At first glance, Paul Ryan's plan to send millions of seniors into the free market with dwindling vouchers in hand might seem a boon to the private insurance industry. But would companies even want to participate?
Unlike the Affordable Care Act, which mandated that millions of young and healthy Americans purchase insurance with government subsidies, the Paul Ryan plan would instead bring the oldest, sickest, and least profitable demographic to the table. And with the CBO projecting that the average senior would be on the hook for over two-thirds of their health care costs within just 10 years of the plan's adoption -- a proportion that is projected to worsen in the long run --- the government subsidies backing them up may not bring in enough profitable customers to make things worthwhile.
"If reimbursement rates are too low to provide basic benefits, they'll tell the government, 'You do it,'" one insurance lobbyist told TPM. "I don't think they can require they lose money, they'd just pull out."
They'd stop insuring seniors. After all, the whole point of the insurance industry is to make a profit, not to provide health care coverage. You take government out of the picture with the voucher plan that won't cover costs, and the insurance companies are stuck with the bill. They of course would either pass along the costs to the rest of us, or just refuse to provide coverage at all for seniors. That would in turn raise rates on everyone else.
Maybe that's Ryan's real point. I'm betting however that the insurance industry loves getting big money from the government, and they want more customers, not fewer ones with less money.
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