Last week, a bicameral, bipartisan conference committee met to discuss extending a payroll tax cut and delaying the scheduled cuts to Medicare physician reimbursement rates. Lawmakers are discussing a yearlong extension of the initiatives, which must be passed before the short-term agreement expires at the end of February.

Committee members from both parties were optimistic that they could reach an agreement before the deadline. However, Democrats and Republicans disagree on how to offset the roughly $160 billion cost of extending the tax cut and doc fix. Democrats want to increase taxes for high-income U.S. residents, but Republicans on the committee said such a proposal would not pass the House or the Senate.

Some House Republicans are considering a two-year delay of the cuts, which would be paid for in part with billions of reductions in federal health reform law spending. Democrats argued for permanent replacement of the sustainable growth rate (SGR) formula that determines the cuts, noting that they could offset the $300 billion cost of fully repealing the SGR with savings from the end of the Iraq War.