The problem is that these top-down cuts don’t work. In fact, by 2019, Medicare payment rates would actually dip below those for Medicaid – which already pays much less than private insurers do. Medicaid recipients can find it very difficult to get timely access to quality care. Over the long run, Medicare payments would fall to half Medicaid rates.

Medicare actuaries predict that under Obamacare, “beneficiaries would almost certainly face increasingly severe problems with access to care.” In 10 years, 15 percent of Medicare providers would be unprofitable; by 2030, one in 4 would be, rising to 40 percent by 2050.

Krugman’s criticism of Ryan’s plan is actually an apt description of what will happen if Obamacare is implemented as written: Medicare payments would become “too small for adequate coverage” and “wealthy older Americans would be able to supplement” their Medicare coverage out of pocket, while “everyone else would be out in the cold.”

Now, to be fair, no one actually expects Congress to allow Obamacare to be implemented as written. Medicare’s actuaries expect the Medicare cuts to be phased out starting in 2019. But that also means most of the long-term savings from Obamacare will be illusory – and along the way, we’ve put taxpayers on the hook for another massive federal health-care entitlement and an expanded Medicaid program. These new obligations will make future budget reforms even more difficult.

Krugman’s response to Ryan’s proposal is hard to distinguish from hysteria.

The real and important debate is over who buys health-care coverage and how. Liberals believe that the government should buy coverage for everyone, because it will be able to dictate prices to providers and force them down by fiat. Conservatives believe that Obamacare spends too much, shifts far too much power to Washington bureaucrats, and puts real reforms farther out of reach. Real reforms, we argue, should come from less government regulation (not none), and by empowering individuals to choose their own coverage – with a safety net for the poorest and sickest among us. Innovation and competition, we believe, will drive health care costs down, just as it does in the other 80% of the U.S. economy.

Ryan’s plan for Medicare reform is linked to a number of other market-based reforms, along with added financial protection for especially poor or sick seniors. One can argue about whether his plan would be successful, but it is a serious and thoughtful proposal. Our national leaders should be confronting health-care with the same seriousness.


Paul Howard

Paul Howard is the director of the Center for Medical Progress at the Manhattan Institute.