WASHINGTON (Reuters) - A budget proposal by Republicans in the House of Representatives calls for a sweeping overhaul of the government-run Medicare healthcare program for the elderly.

Here are some details of the plan outlined by House Budget Committee Chairman Paul Ryan. It is similar to the privatization proposal set out in his budget plan last year but this year's proposal includes elements of a compromise Ryan worked out with Democratic Senator Ron Wyden. Ryan argues that the current Medicare program is financially unsustainable.

Ryan's budget plan would:

* Keep the current fee-for-service Medicare system for current retirees and those near retirement.

* Change Medicare for workers currently under the age of 55. Starting in 2023, retirees would be given an allowance by the federal government to purchase medical coverage from a private insurer or traditional fee-for-service Medicare.

* Set up special insurance exchanges, similar to those established by President Barack Obama's healthcare overhaul, to provide a place for the elderly to compare and purchase plans. The proposed Republican budget would repeal Obama's sweeping 2010 healthcare restructuring law.

* Make all of the insurers on the exchange, including traditional Medicare, participate in an annual competitive bidding process to determine the dollar amount of the premium support allowance that elderly beneficiaries would receive to purchase medical coverage.

* Mandate that the second least expensive private insurance plan or the traditional Medicare option, whichever costs less, establishes the benchmark that determines the federal premium support allowance for the elderly.

* Ensure the government set coverage standards that at a minimum provide the same amount of benefits offered by fee-for-service Medicare.

* Require health plans in the exchange to offer insurance to all seniors regardless of age or health status.

(Reporting By Donna Smith; Editing by Paul Simao and Bill Trott)