The president says his latest plan, which includes potential cuts to hospitals and pharmaceutical firms over the next decade, will help defray the cost of expanding healthcare coverage to uninsured.

Yet the proposal -- which includes potential cuts to hospitals, pharmaceutical companies and other providers -- also underscores the political delicacy of the administration's search for money for a massive healthcare overhaul that could cost more than $1.2 trillion over the next decade.

Among the proposed policy changes outlined by the president are:

* Reductions in payments to provi...

The president says his latest plan, which includes potential cuts to hospitals and pharmaceutical firms over the next decade, will help defray the cost of expanding healthcare coverage to uninsured.

Yet the proposal -- which includes potential cuts to hospitals, pharmaceutical companies and other providers -- also underscores the political delicacy of the administration's search for money for a massive healthcare overhaul that could cost more than $1.2 trillion over the next decade.

Among the proposed policy changes outlined by the president are:

* Reductions in payments to providers to reflect increased efficiencies in the system, which the White House estimates could save $110 billion over the next decade.

* Cuts in federal subsidies to hospitals that treat large populations of uninsured patients, estimated to save $106 billion over the next decade.

* Cuts in how much the federal government pays pharmaceutical companies to provide prescription drugs to seniors and others, estimated to save $75 billion over the next decade.

The president described the proposals as "common sense changes" that could make the system more efficient.

In briefing reporters, Peter R. Orszag, Obama's budget director and a leading architect of the president's healthcare policy, downplayed the potential lost revenue for healthcare providers, pointing to the millions of additional people who would get insurance under the plans being advanced by congressional Democrats.

The nonpartisan Congressional Budget Office last year postulated that Medicare cuts could encourage hospitals and other providers to become more efficient. But the office also concluded that the cuts could prompt some providers to lower the quality of the care they deliver.