Has Rep. Paul Ryan given the Obama administration and Democrats in Congress a sword with his new budget that includes Medicare reform?

That may be the only way these two groups know how to react to any serious attempt to get the nation’s finances in order before it is too late.  The Wall Street Journal notes this morning that in putting forth the Ryan budget the Republicans are “taking a huge political risk” but they are also “now setting the reform agenda.”

Remember the people who were so beside themselves when Sarah Palin colorfully dubbed panels of bureaucrats who determine life or death issues for older people Death Panels? Well, the Democrats are about to rediscover Granny and Gramps themselves. Look for the Dems to try to frighten the older folks with horror projections of what will happen if Paul Ryan’s reforms are enacted. They will pose as friends of Medicare, but they aren’t: Medicare is unsustainable without changes.

The Wall Street Journal describes Medicare as an entitlement “stuck in the Great Society time warp” that is both the largest and worst buyer of health care in America. Prices are set by government and the taxpayer pays. Here is how the Journal describes the Ryan plan:

 Under the Ryan premium support model, seniors would instead choose from a menu of guaranteed private insurance options of the kind younger, private-sector workers have come to expect. These plans would be subsidized by a “defined contribution,” roughly equal to what the government now spends per person. This subsidy, about $15,000, would grow over time with consumer prices, but seniors who wanted more expensive plans would pay the difference out of pocket.

Premium support would create a market reward for the services that consumers value. Because seniors would be chipping in at the margin, only above the fixed-dollar subsidy, most would favor lower premiums. Insurers would compete to supply them, and providers in turn would have a reason to innovate in health-care delivery and improve what has been their negative productivity rate.

Premium support would not cure all of America’s health ailments, and missing in action in the House budget is a comparable reform for the rest of the market. But Medicare is so big that if it doesn’t change, nothing else can. Simply unwinding Medicare’s price controls would be an historic achievement.

That said, Granny will not be turned loose unsupervised into the market wilds. The subsidies will flow through Medicare, only to regulated insurers and government-approved plans. It does not go as far as Mr. Ryan’s previous “roadmap,” which offered direct cash vouchers for individuals who preferred to buy insurance themselves. The subsidies are means-tested, so the poor would receive more support, as will sicker and chronically ill patients. They wouldn’t kick in until 2022, more than enough time for people to adapt and exempting everyone older than 55 if they wished.

If this sounds sensible to you, just wait until the AARP–that non-profit that famously rakes in all that green stuff by licensing products–and the Democrats get wound up on the subject. They will attempt to promote hysteria, not debate.