In his weekly radio address, Obama announced $313 billion more in reduced Medicare and Medicaid spending to help pay for health care reform. That includes spending cuts of $110 billion to account for improving economic productivity; $106 billion to account for less spending on the uninsured, reasoning that fewer people will be uninsured; and $75 billion for lower drug costs.

In announcing that Social Security and Medicare may bust earlier than expected, Treasury Secretary Timothy Geithner said Obama intends to reform health care spending and expand Americans' insurance coverage before working on the entitlement program. Health and Human Services Secretary Kathleen Sebelius argued that improving care for younger people will relieve the burden on covering older Americans.

Obama's pick for health care czar, Nancy-Ann DeParle, was administrator of Medicare and Medicaid during the Clinton administration. The New York Times quotes former Clinton health adviser Chris Jennings as saying, "She can call their bluff far more credibly and say, 'Come on, guys, I've seen the books, I know you can do this with lower margins and higher market share, and you'll do quite well.' To me that's very, very helpful."

Obama's FY 2010 budget outline slashes Medicare Advantage subsidies and replaces them "with a competitive system in which payments would be based upon an average of plans' bids submitted to Medicare" for a projected savings of almost $177 billion over the next 10 years.

But Republicans are resisting (subscription), saying the move would reduce choices in health coverage. "The president said repeatedly during his campaign that Americans who like the health insurance they have would keep their existing plans in his administration. His budget proposal undercuts that promise," Senate Health, Education, Labor and Pensions ranking member Michael Enzi, R-Wyo., said.

Speakers at Monday's fiscal responsibility summit, including Obama, agreed on the need to restrain medical entitlement costs, but plans were scarce. A similar meeting is planned for next week on overhauling health care.

The stimulus package signed by Obama includes about $17 billion in incentives to Medicare and Medicaid providers to adopt electronic health records.

Daschle withdrew from consideration as Health and Human Services secretary today, saying he did not want his tax problems to distract from the Obama team’s work.

In a meeting with the Washington Post's editorial board, Obama announced plans to convene a Fiscal Responsibility Summit in February on long-term economic issues, particularly spending on Social Security and Medicare. "Social Security, we can solve," he said. "The big problem is Medicare, which is unsustainable." Health and Human Services nominee Tom Daschle dodged a question on what to do about the program from Sen. Lisa Murkowski, R-Alaska, during his confirmation hearing.