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A Glimpse of the Debt Limit Crisis End Game?

By John Reichard, CQ HealthBeat Editor

October 3, 2013 -- A recent letter to the Obama administration from Senate Finance Republicans may be something like what the end game looks like in resolving the building crisis over raising the debt limit.

The letter to U.S. Treasury Secretary Jack Lew doesn't demand a delay in the health care law. Nor does it call for a defunding of President Barack Obama's signature legislative accomplishment. And it doesn't specify how much money Obama must cut from federal spending to get a GOP sign-off on a debt limit increase.

All of those things have been urged by House Republicans in recent days—and the administration says they are non-starters.

But what the letter does do is push for cuts in entitlement spending in a broad sense without getting into specifics on how they should be accomplished. The letter notes the Congressional Budget Office's recent assessment that most of the long-term growth in federal spending in the next 25 years, not including interest payments, is in the government's major health programs. They are Medicare, Medicaid, the Children's Health Insurance Program, and health care law (PL 111-148, PL 111-152) subsidies on insurance exchanges. The GOP senators add that Social Security spending also is expected to outpace economic growth.

"We ask that the President begin discussion now to combat our long-term debt through meaningful entitlement reforms—not merely more cuts to health care providers," the Sept. 25 letter said. It also asked "how long and how great of a debt limit increase the Administration is requesting."

Sen. Orrin G. Hatch of Utah, the top Republican on the Finance panel, has sought during the year to build support for changes to Medicare that have drawn at least a smattering of bipartisan support in the past. They include a 15 percent surcharge on Part B premiums for beneficiaries who have Medigap plans with low cost-sharing. Other changes include streamlining several Medicare payments by establishing an annual catastrophic cap, a single combined annual deductible for Part A and B services, and a uniform coinsurance rate for amounts above the deductible. More controversially, they include raising the Medicare eligibility age from 65 to 67.

A debt limit deal charting a path toward such changes could be a face-saving way for Republicans to allow an increase in the limit without having to acknowledge they got nothing in return. And if it didn't have any real teeth, the administration could say it didn't make concessions in return for a debt limit hike. While unappealing to both sides, such an agreement might become more attractive if the two parties are facing a stock market collapse with a few days to go before default.

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