Debt panel could recommend health program cuts

Washington -- The Obama administration indicated at the first meeting of its newly minted debt commission panel that all federal programs, including Medicare and Medicaid, will be considered as it proposes ways to address fiscal challenges and to balance the nation's budget.

The administration inherited an annual budget deficit of $1.3 trillion, and additional projected deficits total $8 trillion over the next 10 years. President Obama acknowledged at the April 27 meeting that rising health care entitlement costs have contributed to the situation. "Each year, more tax dollars are devoted to Medicare and to Medicaid."

On Feb. 18, the president signed an executive order establishing the bipartisan National Commission on Fiscal Responsibility and Reform. The commission's co-chairs are former Clinton White House Chief of Staff Erskine Bowles and former Republican Senate Whip Alan Simpson. The commission will issue recommendations to the president by Dec. 1, and congressional leaders have promised an up-or-down vote on the proposals.

Obama said at the meeting that he's interested in hearing a wide variety of ideas from the panel.

"I've said that it's important that we not restrict the review or the recommendations that this commission comes up with in any way," the president said. "Everything has to be on the table."

Federal Reserve Chair Ben Bernanke noted that the aging population and rapidly rising health care costs are putting increased pressure on deficits. He added that federal spending for Medicare and Medicaid has shot up over the past several decades, spurred by a rising number of beneficiaries and by more per-capita spending.

"Continued increases in health care costs at the rate seen in recent decades, together with the aging of the population, would put enormous pressures on the federal budget in coming years," Bernanke said. He added that it's too early to calculate the effects of the recently passed health system reform bill on federal spending over the long term, in part because the legislation depends on staggered implementation dates.

"Choices regarding Medicare, Social Security and other spending programs cannot be made in a vacuum but must be combined with decisions about how much revenue the government will raise and how it will raise it," he said.