Medicare is supposed to be the third rail of American politics – but only for Republicans. Rep. Paul Ryan learned this the hard way last week, when New York Times columnist Paul Krugman unleashed a vitriolic attack on Ryan’s proposal to reform Medicare by transforming it into a voucher program for seniors.

Calling Ryan a “flimflam man,” Krugman claims that the main savings from the congressman’s plan would “come from sharp cuts in Medicare, achieved by dismantling Medicare as we know it.” Ryan’s vouchers, Krugman continues, would be “too small to pay for adequate coverage,” meaning that “wealthy older Americans would be able to supplement their vouchers” but “everyone else would be out in the cold.”

Krugman’s not the only Democrat gunning for Ryan. In his last speech as President Obama’s White House budget advisor, Peter Orszag also claimed that Ryan’s plan “mechanically cuts Medicare” and shifts “more and more cost and risk onto seniors.”

Well, if you’re worried about government cutting your Medicare benefits, or if you’re afraid of cruel politicians leaving seniors without critical access to care, don’t worry: It already exists, and it’s called Obamacare.

President Obama’s hallmark legislative achievement, the Patient Protection and Affordable Care Act, cuts hundreds of billions of dollars from Medicare. Of course, the bill is 2,400 pages long – so maybe Democrats missed the fine print in their haste to vote the bill into law.

Consider what Medicare chief actuary Richard Foster has to say in the recently released 2010 Medicare Trustees Report. Obamacare’s projections for cuts in Medicare spending are not realistic, he concludes, because providers won’t be able to slash their own expenses enough in response to remain profitable. Instead, “the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services.”

Translation: Obamacare’s vaunted savings comes from automatic, across-the-board cuts to Medicare. These it would achieve by slowing the rate at which Medicare payments for hospitals and nursing homes can go up compared to the overall rate of medical inflation. Assumptions for large health-care savings from Obamacare hinge on the premise that Medicare can pay less – a lot less over time – for seniors’ care, and that providers will respond by becoming more productive and efficient, finding ways to provide the same benefits more cheaply.


Paul Howard

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