample error may be higher for results based on subgroups.

This is one of KHN’s “Short Takes” – brief items in the news. For the latest from KHN, check out our News Section.

Ìý

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Yes, there’s plenty of time to change the bill. But political analysts say a final overhaul bill would more likely look like this measure than the version already approved by the House because Senate Democrats barely could agree on sending it to the floor for debate. In short, there’s not much political room for major changes.

Here are some examples of what lies in this :

Nursing Mothers GetÌýA Break

Employers would be required to provide an unpaid “reasonable break time for nursing mothers” in the first year after giving birth. Women would be provided a private place, other than a bathroom, to use a breast pump. The provision exempts companies with fewer than 50 workers if the requirement would impose “an undue hardship,” a determination left to the employer to make.

This provision was inserted by Sen. Jeff Merkley, D-Ore., who in June introduced the Breastfeeding Promotion Act. Merkley is promoting breast feeding partly as a way to cut health costs. He cites showing breast-fed children have a lower rate of disease and illness in their lifetime.Ìý

But employers see yet another expense. “Every additional mandated rule further burdens employers who are struggling to keep jobs afloat,” says Neil Trautwein, vice president of the National Retail Federation.

Twenty-four states already have protections for nursing mothers in the workplace, according to the National Conference of State Legislatures.

Learning To Be An Adult Being a teenager is tough.ÌýThe Senate wants to help with a provision allocating $400 million fromÌý2010 to 2015 to help teens make the transition to adulthood.

The money goes to states primarily to set up sex education programs. But the money can also be used for “adult preparation” programs that promote “positive self esteem, relationship dynamics, friendships, dating, romantic involvement, marriage and family interaction.”

In addition, the programs can teach financial literacy and other skills such as goal setting, decision-making and stress management. About $10 million of funding would go to “innovative youth pregnancy prevention strategies” in areas of the country with high teen birth rates.

The Personal Responsibility Education for Adulthood Training funding was approved as an amendment in the Senate Finance Committee. Republican Sen. Olympia Snowe of Maine joined all the Democrats in passing it.

Retiree Health Benefits

The Senate bill includes a provision designed to ease out-of-pocket costs for retirees who are under 65 but who still get health insurance from their former employer. The bill would create a temporary “reinsurance” program under which the government would pick up 80 percent of some high-cost insurance claims filed by retirees. Employers would use the savings only toÌýmakeÌýretirees’ coverage more affordable by reducingÌýtheir share of premiums or other costs. The Senate bill would set aside $5 billion for the program; the House-passed bill, which has a similar provision, has a $10 billion pot. The proposal has wide support among employer groups and labor unions.

The same can’t be said of another provision in both bills. Companies would have to pay a tax on the government subsidies they receive for providing their Medicare-eligible retirees with prescription drug coverage. These subsidies, included in the 2003 law that created the Medicare drug benefit, were designed to encourage companies to keep offering drug coverage. Now, if the subsidies are taxed to help pay for a health overhaul, they become much less attractive to employers; some companies might drop drug coverage for retireesÌýaltogether, warned the American Benefits Council, an employer group, and the AFL-CIO in a joint letter to Congress. If that happened, the retirees would get their drug coverage from Medicare. Critics say that would ultimately cost the government more money than it would recoup by taxing the subsidies.

Promoting Use Of Bone Density Scans

Rapid increases in Medicare payments for imaging services led lawmakers to reduce payments for some services, including those that test bone density.

The Senate bill is trying to boost payments, which have dropped by more than half since 2006, for a bone test known as dual energy X-ray absorptiometry () or bone densitometry. And those cuts have made it more difficult for patients to get access to the test, especially in physicians’ offices and clinics, according to the National Osteoporosis Foundation. The Senate bill would increase rates to 70 percent of what Medicare paid in 2006.

Raising the payment for bone density scans is a priority for two senators whom Reid hopes to win over in his bid to get 60 votes for his health care plan: Blanche Lincoln, a moderate Democrat from Arkansas, and Olympia Snowe, a moderate Republican from Maine.

Setting ER Prices Nonprofit hospitals would have to limit how much they charge low-income uninsured emergency patients to the lowest amount they receive from insured patients for the same services.

The provision in the Senate bill comes more than six years after consumer groups in California and Texas began highlighting how hospitals were charging uninsured patients several times more for the same services as insured patients.

A published in the journal Health Affairs showed that many “uninsured and other ‘self-pay’ patients for hospital services” were often charged “2 1/2 times what most health insurers actually paid and more than three times the hospital’s Medicare-allowable costs.”ÌýThe study by Gerard Anderson of Johns Hopkins University also found the “gaps between rates charged to self-pay patients and those charged to other payers are much wider than they were in the mid-1980s.”

In response to the criticism, many hospitals have set up programs for the uninsured to apply for financial assistance and obtain discounted care. The Senate provision would require all hospitals to have such programs.

Singing The Blues

Non-profit Blue Cross and Blue Shield health plans would have to spend at least 85 cents of every premium dollar on health services or forfeit their special federal tax deductions. The Congressional Budget Office estimates this provision in the Senate bill would cost the Blues’ plans about $400 million over the next decade.

Historically, Blue Cross and Blue Shield plans received a tax-preferred status because they were created to provide a more significant “community benefit” than other insurance companies. But the Blues have come under increasing scrutiny from state and federal lawmakers and consumer watchdog groups for charging high rates, racking up profits (revenues over expenses) and paying top executives no differently than their for-profit insurance counterparts.

Several Blues’ plans converted to for-profits in the past 15 years. Of the 39 Blue Cross and Blue Shield plans nationwide, 24 are now non-profit.

Transparency in Drug Pricing

Pharmaceutical benefit managers are a critical part of the nation’s health care system. Administering drug plans for more than 210 million insured Americans, they negotiate discounts on prescription drugs with retail pharmacies and wholesalers and also get rebates from drug makers.

At the urging of Sen. Maria Cantwell, D-Wash., the Senate Finance Committee inserted language into its health bill that would force the benefit managers, known as PBMs, to disclose details of those negotiations – including how much of the savings were passed on to consumers.Ìý

Adding that transparency to drug pricing, Cantwell maintains, would help lower drug prices. “We want the consumer to benefit as greatly as possibly from the discounts that PBMs are helping to negotiate,” Cantwell said earlier this year.

The PBMs don’t see it that way. Cantwell’s amendment, they argue, would “allow competing drug manufacturers and pharmacies to learn prices their competitors charge and raise prices accordingly. It would decrease, not increase, competition among them,” Mark Merritt, president and chief executive officer of the , wrote in a Nov. 24 letter to Senate Majority Leader Harry Reid, D-Nev. Merritt’s group represents PBMs.

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Ignagni, 55, the President and CEO of America’s Health Insurance Plans sat down Wednesday with KHN’s Laurie McGinley, Julie Appleby and Eric Pianin at her office on Pennsylvania Avenue, overlooking the U.S. Capitol. She discussed her take on the Democratic political assault, her industry’s end-game strategy and her unflagging opposition to the Democrats’ efforts to create a public insurance plan to compete with private insurers. Here are edited excerpts:

Q: You seem a little bit surprised by the insurance industry’s being portrayed as a villain by some of the Democrats.

A: I wasn’t particularly surprised because we had heard from various sources that it was coming. Now, before I heard that it was coming, I was surprised that – given the focus that people have had on trying to encourage stakeholders to participate at the table, to commit to a real contribution and to stick with it and be productive agents in achieving health care reform –ÌýI was surprised to hear that the course was changed. But it’s clearly I think consultant-driven, poll-driven, and it’s a strategy that probably is going to backfire from a number of perspectives.

Number one, this is an industry that has advanced the very market reforms that people are now talking about. Two, I think the concept that people should be judged on whether they’re for reform or not based on whether they accept a government-run program or not is something folks will regret because they’re setting up a litmus test

And three, everything we proposed as part of the $2 trillion coalition, we have followed through on, and you will shortly seethe administrative simplification promises and commitment we made will be part of the Senate Finance Committee package.

Q. Clearly we’re going into a long, hot August and not surprisingly the Democrats will be striking back even more in response to Republican attacks on their plan, and this could mean more attacks on the insurance industry. At what point do you walk away from the table?

A. Well, you have to consider what is your endgame strategy, and our members meant it what they said three years ago when they made a commitment to contribute to reformSo the first job for us, given the heightened rhetoric, is to make sure the American people understand that we meant what we said in terms of being committed to health care reform.

Two, that we’re working very hard with members of Congress, even where we disagree, which has never been a secret, about the public program, to try to encourage support for insurance market reform, for subsidies, for Medicaid expansion, and getting everyone in. And if you do that, you’re 80 percent of the way there to health care reform. So we think now we have to make sure people outside the Beltway know what people inside the Beltway know, which is not only our commitment but our contribution to health-care reform. At the same time we are going to work very, very actively to fact-check what people are saying, to set the record straight

We’re going to be going to town hall meetings and making sure the people who have been villainized– the people who have been villainized are pillars of their communities, they are regular people. It’s not the CEOs, but it’s nurses, it’s doctors, it’s folks who are helping to build personal health records.

