The GOP plans to cut $270 billion from Medicare over the next seven years. The cuts will mean smaller payments to health care providers, making them more reluctant to treat Medicare patients.
The Republican leadership believes healthy people will leave Medicare in favor of Medical Savings Accounts (MSAs), because if policy-holders stay healthy, they get to keep the money they didn't spend on care. But the money they keep is money that would normally pay the costs of those in Medicare who get sick. As more money drains out of the Medicare system, more relatively healthy people will leave Medicare in favor of MSAs or private insurance services such as HMOs and managed care plans. This creates a "death spiral," in which the sickest Medicare recipients are left behind in an underfunded and rapidly collapsing Medicare system.