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Senior Democrat Durbin urges talks on Medicare

By Kim Dixon and Thomas Ferraro and David Morgan

WASHINGTON (Reuters) - Dick Durbin, a senior Senate Democrat and close ally of President Barack Obama, urged fellow liberals on Tuesday to consider reforming Medicare and Medicaid, the U.S. healthcare programs they have long fought to shield from spending cuts.

The timing of his message - just as Democrats and Republicans struggling to avoid the "fiscal cliff," looming early next year - and its prominence may signal that Democratic leaders and the White House will discuss social programs at the fiscal policy negotiating table.

"Progressives should be willing to talk about ways to ensure the long-term viability of Medicare and Medicaid," which help pay for the care of the elderly and needy, Durbin said in remarks to the liberal Center for American Progress.

Most Democrats have avoided talking about making changes to Medicare and Medicaid, despite the rising costs of the two programs, which are adding mightily to U.S. budget deficits.

Durbin has recently made other high-profile remarks about reducing Medicare and Medicaid costs. Appearing on ABC's "This Week" program on Sunday, he raised the possibility of Democrats accepting Medicare reforms that would make higher-income seniors pay more for their care.

Durbin said on Tuesday, however, that the debate over Medicare and Medicaid should not be part of the solving the immediate fiscal problem - the convergence of sharp tax increases and deep federal spending cuts set for January. Economists warn that going over this fiscal cliff could put the U.S. into a recession.

Durbin has suggested a two-step process: avert the cliff now and agree to a framework to find savings from Medicare and Medicaid with the details to be worked out next year.

Obama and congressional Democrats want to raise income taxes only on the wealthy and Durbin said liberals need to offer concrete ways to rein in spending, as well.

"We can't be so naive to believe that just taxing the rich will solve our (fiscal) problems," Durbin said.

Durbin repeated the Democrats' position that most tax cuts enacted in 2001 should be extended, but tax cuts given to those with income above $250,000 should expire. If Congress fails to act, tax rates for all income groups will rise.

Republicans could block any bill that does not extend all tax cuts, but this risks playing into Democrats' hands. After January 1, with all tax cuts expired, Democrats could draft a bill that cuts taxes only for those earning below $250,000, cranking up pressure on Republicans to go along.

One controversial proposal to shore up Medicare finances the to raise the age at which seniors start receiving benefits. Durbin said he was concerned that those with health problems in the years before Medicare kicks in may struggle to get coverage.

Democrats say manual laborers and people with health problems before eligibility age are at risk. Durbin cited his brother, who had a heart attack before qualifying for Medicare at age 65.

"My very conservative Republican brother, who had no use for social programs, started counting the days until he was eligible for Medicare," Durbin said.

"If anybody wants to talk about a later eligibility age for Medicare, what I want to hear is the assurance and guarantee that people like my brother will have access to affordable health care and insurance," before they reach the age, he said.

Echoing the stance of Obama and other Democrats, Durbin said changes to Social Security are needed but since the retirement benefits program did not contribute to the deficit problem, it should be tackled separately.

He proposed a new bipartisan commission to recommend a plan to keep Social Security solvent for the next 75 years. Congress should be required to vote on the changes, he said. Such a panel shored up the pension program in the mid-1980s.

(Reporting by Thomas Ferraro, Kim Dixon and David Morgan; Editing by Kevin Drawbaugh and Jackie Frank)

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