Yuval Levin Tears Krugman a New One

I’ve linked to Mr. Levin’s articles before, and I will now do so again. Out of everyone, he’s probably the person one can learn the most from when it comes to health care and economic policies. Today he’s tearing apart this article from Paul Krugman, New York Times’ own Baghdad Bob when it comes to fiscal policy.

But Krugman’s chief focus is on what Romney and Ryan have had to say about Medicare, and what they propose to do about it. He describes their proposal this way:

“But back to the big lie. The Republican Party is now firmly committed to replacing Medicare with what we might call Vouchercare. The government would no longer pay your major medical bills; instead, it would give you a voucher that could be applied to the purchase of private insurance. And, if the voucher proved insufficient to buy decent coverage, hey, that would be your problem.”

Big lie is right. Krugman’s description here is, to put it charitably, entirely incorrect. The Romney-Ryan proposal involves a hybrid of defined-benefit and defined-contribution insurance. The government would establish a basic benefits package, based on what Medicare covers today, and each year private insurers and a government-run fee-for-service insurer would bid to offer that coverage (or more) at the lowest premium they could offer. The amount Medicare would spend on behalf of seniors would be set at the level of the second-lowest bid (or the fee-for-service bid, whichever was lower) in each region. Seniors who chose options that cost more than the premium-support payment (because they offered more benefits, or were less efficient) would have to make up the difference themselves, and those who chose a less expensive option would get the difference back in a tax-free health-savings account. In such a system, seniors would continue to be guaranteed comprehensive coverage with no greater out-of-pocket costs than today’s seniors have, but intense competition among insurers could drive down the cost of providing it. If it worked, Medicare’s costs would decline dramatically, making the program (and the federal government) more fiscally sustainable. If it didn’t work, costs would not go down and another approach would have to be found. Either way, seniors would have a guaranteed, comprehensive benefit. By definition (that is, by program design), the voucher would not prove insufficient to buy decent coverage because its value would be determined by the cost of decent coverage in the very market in which it would be used.

So it goes on. Mr. Levin dissects each of Krugman’s inaccurate statements and corrects him, using actual numbers and plain English.

I’d read the whole thing. You can find it here.