Q. The Senate Finance Committee has been having trouble coming up with the money for the health care bill, which is the reason they’re talking now about windfall profits taxes on insurers and taxes on companies that sell high-cost policies. Since you’re opposed to both of those, what would you propose as an alternative?

A. I think the country has to get serious about bending the cost curveWe think there needs to be incentives for things to happen over the next few years that can reduce the rate of increase in health care costs, but there should be a commission, a broad commission not simply looking at Medicare, but a broad commission to monitor the progress and to make recommendations if goals are not achieved.

Q. Should there be some kind of mechanism for an across-the-board cut [in health spending]? A. I think we have to look at those sorts of things. It doesn’t have to happen right away, but having a commission, having a mechanism, would give every stakeholder group an incentive to create more productivity, to reduce unit costs and to create more efficiency. And those are the kinds of incentives that I think the system needs.

Q: Is there any version of a public plan or co-op that you would find less objectionable? A: It’s hard to envision any kind of publicly sponsored option, no matter the nomenclature, that wouldn’t rely on administered pricing, which is the government’s only strategy right now to contain costs. The reason we’re concerned about that is if you go out and ask leading hospitals and physicians if they can live on Medicare rates, they will give you a resounding ‘No.’ We are kidding ourselves if we think underpaying providers means cost-containment. What we have is a significant amount of cost shifting because the government underpays. Our [premium] rates are higher as a result of that. If you set up a public structure, whatever you call it, and it has the benefit of government rates, we are still disadvantaged because of the cost-shifting.

Q: Are you concerned there won’t be significant subsidies and that at some point lawmakers may say we can’t require individuals to have insurance?

A: It’s very important that the subsidies be adequate for individuals to be able to afford coverage. Members of Congress should not miss the opportunity to address the cost-containment problem. Subsidies should be one of the last decisions made. One of the first decisions needs to be how to structure everything possible to make sure the system is as affordable as possible. That’s the first order of conversation.

Q: Will the industry step forward and say we’re going to cut our premiums by X amount as part of the negotiating process?

A: It would be irresponsible to do that unless we knew that cost would be cut by X amount because premiums are driven by cost. You’ve just put your finger on the Gordian Knot for members of Congress. It’s much easier in the political dialog to talk about premiums. No congressperson gets re-elected by talking about underlying costs.

Q: Can Congress do insurance reform without an individual mandate? A: We asked [consulting firm] Milliman to do a study on what happens in states that did that. The markets essentially blew up in all those states. [There was premium] rate shock for people who stayed in. All the states had to walk back from it.

Q: Will the protests now being made by opponents at town hall meetings around the country backfire?

A: Members of Congress are hearing vehemently from both the left and the right. It’s very important for members to hear from the center. [Without that], we’ll miss an important opportunity in August for members of Congress to hear about how to create the consensus we believe can be created. Members of Congress got off on wrong foot on health care in past few months in confusing support for a public option with health care reform. Reform is about access, quality and cost. Whether we have a public option or a government option is one aspect, but, unfortunately, it has distracted a great deal of attention from all the consensus that does exist around some of the essential building blocks of reform.

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The deal could be announced as soon as Wednesday by Vice President Joseph Biden. A critical feature is an agreement on phasing in Medicare and Medicaid cuts so that they’d take effect as uninsured patients gain coverage. The expanded coverage would provide additional revenues to hospitals that are struggling with big losses resulting partly from rising numbers of people without insurance.

Hospitals, which have been hit hard by the recession, have been objecting to President Barack Obama’s proposals to slash federal payments to hospitals by more than $220 billion over 10 years. Under the deal with the White House and Senate Democrats, hospitals have agreed to smaller cuts–and gotten assurances that those reductions would be timed to coincide with expanded insurance coverage.

However, the pact doesn’t prevent the House from demanding bigger cuts, according to people who are familiar with the negotiations. Still, industry insiders are hoping that, by reaching agreement and creating good will with the White House and Senate Democrats, they’ll have influential allies arguing on their behalf when the House and Senate meet in a conference committee this fall.

A hospital agreement would boost Obama’s drive for reform legislation by addressing some of the biggest concerns of hospitals, one of the most influential players in the health care industry. In addition, a pact would provide more money to the administration and Congress to cover the uninsured. Moreover, the deal would come at a crucial time–just as members of the House and Senate begin a sprint to get legislation through both chambers before the start of the August recess.

