WASHINGTON BUREAU — The heads of the federal Budget deficit commission are recommending that the commission call for repealing or restructuring a new federal long term care benefits program and possibly for reducing the group health exclusion.

The co-chairmen of the 18-member National Commission on Fiscal Responsibility and Reform — Erskine Bowles, a Democrat who served as White House chief of staff under former President Bill Bowles-SimpsonClinton, and former Sen. Alan Simpson, a Republican – have included those recommendations along with many others in a draft of the “Moment of Truth,” a budget-cutting proposal released today.

An earlier draft appeared Nov. 10.

The full commission is supposed to vote on the recommendations Friday.

In addition to the LTC program recommendation and the group health exclusion recommendation, Bowles and Simpson have proposed redesigning Medicare deductible rules and other Medicare cost-sharing rules; expanding efforts to improve coordination of Medicare enrollee care; and giving the Pension Benefit Guaranty Corp. the authority to increase pension insurance premiums.

Bowles and Simpson also have recommended that the government consolidate and replace a number of existing federal retirement programs, including the saver’s credit. The co-chairmen are suggesting that tax-preferred contributions be capped at the lower of $20,000 or 20% of income, and that the saver’s credit be expanded.

Bowles and Simpson do not seem to refer directly in the draft to 401(k) plans, individual retirement accounts or annuities, and they mention the estate tax only in passing.

The Affordable Care Act, the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA), includes a provision that is supposed to impose a 40% excise tax on relatively high cost “Cadillac plans” starting in 2018.

Bowles and Simpson provide a chart outlining an example of an “individual tax reform plan.” In that example, the co-chairmen suggest reducing the Cadillac plan excise tax to 12%.

They also call for reducing the current exclusion for employer-provided health coverage “at the 75th percentile of premium levels in 2014, with a cap frozen in nominal terms through 2018 and phased out by 2038.”

Bowles and Simpson write in more depth about the Community Living Assistance Services and Supports (CLASS) Act component of the

Affordable Care Act.

The CLASS Act is supposed to create a voluntary worksite LTC benefits program. Insurance groups and actuaries at the Centers for Medicare & Medicaid Services have criticized the program and argued that it will be actuarially unsound.

Budget analysts say the CLASS Act would reduce the cost of implementing the Affordable Care Act up until 2014 but then would add $76 billion to the deficit from 2015 to 2020.

The CLASS Act program addresses “an important public policy concern, but is viewed by many experts as financially unsound,” Bowles and Simpson say in the Moment of Truth draft.

The program’s earliest beneficiaries will pay modest premiums for only a few years and receive benefits many times larger, and “sustaining the system over time will require increasing premiums and reducing benefits to the point that the program is neither appealing to potential customers nor able to accomplish its stated function,” Bowles and Simpson say.

The CLASS Act program should be “reformed in a way that makes it credibly sustainable over the long term,” and “to the extent this is not possible, we advise it be repealed,” Bowles and Simpson say.

In a section on Medicare, Bowles and Simpson suggest replacing the current deductible, coinsurance and co-payment rules with a single combined annual deductible of $550 for the Part A (hospital) and Part B (medical care) programs, along with 20% uniform coinsurance for health care spending above the deductible.

The co-chairman suggest providing catastrophic protection for seniors by reducing the coinsurance rate to 5% after costs exceed $5,500 and capping total cost sharing at $7,500.

They also propose discouraging Medicare supplement plans, which are also known as Medigap plans, from covering the first $500 of an enrollee’s costs, because “Medigap plans cover much of the cost-sharing that could otherwise constrain over-utilization of care and reduce overall spending.”

The provision would limit Medigap coverage to 50% of the next $5,000 in Medicare cost-sharing.

Bowles and Simpson are recommending similar treatment for TRICARE for Life, the Medigap program for military retirees, which would save money both for that program and for Medicare, as well as similar treatment for federal and private employer retiree benefits programs.