Though I warned two weeks ago about the possibility of a Republican loss in NY 26, I’m not sorry that Democrat Kathy Hochul’s deceptive, demagogic resort to Mediscare succeeded. After May 24, no Republican can fail to anticipate the contours of the 2012 election. They’d best pay attention.

The New York loss may yield even more dividends. It may induce a certain complacency among Democrats. Rep. Steve Israel, chairman of the Democratic Congressional Campaign Committee, crowed, “Today, the Republican plan to end Medicare cost Republicans $3.4 million and a seat in Congress. And this is only the first seat … We served notice to the Republicans that we will fight them anywhere in America when it comes to defending and strengthening Medicare.”

Liberal columnist E.J. Dionne noted with satisfaction that “This is a big setback for Paul Ryan’s budget and a warning for Republican incumbents everywhere.”

And Senate Majority Leader Harry Reid, eager to wring every partisan drop from the special election results, scheduled a rushed vote on the Ryan budget. It failed 57-40 in the Democrat-majority chamber. A number of Republicans, including Scott Brown, Lisa Murkowski, and the ladies from Maine voted with the Democrats. (Rand Paul also voted against the Ryan budget – believing it to be too timid.)

Democrats believe that Republicans have blundered badly – changing the subject from the limping economy, the soaring debt, and the unpopular Obamacare to the Democrats’ favorite campaign issue – Medicare. But that confidence is misplaced.

Jane Corwin, the Republican candidate in NY 26, didn’t make counterarguments about Medicare – not even when the liberal group The Agenda Project aired a spot that looked more like a “Saturday Night Live” parody of a political ad than the real thing. A tall young fellow looking very much like Ryan pushes a delicate old lady in a wheelchair toward a scenic lookout. To the strains of “America the Beautiful,” on-screen graphics describe the Medicare program and claim that Ryan’s budget would “privatize” and thus end it. At the end of the spot, the Ryan figure dumps grandma out of the wheelchair and off the cliff. Subtle.

“Is America still beautiful without Medicare?” asks the graphic.

Is America still beautiful with politics like this? Sheesh.

For the Democrats to succeed with this tactic (and on political hygiene grounds alone, they deserve to lose), they must rely on the ignorance of voters. That’s a dangerous gamble. In one special election, you can get by with it. But in a nationwide contest that includes the presidency, it’s not going to be so easy.

Republicans happen to have reality on their side.

Reality: It isn’t as if there is a choice between preserving Medicare “as we know it” and reform. Medicare is – to use the environmentalists’ favorite word – unsustainable. The trustee’s report issued last week puts the program’s unfunded liabilities at $24.6 trillion and projects the program going broke in 2024. Even Treasury Secretary Tim Geithner recognizes “the need to act sooner rather than later to make reforms to our entitlement programs.”

Reality: Without reform, severe benefit cuts will be required in the Medicare program. Increased taxes simply will not cover the gap.

Reality: The Ryan plan would not affect those 55 and older and would gradually shift from an open-ended entitlement (which pays all bills submitted and thus encourages overuse) to a “premium support” model that will encourage competition among private providers. It will provide less money to the wealthy and more to lower-income elderly.

Reality: One of the biggest drivers of spiraling medical costs is the third-party payer problem. Both in the Medicare program and in employer-provided coverage, the patient himself has no incentive to shop around, and doctors are encouraged to order more and more tests and services because they are paid on a fee-for-service basis.

Reality: The Democrats’ solution to rising Medicare costs is rationing. They deny it, but the Independent Payment Advisory Board (which will not come into existence until after the 2012 election), a 15-person panel created by Obamacare, would have virtually unreviewable discretion to set prices for medical services. While it’s technically true that the IPAB wouldn’t have the power to prevent doctors from performing services, the low reimbursement levels will surely dry up the number of doctors willing to take Medicare patients.

Reality: The Democrats’ plan for a centralized, unaccountable, bureaucratic, price-controlling body for key medical decisions is precisely the sort of policy that has led European nations toward insolvency. Competition-oriented reform is not only the only possible way to save Medicare; it is the only way to preserve the national fisc.

And that’s the real message of NY 26.

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