A hospital agreement would follow a recently announced deal involving the pharmaceutical industry, the White House and the Senate Finance Committee. Under the deal, which was endorsed by the powerful seniors’ group, AARP, the Pharmaceutical Research and Manufacturers of America said it would spend $80 billion over 10 years to expand the Medicare drug program and help defray the cost of an overhaul.

The hospital negotiations involve the American Hospital Association; the Catholic Health Association; the Federation of American Hospitals; administration officials, and congressional staff. The hospital associations and the White House declined comment on the potential deal.

Hospital costs make up the biggest slice of national health expenditures–about 31 percent of the $2 trillion spent annually. That’s why hospitals are a target for Obama and Democrats searching for ways to finance reform legislation.

Beyond the timing of payment cuts, hospitals are concerned about proposals to expand the powers of a panel that advises Congress on payment rates for hospitals. Under an Obama proposal, the Medicare Payment Advisory Commission would set the rates itself (though Congress could overrule it). Such an arrangement would make it harder for the industry to effectively lobby against payment reductions.

Hospitals also have raised concerns about proposals to create a government-run insurance plan to compete with private insurers. They want to make sure that such a plan doesn’t link its payment rates to Medicare rates, which are lower than those paid by private insurers.

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The deal, which isn’t final, could be announced within days. A critical feature is an agreement on phasing in the Medicare and Medicaid cuts.

Hospitals have been objecting to President Barack Obama’s proposals to slash payments over 10 years. They have been seeking assurances that cuts would occur in stages as more people get insurance under reform legislation. If the cuts were to take effect sooner, hospitals say, they’d lose billions of dollars in revenues while caring for large numbers of uninsured patients.

An agreement would boost President Obama’s drive for reform legislation by addressing the biggest concerns of one of the most influential players in the health care overhaul debate. It would provide more money to cover the uninsured and it would come at a crucial time–just as members of the House and Senate return from their July 4th break. Democrats are hoping to complete floor action in both chambers before the start of the August recess.

A hospital agreement would follow a recently announced deal involving the pharmaceutical industry, the White House and the Senate Finance Committee. Under the deal, which was endorsed by the powerful seniors’ group, AARP, the Pharmaceutical Research and Manufacturers of America said it would spend $80 billion over 10 years to expand the Medicare drug program and help defray the cost of an overhaul.

The negotiations involve the American Hospital Association, the Catholic Health Association; the Federation of American Hospitals; administration officials, and congressional staff.

Hospital costs make up the biggest slice of national health expenditures–about 31 percent of the $2 trillion spent annually. That’s why hospitals are a target for Obama and Democrats searching for ways to finance reform legislation.

Beyond the timing of payment cuts, hospitals are concerned about proposals to expand the powers of a panel that advises Congress on payment rates for hospitals. Under an Obama proposal, the Medicare Payment Advisory Commission would set the rates itself (though Congress could overrule it). Such an arrangement would make it harder for the industry to effectively lobby against payment reductions.

Hospitals also have raised concerns about proposals to create a government-run insurance plan to compete with private insurers. They want to make sure that such a plan doesn’t link its payment rates to Medicare rates, which are lower than those paid by private insurers.

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Under the plan, national health care spending would be held to a specific growth rate. If growth were higher, the “excess spending” would trigger the fail-safe mechanism for the following year.

The proposal was authored by David Cutler, an economics professor at Harvard University, and Judy Feder, a professor of public policy at Georgetown University and a senior fellow at the think tank, which has close ties to the Obama administration.

Some of the ways spending could be reduced, they said, would be: slowing payment increases to Medicare providers; making individual insurance subsidies contingent on the achievement of system-wide savings, and reducing the tax preference for employer-provided insurance beyond what was already included in any health care legislation.

Cutler and Federal proposed that the policy options be decided by a new commission overseen by Congress.

John Podesta, head of the think tank, said he thought the administration “would be interested” in the report. “I know they are concerned” about keeping the legislation budget neutral over the long run, he said.

Ìýreports that the proposal “was released as the health care debate enters a critical moment.” Former Senate Majority Leader Tom Daschle , who also backs the proposal, appeared with Podesta at the CAP event. Both put “the odds of the House and Senate passing a bill before the August recess as somewhat better than 50-50. They called for flexibility and compromise to reach an agreement, but neither seemed particularly optimistic about the chances of drawing significant Republican support.” Daschle defined bipartisanship as “the involvement of one or more” Republicans. He also said the use of “a parliamentary procedure known as reconciliation was ‘certainly a viable fallback.’ Using reconciliation would prevent opponents from threatening a filibuster, meaning a plan could pass with Democratic votes alone” (Page, 6/29).

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