This One Goes to Eleven (Robert Wright & Mickey Kaus)

[DWAnderson]

Originally Posted by stephanie

If we are assuming that people will have insurance (which is the only way anyone would think privatization is a good thing), then you don't really have any free market effect, because the insurance company acts as the gov't would and pays for what's covered. There's no incentive for doctors to perform fewer procedures or do operations more cheaply or whatever.... Thus, the only way that one can assume a cost control benefit from privatizing is by assuming that people will have a lesser degree of coverage. This is obviously what is likely -- indeed, if the market in insurance is really allowed to work, many or most old people will have less coverage, and many will have none at all.

People buy homeowners insurance that from companies that compete in many ways. They don't pay out of pocket for many costs, yet a competive home insurance market still provides people with consumer surplus and creates other efficiencies. There are many possible ways to save money without sacrificing the overall quality of care (unless you believe that the current system is the best possible). The only question here is whether these efficiencies are more likely to be realized by goverment dictate or by competition between insurance plans. Remember, I am assuming equal levels of funding for the Ryan plan and Medicare. Reasonable people can disagree about what the appropriate level of funding is, but not (IMHO) about what the best system for spending a given level of funding.

The rest of your response misapprehends the key component of the Ryan plan. Hint: its not the level of funding, its the mechanism for using that funding.