Democrats push Medicare cap on out-of-pocket care, GOP expected to resist

Unlike Medicare Advantage plans, traditional Medicare has no annual limit on beneficiary spending. Sen. Ron Wyden and 14 Democratic co-sponsors will introduce legislation Thursday to cap what people pay out of pocket in traditional Medicare, giving relief to enrollees who can still face large hospital and doctor bills even after Medicare pays its share.

That gap is most painful for beneficiaries who do not have extra coverage. KFF found 3.5 million people, or 13% of traditional Medicare enrollees, lacked supplemental coverage in 2023 and therefore faced the risk of high annual out-of-pocket costs. Most others buy protection such as Medigap, but KFF puts the average Medigap premium at about $2,600 a year, adding another layer of cost on top of Medicare premiums and deductibles.

Medicare Part D got its first annual out-of-pocket prescription-drug cap in 2025 under the Inflation Reduction Act, and the Centers for Medicare & Medicaid Services says that threshold will rise to $2,100 in 2026 after adjustment for spending growth. Congress.gov lists Wyden’s RxCAP Act in 2019, which would have eliminated beneficiary cost-sharing above the Part D annual threshold.

Urban Institute analysts estimated June 3 that a $5,900 annual cap on traditional Medicare Parts A and B would protect about 3.8 million enrollees in 2026 whose cost-sharing is projected to exceed that level. Such a cap could also reduce Medigap premiums and ease state Medicaid budgets, the institute said, while earlier Urban Institute work found about 4.5 million fee-for-service enrollees had more than $5,000 in cost-sharing in 2023.

Wyden framed the debate as a choice between ordinary beneficiaries and the wealthy, saying Democrats want to give people on traditional Medicare "a fair shake" while Republicans want to help billionaires. Republicans will cast the proposal as a Medicare expansion rather than a repair. AHIP, the health-insurance lobby, argues that Medicare Advantage delivers better care at lower cost and has attacked comparisons with fee-for-service Medicare.