I have the same issue on Ubuntu 16.04, I solved it with some work around.
My version of gems is 2.5.1, but the rhc is in folder 
/var/lib/gems/2.3.0/gems/rhc-1.38.4
( I founded by searching the folders)

I navigated there and run 'rhc setup' from this location.
It worked.

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https://bugs.launchpad.net/bugs/1531613

Title:
  rhc package isn't working

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