Health Care Cuts Are Coming: Here’s Where Liberals Say You Can Slice

Two new studies and a proposed class-action lawsuit settlement all have the potential to change dollar signs as lawmakers address the impending fiscal cliff.

A liberal think-tank closely allied with the Obama administration is proposing a health care spending plan it says could save hundreds of billions of dollars in entitlement spending without hurting middle- and low-income patients.

The plan from the Center for American Progress comes as Congress prepares for a battle royal over the so-called fiscal cliff. That's the combination of tax increases and spending cuts that happen automatically unless lawmakers and the president can reach a deal before the end of the year.

Democrats have been demanding higher taxes on the rich, while Republicans say they won't budge without big changes to programs like Medicare and Medicaid.

Senate Minority Leader Mitch McConnell didn't mince any words in his first floor speech of the lame-duck session Tuesday afternoon: "Republicans like me have said for more than a year now that we're open to new revenue in exchange for meaningful reforms to the entitlement programs that are the primary drivers of our debt."

And meaningful reform is exactly what the authors of the CAP plan said they are proposing.

"If entitlement reform is simply code for dismantling Medicare and Social Security, we're not at the table, and we should oppose that with everything we've got," said Ezekiel Emanuel, a senior fellow with the group who helped put the proposal together. "On the other hand," he added, "if entitlement reform is, 'We're going to transform the system, modernize it so it can deliver high-quality, lower-cost care,' that's where we are. And that's what we think we've got here."

Now, the Center for American Progress isn't just any group. It's considered something of the White House's reserve corps. Emanuel, for example, is the brother of former White House Chief of Staff Rahm Emanuel and a former White House health staffer himself. CAP President Neera Tanden is also a former White House health staffer.

And this new plan is notable not just for potential savings of a half-trillion dollars but for what some of those savings are. They include many things that build on savings included in the Affordable Care Act, like cutting waste and encouraging more efficient care, as well as lowering payments to some providers. But there are also some controversial items. Like asking wealthier Medicare beneficiaries to pay more out of pocket for their care. And limiting the tax-free status of health insurance for people who earn more than $250,000 a year.