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Are Ryan's Savings Realistic?

A frequent criticism of the Affordable Care Act is that its efforts at controlling the cost of medical care are unlikely to take effect. The law will ultimately reduce what Medicare pays doctors, hospitals, drug makers, and other parts of the health care industry. As these cuts take effect, the argument goes, lobbyists for these groups will scream and lawmakers will rescind the cuts. 

Although I don't find that argument persuasive, I agree it's a reasonable argument. But if it's an indictment of the Affordable Care Act, it's an even bigger indictment of Paul Ryan's budget plan.

Here's why. You may have noticed that doctors and hospitals haven't protested these cuts. A big reason is that they also stand to gain something from the Affordable Care Act: 32 million newly insured people. And that means 32 million fewer people getting charity care, some of which eats into their operating margins. The coverage expansions, in other words, are the sweetener to get the health care industry to swallow the cuts. And it's those cuts, which push providers to be more efficient, that are our best hope for controlling health care spending in the long run.

Ryan, of course, would take away the coverage expansion. But, per reporting from Tim Ferhholz, Ryan has said he would leave in place the Medicare cuts. (The budget document promises to "retain the Medicare savings ... and reapply those savings to Medicare.") See the problem? Confronted with the prospect of declining revenue and no relief on charity care, providers are going to scream bloody murder. And that makes Ryan's cuts as politically risky as the ones in the Affordable Care Act--maybe even more so.