Choose Medicare Act
The Choose Medicare Act would create a new federal "Medicare Part E" public health plan option that competes in the ACA marketplaces (individual, small group, and large group). Medicare Part E plans must behave like qualified health plans, cover essential health benefits, provide Gold-level coverage, and include abortion and other reproductive services. The bill would preempt state laws that block coverage of reproductive services by these plans. It also establishes a set of adjacent reforms: expanded premium credits and cost-sharing reductions (via gold benchmarks), new out-of-pocket cost protections for Medicare Part A/B beneficiaries, funds to support start-up and reserves, a reinsurance/affordability program for the individual market, expanded rating rules to large groups, rate-review enhancements, and a navigator referral requirement for certain employers. The package envisions federal funding and administrative involvement (including CMS as a plan issuer and third-party administrator in some cases) and introduces several timelines for implementation (starting in 2026 for certain provisions, with broader effects in 2026–2028 and beyond). In short, the bill would establish a new public option, extend federal price/support mechanisms to stabilize premiums and cost-sharing, mandate reproductive coverage across Part E plans, and broaden federal and state oversight of plan pricing and protections.
Key Points
- 1Public option creation: Establishes Medicare Part E plans available in the individual, small group, and large group markets; plans must be qualified health plans that cover essential benefits, gold-level coverage, and all reproductive services, with abortion coverage required.
- 2Reproductive services and preemption: Part E plans must cover abortions and reproductive services, and states may not prohibit these plans from offering such coverage or apply laws that would prohibit it.
- 3Enrollment and employer provisions: Part E plans would be offered on exchanges; eligibility is broad (with specific exclusions for current Medicare, Medicaid, or CHIP beneficiaries). Employers can voluntarily offer Part E plans or have CMS act as a third-party administrator; portability rules allow workers to retain Part E coverage if their employment ends.
- 4Financial and provider-payment framework: Premiums must be set by the Secretary with market-specific and geographic adjustments, sufficient to finance benefits and administration, and aligned with existing rate rules. CMS would establish provider payment rates that are not totalled lower than Medicare and not higher than average Exchange payers, with a process to include new participating providers and restrictions on balance-billing.
- 5Cost and affordability enhancements: Expands premium credits to use gold-plan benchmarks, extends eligibility rules for subsidies to higher income levels, and enhances cost-sharing reductions (increasing payer share to 94%/92%/90%/85%/80% across income bands). Adds reinsurance and an affordability fund to stabilize premiums in the individual market.
- 6Out-of-pocket protections for Medicare FFS beneficiaries: Adds a new 1899C section to Title XVIII establishing an annual out-of-pocket limit starting at $6,700 in 2027, with future adjustments tied to CPI for medical care; establishes definitions and exclusions for eligible costs.
- 7Navigator referrals and workforce funding: Requires certain employers (under FLSA) to refer full-time employees to ACA navigators or equivalent entities; creates study requirements and authorizes funding to expand navigator capacity.
- 8Administrative funding and sequencing: Provides up-front start-up funding ($2 billion in FY 2026) and reserves for the initial 90 days of claims; creates a separate $30 billion reinsurance/affordability fund for 2026–2028 to support the individual market.
- 9Expanded rating and rate-review authority: Extends ACA rating rules to the large group market and strengthens the ability of states and the federal government to review and correct excessive, unjustified, or unfairly discriminatory rates, with potential penalties and plan disqualification for noncompliance.
- 10Grandfathered plans and effective dates: Affects grandfathered plans by applying new rate protections to plan years beginning on or after 2026; various provisions take effect on enactment or begin in plan years shortly thereafter (notably 2026–2028 for many affordability/reinsurance provisions).