On July 8th, Peter R. Orszag, the Director of the Office of Management and Budget, wrote a letter to Reps. George Miller (D-CA), Charles Rangel (D-NY), and Henry Waxman (D-CA), to express the Administration's support for the policy changes that have been discussed thus far.  After commending their efforts thus far to make policies deficit-neutral, Orszag writes that these changes are not enough.

In his opinion (and therefore the Administration's), the proposed deficit-neutral policies are only the beginning:

I commend you for proposing delivery system reforms that will begin the process of transforming our health system so that quality is improved, cost growth is contained, and waste is reduced.  Though these reforms may not achieve immediate or scored savings, they do emphasize quality and value...it would be desirable to build upon these measures with additional steps that will help make our health care system sustainable for generations to come.

The letter points to Medicare reform as a specific opportunity for change: 

We recommend that you consider additional savings from Medicare and Medicaid disproportionate hospital payments and further delivery system reforms, including changes to the process through which Medicare policies are set.

Orszag remains consistent to his testimony at the PAYGO hearing and continues to emphasize that Medicare policy is one of the biggest obstacles to long-term debt reduction.  Perhaps learning from the Clinton years, it's clear that the Administration would love for Congress to take on the heavy-lifting associated with any type of Medicare reform.  Given how Medicare "reform" equates "benefit reduction" in the mind of a formidable constituency, it remains to be seen whether Democrats will take on this politically unpopular topic in a meaningful way.