Hatch said the idea could gain bipartisan support, citing a Medicaid proposal then-President Clinton put forward in 1995.
“If we’re serious about addressing our nation’s debt, Medicare and Medicaid need structural reforms," Hatch said in a floor speech Thursday.
He said his package of five reforms should be included in any deficit-reduction package.
The proposal also calls for raising the Medicare eligibility age from 65 to 67. Although President Obama supported that change in his earlier push for a "grand bargain" on the debt, Democrats have more recently taken a hard line against raising the eligibility age.
Hatch also called for new limits on the supplemental Medicare plans known as Medigap and expanding the use of competitive bidding throughout Medicare. He said the program should have a simpler structure for cost-sharing, which currently varies for different services.