06/24/2011 01:40 pm ET | Updated Aug 24, 2011

Schumer Brings Medicare Into Heart Of Debt Negotiations

WASHINGTON -- Democrats laid out additional details on Friday of their plans to cut the deficit, signaling they would be willing to negotiate some Medicare cuts on the provider side as part of a deal to raise the debt ceiling this summer.

Sen. Chuck Schumer (D-N.Y.) and Rep. Chris Van Hollen (D-Md.) told reporters they would be willing to look at "delivery system reform" of Medicare, which would change the way providers on the senior health care system are paid. Although it could be positive for negotiations, the move could give Democrats less political cover for hammering Republicans on the Rep. Paul Ryan (R-Wis.) budget plan, which would transform Medicare into a voucher-like system for future seniors.

"There are three approaches: One is the Republican approach to end Medicare as we know it, transfer it all to insurance companies, which will not reduce costs, it will simply shift costs to beneficiaries," Schumer said on a call with reporters. "Second is to do nothing. We reject both of those."

Instead, Schumer said the Democrats will push for changes to the "delivery side" of Medicare, such as implementing more information technology and putting more emphasis on prevention.

"We believe that Medicare provides very good health care but it does it inefficiently," he said. "The way to bring savings out of Medicare while at the same time preserving the benefits is to make it more efficient in terms of the delivery system."

Democrats have consistently rebuked Republicans for voting to change Medicare using the Ryan plan, meaning it may be a political loss to allow for Medicare changes themselves. But Schumer and Van Hollen argued that Democrats are in a good political position in debt ceiling talks, particularly after Republican representatives in the talks quit on Thursday.

Since House Majority Leader Eric Cantor (R-Va.) and Senate Minority Whip Jon Kyl (R-Ariz.) announced they would not participate in the talks, Democratic votes will be needed to pass an eventual deal, they said, giving the Democrats more power over negotiations.

"They need Democrats to get a deal passed, and that means the final deal will have to include some Democratic priorities," Schumer said. "Thus it will have some messy realities for Republicans."

Among them, Democrats hope, will be an end to subsidies for major oil and gas companies, along with deductions for private planes and tax preferences for men and women who make more than half a million dollars per year, Van Hollen said.

Republicans have said repeatedly that tax increases cannot be a part of the final deal to end the deficit, part of a pledge they sign each year with Americans for Tax Reform, the organization led by Grover Norquist.

House Speaker John Boehner (R-Ohio) reiterated in a statement on Friday that a package with tax increases "cannot pass the House."

"Until the Republicans are more worried about reducing the deficit than they are about Grover Norquist, then we've got a problem," Van Hollen said. "Every serious solution to this issue requires a balance."

Congress must approve an increase in the debt ceiling -- which currently stands at $14.29 trillion -- by about Aug. 2 to avoid the government defaulting on its loans, according to Treasury Secretary Timothy Geithner.

The White House announced this morning it will hold separate meetings next week with Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) to discuss the debt ceiling talks, focusing on a "balanced approach" -- revenue increases along with spending cuts -- for the eventual deal.

McConnell signaled in a statement on Friday that he will not be receptive to discussions about revenue increases for shrinking the deficit.

"The President needs to decide between his goal of massive tax hikes, and a bipartisan plan to address our deficit," he said. "But he can’t have both."