

The concept of merging the deductibles for Medicare Part A insurance, which covers hospital stays, and Part B, which covers doctors' services, is one of the few ideas that appeals to both parties. Seniors who have a serious illness could pay less, but for most seniors, the net effect would be an increase in their out-of-pocket expenses.

Senior House GOP aides said it was among the deficit-reduction options the White House and Republicans have discussed in the past. They also said President Barack Obama indicated he was open to the idea when he met recently with House Republicans on Capitol Hill.

Sens. Mark Warner (D., Va.) and Tom Coburn (R., Okla.) have pushed it among their colleagues, and a Democratic aide said many Senate Democrats are open to the idea. House Republican leader Eric Cantor of Virginia touted it in a high-profile speech earlier this year.

Total federal spending for Medicare, including the Part D coverage for prescription drugs added in 2003, has more than doubled in the past decade and is projected to grow significantly in the years ahead.

Payroll taxes and premiums paid by beneficiaries covered around half of the $549.1 billion in expenditures in 2011, the most recent year for which figures are available.







Such a proposal could also lead to the two separate parts of the program merging over time, and changes to their financing. Linking the two more closely also could encourage greater coordination of treatments, fueling cost savings over time.

Supporters of the idea say there are plenty of details that would still have to be worked out, especially how to account for the significant number of low-income seniors who advocates say cannot afford to see their deductible for basic care increase by $400. There isn't consensus about how to do that, and the idea isn't expected to appear in Mr. Obama's budget next week, according to Democratic officials close to the White House.

White House officials said the president hadn't proposed combining deductibles and declined to comment on the content of the budget.

Seniors groups have backed the idea in the past because a cap on out-of-pocket costs could reduce the risk to seniors of incurring high medical bills. But they have raised objections when the proposal is framed as a deficit-reduction measure.

The National Committee to Preserve Social Security and Medicare, an advocacy group, has said it is concerned about the proposals as part of deficit-reduction talks because they would raise costs for most beneficiaries while the catastrophic cap of $7,500 would only help a small percentage of beneficiaries.

But the proposal doesn't face vocal opposition from seniors groups, unlike other ideas that have been floated, such as raising the Medicare eligibility age. AARP, the main seniors' lobby group, has signaled only cautious objections to a combined deductible, and highlighted that its main concern would be shielding low-income beneficiaries.

"An examination of Medicare redesign must take into account the economic status of seniors," said Joyce Rogers, the group's senior vice president for government affairs.

Marilyn Moon, a former trustee of Medicare and director of AARP's public policy institute, said such protections were important but could significantly reduce savings. "If you made it a good protection for the people who need it, you would essentially be only getting this from half of the beneficiaries."

Write to Louise Radnofsky at louise.radnofsky@wsj.com and Janet Hook at janet.hook@wsj.com