Paul Ryan, the Republican’s vice presidential candidate has a plan for Medicare.He laid out the specifics months ago when he was known chiefly as the articulate congressman from Wisconsin and, more importantly, the bold chairman of the House Budge Committee. Ryan’s plan for Medicare won’t affect citizens who are 55 years old or older. Many of them would be financially crushed it if did. But Ryan’s plan would change Medicare for the enormous majority currently under 55.
Ryan’s plan is as up front and straight forward as the man himself. He would change the government’s health insurance plan for seniors so that instead of having Medicare pay the medical bills, the government would give the elderly a fixed amount of money to use in buying their own health insurance. In other words, it would do away with Medicare as we know it and substitute a voucher plan. And if the amount of the voucher isn’t enough to pay for the nice peace-of-mind plan you want, you’ll have to pay the difference or take the crummier, less expensive insurance.
In Paul Ryan’s theory of economics, the voucher plan would lower the cost of health insurance. Well, hooray for that! According to Ryan, competition between health insurance companies would cause them to lower their prices. That may confuse you, so let’s go over it again. According to the Ryan theory of economics, if all the elderly people in the country are given a voucher to purchase their own health insurance, that would create a big demand for health insurance and in the face of that big demand the insurance providers would lower their prices. You have to admit it’s a terrific theory.
You still have your doubts, right? You wonder if economics works that way in the real world. After all, if the US government offered everyone a voucher to buy an automobile, would car manufacturers lower the price in the face of increased demand for cars? Or would they raise the price, knowing that everyone had just received a nice check in the mail which they could spend only on a new car? That’s hypothetical, of course, so let’s see what’s been happening in the real marketplace where there’s real competition for your dollar. Amid the competition to sell health insurance, the cost to an individual person or to a company buying a policy for employees has been steadily going up, way up, not down. But it’s still a terrific theory.