A Medicare Services office in New York City
A Medicare Services office in New York City - 
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JEREMY HOBSON: Well as the president meets with top budget negotiators about this year's budget to avoid a government shutdown later this week, there's a new proposal for next year's budget. It comes from the chairman of the House Budget Committee. Republican Congressman Paul Ryan's plan would cut more than $6 trillion in federal spending over the next decade. The focus of the cuts are Medicare and Medicaid.

Our health care reporter Gregory Warner joins us live now from WHYY in Philadelphia with the details. Gregory, how would Medicare and Medicaid change under Paul Ryan's plan?

GREGORY WARNER: OK, so Medicaid, which covers the poor -- right now it's paid for by the states and the feds. And the spending depends on how many people sign up. Under Ryan's plan, federal spending would be capped with a block grant given to the states to use as they see fit.


WARNER: An even bigger change is proposed to Medicare, which covers seniors and people with disabilities. Right now the government pays doctors and hospitals directly. Under Ryan's plan, the next generation of seniors when they retire would shop for private insurance. The government would chip in to pay a percentage of those insurance premiums.

HOBSON: OK. Marketplace's Gregory Warner in Philadelphia. Now let's get reaction now from our regular Tuesday guest Juli Niemann. She's an analyst with Smith Moore and Company in St. Louis. Juli, cuts to Medicare and Medicaid -- this is bound to be politically unpopular.

JULI NIEMANN: Well, it's a good first step though. You know, you've got to talk about the other resident gorillas -- Social Security and defense. You can't freeze spending at existing levels, you got to reduce spending. My favorite daily reading is the Treasury report. The government spent eight times [their] revenue last month. Now that's March madness. We've got to maintain our national credit rating and ability to fund the humongous debt at reasonable rates. If we don't, the interest on debt becomes a driving component of the budget.

HOBSON: And Juli, this plan from Republican Paul Ryan is coming out just as we're getting into another presidential election, believe it or not. Doesn't that seem like an odd time for something this drastic?

NIEMANN: Odd time, but only time. There's a narrow window of time in which to reform. That's two years before elections. All reform is popular as long as it hits the other guy. This has to be piecemeal, we can't get omnibus packages through so getting started now means you've got a little window of time to do it.

HOBSON: Juli Niemann, analyst at Smith More and Company. Thanks as always.

NIEMANN: You bet.