Under the plan, an independent commission would be empowered to recommend changes in Medicare annually, to take effect automatically unless Congress enacted an alternative. In addition to saving money, the proposal is aimed at turning the program for those age 65 and over into one that more clearly rewards quality, officials said.
The commission would be required to recommend $35 billion in savings over a decade from Medicare. There was no immediate estimate on the longer-term effects of the provision, the topic of exhaustive discussion among three Democrats and three Republicans groping for a compromise on legislation atop the administration's domestic agenda. The officials spoke on condition of anonymity, saying they were not authorized to discuss details of the private talks.
The negotiations occurred as White House chief of staff Rahm Emanuel spent much of his day in the Capitol attempting to untangle a dispute that has stalled a companion bill in the House.
Progress has been blocked by a group of conservative-to-moderate Democrats seeking to exempt additional businesses from a requirement to offer insurance under the bill, and to alter the rules governing a government insurance option, among other changes.
"The legislative process is about give and take," Rep. Mike Ross, D-Ark., a leader of the Democratic critics, said during a break in the talks. "There could be a breakthrough in the next few hours and then again there may not be."
There was no breakthrough, and the talks ended around 9:30 p.m. EDT with no agreement except to meet again Wednesday.
The White House and Democratic leaders originally set deadlines of votes in the House and Senate on health care legislation before lawmakers leave the Capitol for a monthlong summer vacation. While Speaker Nancy Pelosi has yet to publicly abandon that timetable for the House, Senate Majority Leader Harry Reid did so last week, and it appears the earliest either house can vote is in September.
Mr. Obama is seeking legislation to extend health insurance to millions who lack it, at the same time he has asked lawmakers to slow the growth in the skyrocketing cost of medical care overall.
When it appeared more than a week ago that the House bill would fall short on cost-cutting, Mr. Obama called on lawmakers to relinquish some of the control they now exercise over setting payments to hospitals and other health care providers under Medicare.
Speaking to members of the AARP, an advocacy group for senior citizens, President Obama said Tuesday that Medicare benefits could be at risk without broader health care reform.
"We all know right now we've got a problem that threatens Medicare and our entire health care system," the president said. "Unless we act, within a decade, the Medicare trust fund will be in the red."
No one is currently suggesting reducing Medicare benefits, the president stressed. "If it works, we don't want to change it," he said. "What we do want is to eliminate some of the waste being paid for out of the Medicare trust fund."
Most of the variations under discussion have called for creation of a commission to issue annual recommendations for savings that would go into effect automatically unless the House and Senate blocked them. Currently, Congress must vote affirmatively to make any changes, a system that encourages individual lawmakers to seek favorable treatment for constituents or businesses in their districts or states.
Any bipartisan compromise that emerges from the negotiations is also expected to include a number of cutbacks in planned payments to hospitals and other Medicare providers, totaling hundreds of billions of dollars.
The bipartisan group is attempting to complete work in time for the Senate Finance Committee to vote on legislation next week.
While the lawmakers involved have devoted weeks to the talks, there is no guarantee that any agreement would survive scrutiny in the full Senate. There, Democrats control 60 seats, and liberals, in particular, are expected to seek major changes.
Both bills under discussion would require insurance companies to offer insurance to all comers, and bar them from raising premiums on the basis of pre-existing medical conditions.
The bills provide federal subsidies to help lower-income individuals and families purchase insurance.