Center for Budget & Policy Priorities
The health plan from House Republican leaders would raise costs for many or most Medicare beneficiaries by converting Medicare to a premium support system, raising its eligibility age, and modifying its cost-sharing requirements.
Premium support. Under premium support, Medicare would make a fixed-dollar payment (often called a voucher) for each beneficiary to defray part of the cost of health insurance — either through a private plan or a form of traditional Medicare. The beneficiary’s premium would equal the difference between the voucher amount and the cost of the plan that he or she selected. Premium support would apply to all new beneficiaries starting in 2024 and to any other beneficiaries who chose to participate.
Unlike the current system, in which Part B premiums are generally the same for all beneficiaries, premiums under the House GOP plan would vary by region and by plan. Although the GOP plan lacks the details to assess its impact on beneficiaries, most beneficiaries enrolled in traditional Medicare would pay more than under current law, according to the Congressional Budget Office.
Eligibility age. The House GOP plan would gradually raise Medicare’s eligibility age from 65 to 67, starting in 2020. At the same time, it would repeal or weaken health reform’s coverage expansions through Medicaid and the health insurance marketplaces. Consequently, 65- and 66-year-olds who lacked access to employer-sponsored insurance would have to get coverage in a largely unregulated individual market. Insurers could charge much higher premiums to this age group than they can under the Affordable Care Act and even more to those with pre-existing conditions who weren’t able to maintain continuous health coverage. The proposed tax credit for health insurance would likely be much smaller than the ACA’s subsidies, and many 65- and 66-year-olds, particularly those who are poor or near-poor, would end up uninsured or underinsured.
Cost sharing. Among its few positive elements, the Republican plan would add an annual out-of-pocket spending limit to traditional Medicare, thereby filling the program’s largest coverage gap. The plan, however, would also increase cost-sharing for many beneficiaries by establishing a single unified deductible as well as uniform 20 percent coinsurance.