The bill secures the existing Medicare program for those over 55 - so Americans can receive the benefits they planned for throughout most of their working lives. Those 55 and younger will, when they retire, receive an annual payment of up to $9,500 to purchase health coverage - either from a list of Medicare-certified plans, or any plan in the individual market, in any state.
The payment is adjusted for inflation and based on income, with low-income individuals receiving greater support and a funded medical savings account.
The sustainability problem with Medicare, as Peter Orszag is fond of pointing out, is due largely to the fact that health care spending is rising faster than GDP. What Rep. Ryan is proposing is to change Medicare from an open-ended entitlement to reimburse people for whatever expenses they incur to a voucher system.
The voucher system would allow the government to control the budget. If the elderly want to continue to increase their health care spending faster than the rate of inflation, they will have to dig into their own pockets to do so.
I prefer to phase out Medicare. A universal voucher system still involves a lot of recycling from taxpayers to recipients, when personal saving should be encouraged instead.
But give Representative Ryan credit. The biggest institutional crisis in health care in this country involves Medicare. And he would actually do something about it.