People on medicare/-aid are already there because they can't afford other health insurance. All you will be doing by making health care less affordable for this population is forcing them to consume less health care, get sicker and visit the emergency room more, if not die for lack of preventive care. Emergency rooms and hospitals that are legally bound to treat people regardless of ability to pay, so those hospitals will turn around and charge health insurers more, who will, in turn, turn around and increase premiums.
Squeeze the balloon in one place, it bulges in another. Your solution ultimately would simply increase an already bloated inefficient system of risk transfer where 1/4 of all dollars spent are on administrative overhead.
Sorry, health care is where libertarian fantasies go to die. Free markets do not work for health care. The underlying things that make free markets efficient breakdown, i.e. subs ution of goods, price elasticity. Universal health care, paid for by a broad tax offers the least expensive and most effective way, to provide health care.
Every other industrialized country does this. We know it is cheaper because our health care spending per capita is roughly twice that of the average.