Jared Bernstein has a good and clear explanation as to why Rep. Paul Ryan’s (R-WI) argument about seniors using “premium support” vouchers to “deny business to inefficient providers” is so horribly wrong:

Suppose you send me to the grocery store to buy you a gallon of milk. Milk costs $3.50 a gallon but you give me $2. I spend the whole day “denying business to inefficient providers”—i.e., grocers who all charge more than that—and at the end of the day, bring you back a pint.

Now, instead of milk, where I’ve got the information I need to be a smart shopper, suppose you give me the same under-priced voucher but ask me to bring you back a plan for treating that strange pain you’ve been experiencing on your left side on humid days.

There’s no “denying business to inefficient providers” in the Ryan plan because there’s no market discipline that average folks with incomplete information armed with an inadequate voucher can enforce on a private health insurance market that’s…well, different.

Part of the problem is that individuals don’t have the market clout of a large employer or a program like traditional Medicare, which are able to secure better prices from providers than future retirees purchasing coverage on their own (under Ryan’s plan) or many other private payers.

Look at this data from S&P tracking the growth of health care costs. As Maggie Mahar points out, over the year ending March 2011, Medicare spending rose at an annual rate of 2.78% — the lowest rate posted for the Medicare Index in its six-year history — while “health care costs covered by commercial insurers rose by 7.57%.” This creates a problem for those who argue that private businesses are magically able to control costs better than government programs:

Why is Medicare cost growth slowing? It appears that “costs for Medicare patients are being better contained than those covered under commercial insurance plans,” observes David M. Blitzer, chairman of the S&P Index Committee. And the provisions in the Affordable Care Act that will put Medicare on the road to financial solvency haven’t even begun to kick in. Meanwhile, conservatives argue that we must privatize Medicare, because taxpayers cannot affords “runaway” government entitlement programs. I wonder how they explain the S&P report.

Robert Pear reports that the Obama administration is raising concerns about Indiana’s new law to cut off all state and federal dollars to Planned Parenthood, arguing that the measure may impose “impermissible restrictions on the freedom of Medicaid recipients to choose health care providers.” The Indiana measure “prohibits state agencies from entering contracts with or making grants to ‘any entity that performs abortions or maintains or operates a facility where abortions are performed’ and “terminates existing state contracts with such entities”:

Asked for comment on the Indiana law, the federal Centers for Medicare and Medicaid Services provided this statement, cleared by the White House: “Federal law prohibits federal Medicaid dollars from being spent on abortion services. Medicaid does not allow states to stop beneficiaries from getting care they need — like cancer screenings and preventive care — because their provider offers certain other services. We are reviewing this particular situation and situations in other states.” [...]

States can obtain federal permission to waive certain requirements of the federal Medicaid law. But the federal law says that “no waiver” may restrict the choice of Medicaid beneficiaries in receiving family planning services.

In other words: House Republicans who voted to ban federal funding to Planned Parenthood in Congress and the five states — Kansas, North Carolina, Oklahoma, Texas and Wisconsin — considering similar legislation are actively trying to do what they accuse the federal government of doing: ration health care to millions of lower-income Americans. The Obama administration — the alleged rationer-in-chief — is working to preserve “choice” and fair access to providers.

The other irony is that the GOP’s efforts to restrict funding to contraception will great increase spending, further undermining the GOP’s claims of fiscal responsibility. According to a new study from the Guttmacher Institute, unintended pregnancies cost taxpayers approximately $11 billion per year. Not surprisingly, “rates of unintended pregnancy are far higher among poor and near-poor women (those with incomes under twice the federal poverty level) than those with higher incomes” — the very women who would be denied contraception under the GOP’s reforms. As NPR’s Julie Rovner reports, “As a result, nearly two-thirds (64 percent) of the 1.6 million births resulting from unintended pregnancies in 2006 were paid for by public health insurance programs.”