New 'Medicare Part E' Public Option Mandates Coverage for Reproductive Services, Caps Medicare Out-of-Pocket Costs at $6,700

The "Choose Medicare Act" is a massive piece of legislation that essentially creates a brand-new federal health insurance option and overhauls key parts of both traditional Medicare and the Affordable Care Act (ACA). Think of it as a three-in-one health policy shakeup, designed to expand coverage and cap costs for millions of people.

The New Player: Medicare Part E Public Plans

The biggest change here is the creation of Medicare Part E Public Health Plans (Sec. 2). This isn't your grandma’s Medicare; it’s a new government-run insurance option that must be offered nationwide. These plans are required to be comprehensive—meeting the ACA’s "gold-level" standard and covering everything traditional Medicare covers. Crucially, the bill mandates that these Part E plans cover abortions and all other reproductive health services. This is a major power move: the bill explicitly states that state laws cannot block this coverage, meaning the federal plan overrides state restrictions on reproductive healthcare access. Almost any U.S. resident who doesn't already have Medicare or Medicaid can enroll, and the plans will be sold on the ACA Exchanges for individuals and small businesses, with options for large employers as well.

For providers, the bill automatically enrolls anyone who already participates in traditional Medicare (Title XVIII) into the Part E network. The Secretary of Health and Human Services sets the payment rates, which must be high enough to keep doctors in the network, but they can’t be lower than what Medicare pays or higher than the average private rate on the ACA Exchanges. If you’re a doctor, you’re now facing a new, massive federal payer with strict rate rules. If you’re a patient, you get a new, comprehensive coverage option, but its success hinges entirely on whether those payment rates are enough to maintain a robust network in your area.

Financial Security for Seniors: The $6,700 Shield

For those already on traditional Medicare (Part A and Part B), this bill offers a huge financial safety net (Sec. 4). Starting in 2027, your annual out-of-pocket costs for deductibles, copayments, and coinsurance will be capped. The starting limit is set at $6,700 for 2027, adjusted for inflation every year after. Once you hit that number, your covered services are free for the rest of the year. This is a game-changer for seniors who currently face unlimited out-of-pocket exposure under Parts A and B, often relying on expensive Medigap plans to fill the gap.

However, there’s an important catch: if your doctor doesn't accept Medicare's approved rate (doesn't "accept assignment"), the extra amount you pay in balance billing does not count toward that $6,700 cap. So, while the cap is a huge win, you could still face bills above the limit if you use non-participating providers.

Boosting ACA Subsidies and Lowering Costs

Sections 5 and 6 fundamentally change how the ACA works, making subsidized coverage both richer and more widely available. First, the bill makes the enhanced premium subsidies permanent and, critically, removes the 400% federal poverty line income cap (Sec. 5). If you’re a mid-career professional earning, say, 500% of the poverty line, you can now get help paying for your premium, preventing your coverage from consuming too much of your income.

Second, the bill changes the benchmark for calculating your subsidy from the "second lowest cost silver plan" to the "second lowest cost gold plan" (Sec. 5). Since Gold plans cover more of your medical costs than Silver plans (meaning lower deductibles and copays), the government is essentially calculating your subsidy based on a more expensive, better-quality plan. This means more money in your pocket to afford better coverage, starting after December 31, 2025.

Furthermore, the bill creates a $30 billion reinsurance and affordability fund (Sec. 7) to help states stabilize their individual markets, either by paying insurers to lower their risk (reinsurance) or by directly reducing consumer costs like premiums and deductibles. This aims to keep monthly premiums down and out-of-pocket costs manageable for people buying coverage on their own.

New Burdens for Employers and Insurers

If you’re an employer who doesn't offer affordable, qualifying health insurance, you now have a new administrative requirement (Sec. 3). Two years after enactment, you must direct every full-time employee to an ACA Navigator—a person or group that helps people sign up for coverage. This adds a small administrative burden to non-offering employers but ensures employees are aware of their options, especially the new Medicare Part E plans.

Finally, insurance companies face much stricter scrutiny (Sec. 9). The law broadens the federal government’s ability to review and reject rates that are "potentially excessive, unjustified, or unfairly discriminatory." This power is strengthened, and if an insurer charges too much, the government can force them to issue rebates back to consumers. Even "grandfathered" health plans—those older plans exempt from many ACA rules—must now comply with these rate review protections starting in 2026. This is a clear win for consumers, but it puts insurance companies under a much tighter regulatory leash.