Paul Ryan's Healthcare Boondoggle

| Wed May 25, 2011 10:49 AM EDT

Peter Orszag may be an ex-Obama aide, but his cost control bona fides are pretty widely acknowledged. And he says that last month's CBO is right: Paul Ryan's plan to voucherize Medicare wouldn't reduce healthcare spending, it would raise it:

On the critical metric of whether the Ryan plan would reduce total health-care costs [] the CBO conclusion is shocking: The plan would not only fail to decrease health-care costs per beneficiary, it would increase them — by an astonishingly large amount that grows over time. By 2030, health spending on the typical beneficiary would be more than 40 percent higher under the Ryan plan than under existing Medicare, according to the CBO report.

....How could this possibly be, when the point of reform is to reduce costs? The CBO points to two factors: Private plans have higher administrative costs than the federal Medicare program, and less negotiating leverage with providers.

Everything in life is relative. The CBO’s analysis of the health-reform act that was passed last year was, well, lukewarm on its potential to reduce costs. Compared with the Ryan plan, though, the health reform act comes across as an efficient cost- containment machine.

The main goal of Medicare reform isn't to reduce federal healthcare spending. That's only a side effect. The main goal is to reduce healthcare spending, full stop. If, instead, your plan increases the cost of healthcare but reduces the federal share of that spending, all you're doing is making things worse. The cost of healthcare goes up and more and more patients no longer have the means to pay for it. There's literally no upside to a plan that does this.

In other words, there's no upside to Paul Ryan's Medicare plan. It's bad news across the board. What we need isn't ideological nostrums, it's actual ideas for controlling costs. Paul Ryan is entirely silent on that.

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