Democratic Representatives Jimmy Gomez (CA) and Don Beyer (VA) in the House, and Senators Jeff Merkley (OR) and Chris Murphy (CT) in the Senate, recently reintroduced the Choose Medicare Act. The primary goal of the bill is to establish a Medicare Part E, allowing employers and the general public to opt into Medicare.
Proposed Medicare Part E aims to:
- Enhance healthcare access and competition with private insurance.
- Fill gaps in the current healthcare system.
- Get more people covered.
- Make the nation healthier by providing a public option for comprehensive health coverage to anyone, regardless of age or employment status.
Key features and provisions of the Choose Medicare Act include:
Opt-In Mechanism
Employers of any size can choose Medicare Part E for their employees. They don’t necessarily need to eliminate their current plans. Individuals not covered by employer insurance can also opt in directly. The public option would be voluntary for firms.
Self-Funding and Competition
The bill’s authors designed Medicare Part E to be funded by premiums. It would compete directly with private health insurance, intending to increase competition and help lower private insurance premiums.
Marketplace Integration and Subsidies
The Act would make Medicare Part E available through all state and federal health insurance marketplaces. People would be able to use existing Affordable Care Act (ACA) subsidies to help pay for Part E premiums. The legislation also enhances premium assistance eligibility and would set benchmark premiums at the gold metal tier (80% actuarial value) instead of the silver tier (70% actuarial value).
Comprehensive Coverage
Part E would be required to cover the 10 essential health benefits mandated by the ACA, in addition to regular Medicare coverage. It would also guarantee access to a full range of reproductive health services, including abortion, and would prohibit discrimination based on preexisting conditions.
Affordability Measures
The bill targets affordability by capping out-of-pocket spending in traditional Medicare (e.g., $6,700 for 2027) and allowing Medicare to negotiate prescription drug prices. It would also include consumer protections against surprise medical bills.
Provider Reimbursement
The Secretary of Health and Human Services would establish a rate schedule for reimbursing providers. These rates would be no lower than current Medicare rates and not higher than the average rates paid by other health insurers offering coverage through an Exchange. Existing Medicare providers would be required to participate in Medicare Part E, and other providers could join.
Portability
Medicare Part E would be portable, meaning individuals could maintain their coverage if they lost employer-sponsored eligibility.
Funding for Implementation
The bill proposes $2 billion in start-up funding for fiscal year 2026 to establish the plans and initial reserves. Additionally, the government would appropriate $30 billion ($10 billion per year for three years) for a national reinsurance fund available in the non-group market, which helps lower premiums by protecting insurers against high claim costs.
What Impacts and Benefits May the Bill Introduce?
The Urban Institute released a study on the previous version of the bill using their Health Insurance Policy Simulation Model (HIPSM). That simulation projected that the Choose Medicare Act could have significant impacts:
Increased Insurance Coverage
The number of uninsured Americans is estimated to fall by 3.6 million relative to the baseline.
Cost Savings
A number of entities – households, the federal government, and employers – could save substantially under The Urban Institute’s simulation. Households could save an estimated $241 billion over 10 years due to lower premiums and out-of-pocket costs. The federal government could save $266 billion over 10 years due to lower premium tax credits. Employers could see their spending on premiums decrease by $284 billion over 10 years. These employer savings are assumed to be largely passed back to workers as higher wages.
Additionally, overall health spending could decrease by approximately $833 billion over a decade. The bill also reduces the federal deficit by an estimated $388 billion over 10 years.
Geographic Variation
The Act’s impact would vary geographically, with greater effects in areas that currently have less competitive insurance and hospital markets, as well as higher provider payment rates. Studies project that states that have not expanded Medicaid would see higher impacts.
What impact would this have on coverage in the U.S.?
Based on analysis from the Urban Institute in 2022, the Choose Medicare Act would have led to the following changes in coverage for the nonelderly population in 2024:
- The number of insured Americans was estimated to increase by 3.6 million relative to the baseline, reaching 256.3 million. Because the proposed legislation aims to provide a voluntary public insurance option to anyone, regardless of age or employment status, insurance coverage would be more affordable.
- Consequently, the Urban Institute projected the number of uninsured Americans to fall by 3.6 million, a 13.4% decrease from the baseline.
- The study estimated that employer-sponsored coverage would increase by 1.0 million. More employers offering coverage and employees opting into the lower-cost, and sometimes more generous, health insurance offers provided by Medicare Part E would drive that growth.
- The Urban Institute expected private non-group coverage to increase by 2.4 million (11.5%).
- The number of people receiving subsidized nongroup coverage was projected to increase by 708,000. This happens because the Act makes Medicare Part E available through health insurance marketplaces, allowing people to use existing ACA subsidies.
- Full-pay nongroup coverage was estimated to increase by 1.7 million (36.2%). This includes individuals who continue to purchase nongroup coverage but are no longer eligible for subsidies due to lower premiums, as well as previously uninsured individuals who find this coverage more attractive.
What are some concerns and challenges?
Despite the projected benefits, the legislation faces criticisms and challenges. Some critics, like Medicare specialist Chris Fong, argue that the legislation “romanticizes Medicare to be the perfect system, which it is not,” citing Medicare’s 80/20 cost-sharing structure, deductibles, lack of out-of-pocket maximum protection, and reliance on additional private policies for prescription drugs.
Some express concerns that an expansion like Part E could increase issues over Medicare’s long-term financial sustainability. Projections show the Medicare Hospital Insurance trust fund could be depleted by 2036. Part E could need additional funding if approved.
What’s Next?
The bill is unlikely to move forward in the near term, as Republicans currently control both chambers of Congress. Providers, like hospitals in more concentrated markets, are expected to oppose the bill due to the lower payment rates.
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