As has been widely reported, the Obama Administration and lawmakers are struggling to reach a compromise on a legislative package to extend the nation’s federal debt limit before the $14.3 trillion ceiling is reached on August 2, 2011. Numerous proposals have been floated calling for varying degrees of federal spending reductions, but no consensus package has yet emerged. It appears likely, however, that any debt limit extension that is coupled with significant spending cuts will include some level of cuts to the Medicare and Medicaid programs, potentially including extensive Medicare provider cuts, drug reimbursement reductions, reduced Medicare Advantaged payments, increased beneficiary cost-sharing, and reduced federal payments to state Medicaid programs. We will provide additional information as legislative details emerge.