From The Economist:
Mr Ryan’s plan ends the guarantee that all American seniors will have health insurance. The Medicare system we’ve had in place for the past 45 years promises that once you reach 65, you will be covered by a government-financed health-insurance plan. Mr Ryan’s plan promises that once you reach 65, you will receive a voucher for an amount that he thinks ought to be enough for individuals to purchase a private health-insurance plan. … If that voucher isn’t worth enough for some particular senior to buy insurance, and that particular senior isn’t wealthy enough to top off the coverage, or is a bit forgetful and neglects to purchase insurance, there’s no guarantee that that person will be insured. It’s up to you; you carry the risk.
Mr Ryan thinks this is a good thing, because individuals who are responsible for paying for their own health insurance will be strongly motivated to seek better insurance at a lower price. I think this is a terrible thing, because the mechanism Mr Ryan is using to incentivise people to seek better coverage for the price is to expose them to the risk that they will suffer from disease for which their insurance doesn’t cover them. The threat that you will suffer illness with inadequate treatment because you can’t afford it and your insurance doesn’t cover it is certainly a pretty strong motivator for most people to seek better insurance. But the purpose of insurance is to insulate people from risks like that. …
… Mr Ryan’s proposal to privatise and voucherise Medicare attempts to reintroduce the incentive to cut costs by dumping that risk back onto individual seniors. And the greatest risks will fall on the poorest, sickest, or least savvy elderly; they will be the ones most at risk of going uncovered. I agree with Mr Ryan that the government needs to limit taxpayers’ exposure to Medicare cost inflation. I think this plan is a fundamentally immoral way to do it.