Thursday, August 12, 2010

Washington vs. Paul Ryan -


Washington vs. Paul Ryan -


Mr. Ryan wants to remodel Medicare by giving seniors a modified voucher to buy private insurance. Mr. Orszag, et al., concede that the roadmap would make the entitlement permanently solvent, as confirmed in an analysis by their icon the Congressional Budget Office, but they claim that the amount of the voucher would not keep pace with rising health-care costs.

This is an odd complaint for an economist like Mr. Orszag, given that more market discipline and consumer choice in health care would drive down costs as it does in all other dynamic sectors of the economy. To take one example, recent research shows that a one percentage point increase in seniors insured by Medicare Advantage HMOs—the Ryan-like program that offers private options—reduces traditional fee-for-service Medicare spending by 0.9%, despite its price controls.

In other words, cost-conscious competition changes how doctors and hospitals provide care to all patients. A larger transition to market-based medicine could turn out to be as smooth as the private-sector shift to 401(k)s from defined-benefit pensions, and a similar reform was even suggested in 1999 by Bill Clinton's Medicare commission, which was led by Louisiana Democrat John Breaux.

This model is a threat to the ideology of those like Mr. Krugman who believe that government can and should decide how all patients are treated. But technocratic central planning won't reform the system, as its sad 45-year history in Medicare shows, and nothing is more likely to finish off Medicare "as we know it" than to continue the current trajectory as it swallows the federal fisc and crowds out all other priorities.

In that sense, Mr. Ryan is really presenting Washington with a philosophical choice between the status quo of an ever-larger and ever-more indebted government and a plan to pay for the promises we've made while still preserving free markets and economic growth. The firehose of invective pointed at Mr. Ryan is in part an attempt to scare voters and in part an effort to prevent voters from understanding that there is in fact a choice.




No comments: