In the drive to fix the country’s ailing health care system, Medicare is likely to undergo some changes. Campaign promises from President-elect Barack Obama and a white paper issued by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, suggest that some specific Medicare proposals will get serious consideration this year.

Longtime ideological battles over whether Medicare should be a public or privatized program won’t melt away overnight, but may ease, experts say. “I think if President Obama has any influence, he’ll try to steer Congress away from that,” says Paul Ginsburg, president of the Center for Studying Health System Change in Washington.

At a time of rising unemployment, Medicare’s finances could worsen faster than expected because of lost revenue from payroll taxes. Yet Medicare could lead the reform field if it reins in escalating health care costs. “The policies Medicare adopts are often taken up by private payers,” says John Rother, AARP’s director of policy. “Medicare is so large that it’s the only system with enough leverage to get doctors, hospitals and other health providers to change.”

Here are suggested Medicare changes on the table and their likely impact on beneficiaries:

• Cutting payments to private plans Congress will almost certainly trim subsidies for private Medicare Advantage health plans, experts say. Obama and Democratic leaders have vowed to do so, citing studies that show the government is paying $114 in 2009 to cover an enrollee in a private plan compared with $100 spent on someone in traditional Medicare.

Democrats would prefer to spend that money elsewhere—most likely to avoid an impending 20 percent pay cut to Medicare doctors, due in 2010 unless Congress acts to prevent it.

Subsidies have allowed private plans to offer lower costs and richer benefits, attracting more than 10 million enrollees. Ending the payments would force the plans to be more efficient, but could also lead them to raise premiums or reduce benefits or both; some plans might pull out of rural areas. Private plans, Rother says, “may not be able to survive if they’re competing head to head with traditional Medicare.”

• Allowing buy-ins for people 55 to 64 Baucus would allow temporary Medicare buy-ins for those in this age group until universal coverage becomes a reality. For over 4 million uninsured Americans ages 55 to 64, the only option now is to buy individual insurance, which is often unaffordable or even unavailable to people with preexisting health conditions.

But a guarantee of full Medicare coverage, regardless of health status, wouldn’t come cheap. Enrollees would have to pay full premiums for Part A (hospital insurance) and Part B (outpatient services), without the subsidies that beneficiaries age 65 and over receive. Those premiums could add up to at least $800 a month.

• Helping people with disabilities People younger than 65 with disabilities are entitled to Medicare coverage, but only after they’ve received Social Security disability payments for two years. Forcing them to wait this long “results in these people having inadequate health care, falling into poverty or, ultimately, in death,” says the Baucus blueprint, which would begin to phase out the waiting period.

Advocates for the disabled, and AARP, have long recommended eliminating the 24-month wait. “It’s causing very great hardship,” says Rother.

Many advocates would also like disabled Medicare beneficiaries under 65 to have the same federally guaranteed right to buy medigap supplemental insurance, regardless of age or health condition, that those age 65 and older already have.

• Doctoring Part D Democrats who opposed many elements of the controversial prescription drug benefit from its passage in 2003 finally have the chance to overhaul it. But will they? Part D is now a huge program with hundreds of competing private plans that would be difficult to dismantle, experts say. Rather than replacing the private system with a drug benefit directly from Medicare, reformers are more likely to move bit by bit.

One proposal would let Medicare negotiate prices directly with drugmakers instead of having insurers do so separately. But it’s unclear how to do this. To negotiate effectively, an insurer must be able to refuse to cover a drug if its maker won’t accept the offered price. “I don’t see Medicare being prepared to do that,” Ginsburg says. “If an insurer excludes Lipitor, the beneficiary can choose another plan that covers it. But if Medicare excludes it, then that’s it—it’s not there” for any beneficiary.

Closing the hated doughnut hole—the coverage gap in Part D—would be popular with beneficiaries but is unlikely because it would cost $300 billion over 10 years.

Patricia Barry is a senior editor at the AARP Bulletin.