Thomas Saving and John Goodman have written an op-ed in today’s Wall Street Journal in which they pretend that Rep. Paul Ryan’s (R-WI) Medicare cuts are almost identical to the reductions Democrats enacted through the Affordable Care Act:
In light of the heated rhetoric of recent days, it is worth noting that for everyone over the age of 55, there is no difference between the amount of money the House Republicans voted to spend on Medicare and the amount that the Democrats who support the health-reform law voted to spend. Even for younger people, the amounts are virtually identical with GDP indexing.
The law’s spending path depends on making providers pay for all the future Medicare shortfalls. But since no one can force health-care providers to show up for work, short of a health-care provider draft this reform ultimately cannot succeed. The House Republican path, on the other hand, would make a sum of money available to each senior to choose among competing private plans—much the way Medicare Advantage provides insurance today for about one out of every four Medicare beneficiaries.
Saving and Goodman surely understand that there are different ways to cut Medicare spending, and they also know that the Ryan budget actually maintains many of the ACA’s productivity cuts to providers. The distinction is worth reiterating: the ACA reduced annual increases in payments to hospitals, skilled nursing facilities, home health agencies and other institutions to spur productivity and cut overpayments to private insurers that are not delivering value for Medicare dollars. They used that money to expand coverage to 32 million Americans — many of whom were receiving uncompensated care at these institutions — to extend the life of the Medicare program and invest in new demonstration projects that aim to encourage providers to deliver quality care more efficiently.
The Ryan budget, on the other hand, tries to change the behavior of consumers (not providers) by shifting more of the costs of coverage from the federal government to the individual. Republicans believe that individuals who go out and purchase coverage on their own will use less care (spend less money on health care) and create a more dynamic and competitive health care market. The problem with this approach is that there is no credible research showing that forcing individuals to be more cost conscious will significantly lower national health care spending or that the “savings from competition would be large enough to offset the massive reduction in funding.” Most importantly, as Jared Bernstein has pointed out, the GOP’s approach fails 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.”