The irony of the Ryan plan for “premium support” is, of course, that it resembles Obamacare with the public option. Some people would say “hypocrisy” rather than “irony,” but Ryan is just being practical here; he can’t get rid of Medicare altogether, so this is the best he thinks he can do.
The intellectual basis for “premium support” is the Republican belief, completely unsupported by the facts, both in this country and elsewhere, that the private sector is always more efficient than the government, and that competition is a better way of holding down costs than the use of a consumer cartel. In my view, the most important questions about the plan in practice are as follows:
1. Will the amount of the voucher increase over time based on population growth and medical inflation, or just the CPI? If the former, privatization would not really result in any cuts; if the latter, which is much more likely, the legislation would shift substantial costs from the government to individual beneficiaries.
2. Will the private plans be required to provide all of the same benefits as traditional Medicare? Private insurance companies make money by screening out customers who represent large and open-ended financial commitments. It is inevitable that even under a GOP plan, there will be some elements of community rating, which will present a problem for the companies when they consider making bids. If the private plans are required to provide all of the same end-of-life care that Medicare does, I can’t imagine the companies really wanting to participate in what looks like a huge potential money pit. If not, if I were an insurance company executive, I would pitch a plan to the younger and healthier seniors that would include low co-pays and perks like gym memberships, while limiting liability for end-of-life care. Under that scenario, large numbers of seniors would start out with one of these private plans and then move into traditional Medicare when they get older and sicker. Medicare (already more expensive than in the past due to the loss of its effective monopoly power) will then go into a death spiral due to increased costs, and will either collapse or be forced to eliminate its payments for end-of-life care.
The bottom line is that in Scenario #2, the market will ultimately serve as a “death panel” for old, sick seniors. You can make a case for that, but I don’t think many of Trump’s supporters knowingly voted for it.
My prediction: Trump, who hates making choices that will cost him popularity, particularly among the members of his base, will keep quiet and watch what happens. The Ryan plan will pass the House, but run into strong opposition in the Senate. The public will react strongly and negatively to the plan. Knowing a vote loser when he sees one, Trump will pull the plug, and the issue will die.