It's a good question about Paul Ryan's Medicare plan, isn't it? Without a mandate, as in the ACA, the insurance companies have no requirement to bring the sickest and most expensive customers into their insurance pools – and no incentive. In fact, the experience of Medicare Advantage would seem to prove that this is a non-starter.
The more generous system brought insurance companies back to the table, but ended up spending 14% more per patient than regular Medicare in the process. "In theory the idea of a more competitive market would have a lot to recommend it," MIT economist Jonathan Gruber told TPM, "But in fact it just simply hasn't worked. We have the example, we've lived it, it's Medicare Advantage, and it hasn't worked"
[A] $15,000 voucher in 2014 that sufficiently subsidizes an insurance plan may fall woefully short in 2020 when the costs become more apparent. Better insurance also runs the risk of overuse that will drive up provider costs as well, just as it does now in the non-senior health-care sector.
The best system overall for the US is one that gets third party payers out of the way of pricing signals, but on senior care, that’s almost certainly a political impossibility. Ryan’s plan works best to get cost control in the government portion of health-care financing as a transition from single payer, but it may not be a viable long-term solution, either.