Paul Krugman on the Ryan budget proposal:
And then there’s the much-ballyhooed proposal to abolish Medicare and replace it with vouchers that can be used to buy private health insurance….
…The House plan assumes that we can cut health-care spending as a percentage of G.D.P. despite an aging population and rising health care costs.
The only way that can happen is if those vouchers are worth much less than the cost of health insurance.
Well, this is just plain illiterate. In fact, the only way that can happen is if the voucher system affects people’s health care choices. Which is, you know, the whole point.
Krugman talks about “the cost of health insurance” as if it were an immutable number. But vouchers will affect health care choices (Do I really need to see the doctor every time I have a sniffle? Do I really need an insurance policy that covers that?) and will therefore bring down medical costs. Reasonable people can argue about the projected size of that effect (though my sense is that most economists specializing in health policy expect it to be huge). But nobody who writes what Krugman wrote should be mistaken for a person who is being reasonable.