The excerpts below are from a mid-length essay; it's best to read the whole thing.
...Speaker Gingrich and Dr. Goodman could have better insulated themselves from Krugman’s attack if their first italicized sentence had read, “Don’t cut Medicare to finance an expensive new entitlement.” I disagree with them in the way they have written it. It is not wrong to “cut” (slow the growth of) Medicare. It is wrong to do so if you are turning right around and spending those savings on a new spending program, leaving our long-term fiscal situation essentially unchanged.
...They cover themselves with their “unsustainable course” sentence, but they make it easy for Dr. Krugman and others to frame their position as one of irresponsible opposition to doing anything to address our the long run fiscal challenge. Many Congressional Republicans did the same thing, falsely wrapping themselves in the cloak of “protecting Medicare” when in fact in a deficit-reduction context they would probably make more significant changes to Medicare than those contained in the pending health care legislation
That section sets up the Ryan/Krugman analysis offered by Hennessey.
- President Obama and Paul Ryan agree we need to significantly slow the growth of Medicare spending to address our long-term fiscal situation.
- They differ on what should be done with the savings. The President wants to spend the savings on a new entitlement. Mr. Ryan wants to address our long-term deficit spending problem.
- They also have different ways of changing the way Medicare works.
- Dr. Krugman is attacking Mr. Ryan for the structure he proposes for Medicare. I imagine most Democrats would agree with the policy critique if not the inflammatory langauge.
- Dr. Krugman is also attacking Mr. Ryan for the magnitude of the changes he wants to make – how much he wants to slow Medicare spending growth. But in this respect, he is attacking a rough Obama/Ryan agreement. Dr. Krugman is the irresponsible one here, not Obama/Ryan.
...The policy reality is that if we are to prevent a massive debt explosion, unprecedented tax increases, and/or the destruction of other federal spending programs, Medicare’s spending growth will have to be dramatically curtailed from its current unsustainable 6.6% average annual growth rate. Medicare’s cost to taxpayers this year will be $25 B larger than last year....
Given that as a reality, then the choice becomes 'which method provides the cure with the least dislocation.'
[Hennessey provides a chart which is described in the text below.]
Dr. Krugman, the Obama Administration, and Congressional Democrats want to move more Medicare beneficiaries into the first structure, fee-for-service Medicare. Were this model applied to everyone, we’d call it a single payer system. The government directly interacts with providers of health care goods and services. It pays those providers and it regulates them. The functions of insurance are contained within the government. This allows the government and policymakers not just to pool risk, but to redistribute the costs of that risk among beneficiaries.
Mr. Ryan and most Congressional Republicans want over time to move Medicare to the second structure, now called Medicare Advantage. This is a parallel to our employer-based health insurance system, in which the payer (in Medicare’s case the government, for working people their employer) pays premiums to a risk-bearing private health insurance plan. The plan then interacts with providers of health care goods and services, negotiating payment rates with them and “regulating” them through contract terms
At this point, one expects to hear that Ryan is a stooge of the health-insurance companies. (But you won't hear that about the Janesville (D), Tim Cullen, will you?)
Dr. Krugman attacks the Ryan plan for increasing the means-testing in Medicare. Mr. Ryan wants to focus whatever amount of money is spent on those who are least able to afford paying. Dr. Krugman instead wants to subsidize everybody.
That fact is interesting. In effect, Ryan advocates re-distribution, and Krugman abhors it.
Strange bedfellows Krugman is adopting, eh?