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Just Because Paul Ryan Says Something Doesn't Mean It Isn't Egregiously Wrong

05/23/2011 11:03 am ET | Updated Jul 23, 2011
  • Jared Bernstein Fmr. Obama administration economist; CNBC and MSNBC contributor

When I introduced this blog a week ago, I said that one reason for it was to help people sort out some of the extremely misleading assertions partisans are making these days.

Rep. Paul Ryan seems intent on keeping me very busy. On Meet the Press this Sunday, he repeated this little chestnut he's been tossing around lately regarding the Republican's treatment of Medicare in the budget plan he authored: "Our plan is to give seniors the power to deny business to inefficient providers...their plan [Affordable Care Act] is to give government the power to deny care to seniors."

Just a few little words... but there's so much wrong with this -- the logic is so upside down it's hard to know where to start. I'll go after the first part here and leave the second part -- 'their plan' -- for later.

To get why this "market solution" can't work, you have to understand a bit about how Ryan's plan changes Medicare. As is by now pretty widely appreciated, including by many in his own party, the plan ends guaranteed health care coverage for seniors and replaces it with a voucher for them to shop for insurance on the street.

Importantly, the value of those vouchers start well below where they need to be to enable seniors to afford coverage comparable to Medicare today (in fact, beneficiaries costs would have to double), and their value falls increasing behind coverage costs over time.

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 experience 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.

I'll deal with the other part of Rep. Ryan's misleadingly mendacious medical mantra manana. Check this out in the meantime if you're so inclined.

This post originally appeared at Jared Bernstein's On The Economy blog.