Democrats on the debt panel have offered a revised deficit-reduction plan that would reduce the federal deficit by $2.3 trillion over 10 years by cutting $400 billion from Medicare and Medicaid.

The plan would cut government spending by $1 trillion and raise $1 trillion in tax revenues. The proposal includes:

  • Cutting $350 billion from Medicare, including $250 billion from providers and $100 billion by requiring beneficiaries to contribute more to the program;
  • Eliminating $50 billion from Medicaid and the federal health reform law, $8 billion of which is slated for preventive health efforts;
  • Finding $5 billion in savings in the durable medical equipment program;
  • Reducing federal funds by $4 billion for hospitals that care for more uninsured patients, known as “disproportionate-share hospitals”;
  • Generating $13 billion in savings through a Medicaid “provider tax”; and
  • Creating $20 billion in savings by increasing federal rebates from drug makers.

Republicans countered the Democrats’ plan with their own revised proposal. The plan would reduce the deficit by $1.5 trillion over 10 years by increasing tax revenue by $300 billion and raising the Medicare eligibility age from 65 to 67.