Ezra Klein - What makes Paul Ryan confident in his Medicare plan?: Here's a question for Paul Ryan, or anyone who supports Paul Ryan's plan: Why are the cost savings in his bill possible, while the cost savings in the Affordable Care Act aren't? Ryan has been warning that one of the ways the Affordable Care Act saves money in Medicare might be overstated.... But Ryan's skepticism about Medicare's ability to hit these targets is selective. As Uwe Reinhardt points out, if you look at what Ryan himself proposes to do to Medicare, it shares a crucial similarity. In the Ryan-Rivlin plan, seniors stop getting Medicare and begin getting a check to buy private insurance products that Medicare has certified. How does that save money? Well, it doesn't. Might actually cost money.... What saves money is that the check can only grow in value at GDP plus one percentage point -- that is to say, the same rate that Ryan considers implausible in the ACA.
This might make sense if Ryan and Rivlin had a much more plausible explanation of how their program would save Medicare money, but they don't. As CBO says (pdf), seniors will have to "purchase less extensive coverage or pay higher premiums" under Ryan-Rivlin. And it's actually worse than that, as Medicare is cheaper than private insurance, and so forcing seniors to buy private plans rather than Medicare will mean they pay more for the same health-care coverage....
So Ryan's plan is to hold down costs in Medicare by giving seniors less money to purchase more expensive private insurance. If you could make that stick, it would indeed hold down costs. But it's a lot more painful, and it includes many fewer mechanisms for cost control, than the Affordable Care Act. And yet when it comes to the ACA, Ryan firmly believes that seniors will quickly and successfully force Congress to reverse any reforms that degrade their Medicare experience. That's a fair enough concern, of course. What's confusing is why it isn't doubly devastating when applied to Ryan-Rivlin.