Why does everyone presume that become more 'libertarian' will help the GOP? If anything it will doom them to losing the next few election cycles. As the Democrats embrace the values that most of the country hold (i.e. progressive values, if the polling is correct) going further to the right on economics and moving to the center on social policy is going to create a situation in which they lose their base and alienate independents or Democratic-leaning independents altogether.
I don't think anyone is suggesting that they go rightward on economics. I feel like if they kept a similar position on economics and at least toned down the social issues rhetoric like the Democrats used to have to they'd start to do better with independents. There's still a market for moderate Republicans in many blue states.
A Republican that wants to abolish Medicare is not a moderate, though. A moderate Republican would just be a milder Democrat. Like, raise the minimum wage, but only to $8.25 instead of $10.10, or something. At least that's how I envision a moderate Republican behaving.