Why Would Introducing a New Layer Of Rent-Seeking Interests Reduce Health Care Spending?

I think describing a Medicare voucher system as a “choice-based cost control program” is a terrible way of looking at it. The best thing to consider, if you’re purely concerned about levels of Medicare spending, is the brute political economy of it. Right now scheduled Medicare cuts keep not being implemented (i.e., we do the “doc fix”) due to complaining from the following groups:

— Old people.
— Health care providers.

If you turn Medicare into a voucher plan, then you’ll have the following groups lobbying against implementation of scheduled cuts:

— Old people (who’ll be more numerous in the future).
— Health care providers (who’ll be more numerous in the future).
— Insurance companies receiving RyanCare vouchers.

What about the political economy situation has been improved here? A true individual choice model would scrap Medicare entirely and then triple Social Security benefits (or some such) and then force providers to directly market their services to retirees as worth the money.


I should say that the Tyler Cowen piece I linked to says “You don’t have to combine that choice with the cost-increasing aspects of Medicare Advantage-like plans” which is aligned with the point I’m making here.

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