It would leave current seniors and people who are now over 55 untouched, but for all younger Americans would transform the Medicare system into a premium-support system, in which Medicare would offer a fixed amount per recipient each year and individuals could use that amount to choose from a menu of private insurance options as well as one public fee-for-service option.
The latter would be a fee-for-service plan as an option within the capped premium-support system and so competing with the private insurers, not today’s open-ended fee-for-service Medicare as an alternative to a premium-support system...
The government would define the minimum insurance benefit it would seek to provide to all covered seniors, based on the level of coverage Medicare now provides, and then there would be a process each year in which the competing insurers would offer bids proposing to provide that (or a greater) benefit at the lowest cost they could. The level of the premium-support payment would be set at the level of the second-lowest of the bids. Seniors would then be able to apply that amount toward the purchase of any of the plans on offer. Thus, there would be at least one option that would cost less than the premium-support benefit, and seniors choosing that option would get the difference back; there would be at least one plan that cost the same as the benefit, so that seniors could obtain it with only the same out-of-pocket costs they have today; and there would be other plans that cost more (perhaps because they offered more, or because they failed to find ways to drive greater efficiency in their networks of doctors and hospitals) and for which seniors would pay an additional premium if they chose. Poorer and sicker seniors would get additional help, while the wealthiest seniors would get less...