The Harvard researchers looked at the (limited and constricted) private-plan option already operating in Medicare today—a program called Medicare Advantage … and found that, on average, the Medicare Advantage plans cost far, far less than federally run fee-for-service Medicare.

This is the opposite of what Democrats were saying a year ago. Then, they were touting a Congressional Budget Office study that estimated the private plans offered to Medicare beneficiaries in the system Ryan envisions would cost much more than traditional fee-for-service Medicare, and thus require higher premiums—$6,400 higher in 2022—to be paid by beneficiaries. This new study shows otherwise, and proves the very point that champions of premium support have been making for years.

The $64-per-month estimate is based on the study’s finding that private plans can deliver the full Medicare package of benefits at a significantly lower cost—nearly 10 percent lower, on average—than the government-administered fee-for-service program. That’s precisely the win-win proposition Paul Ryan has been touting: Beneficiaries could get their comprehensive Medicare benefits for no additional premium if they selected the less expensive private plans, and taxpayers would spend 10 percent less on the subsidies for the Medicare program.

But this is a distortion of our findings, for several reasons. First, it confuses costs and payments. Medicare Advantage plans bid less than traditional Medicare, but they are paid more. The plans are officially supposed to use these higher payments to sweeten the pot—add additional benefits, reduce cost sharing, and the like—though some likely go for profit as well. This is why the Affordable Care Act reduced the amount that the government pays to managed care plans, over howls of protest from conservatives. Bidding less does no good for the program if the government then overpays relative to what was bid.

Second, they miss a key part of the reason why the Congressional Budget Office estimated that Ryan’s voucher proposal would cost seniors more. Medicare Advantage plans can only cost what they do because the traditional Medicare program is in place to help them. Specifically, Medicare sets very low payment rates to providers, and Medicare Advantage plans bargain up a bit from those rates. Get rid of the traditional Medicare program, or even reduce its enrollment substantially, and the estimated cost of Medicare Advantage premiums skyrockets.

Third, determining whether the private plans are really more efficient than traditional Medicare requires more than just knowing that they bid less. The question is why private plans come in cheaper. We take a cautious, nuanced view:

Private plans can cost less than traditional Medicare because: (1) they may use medical resources more efficiently; (2) they may enroll healthier patients relative to the risk-adjusted payment; or (3) their negotiated prices may not fully reflect the costs of indirect medical education or payments for disadvantaged hospitals, which traditional Medicare explicitly pays. The magnitudes of efficiency, selection, and avoided add-on payments are unclear... To the extent that the 9% cost advantage reflects efficiency, it suggests there are better ways to provide the traditional Medicare benefit.”

To put it a bit more plainly, it’s possible that the private plans are cheaper because they really do offer the same benefits at a lower cost. It’s also possible that the private plans are cheaper because the insurers are very good at attracting the best risks—that is, the healthiest seniors least likely to run up medical bills—or because they don’t also subsidize other parts of our health care system, such as medical education. In effect, they may be gaming the system. At this point, we really don’t know which answer is correct, although it’s entirely possible all three are true, to an extent.

Making the wrong assumption here could be fatal, particularly to those seniors with the gravest health needs. If managed care plans are able to select healthier enrollees—by skimping on benefits in ways that get around whatever regulations (if any) the Romney-Ryan plan put in place—traditional Medicare will end up with less healthy seniors, driving up its costs. The system will spiral out of control. The costs will proportionately rise and the guarantee of benefits that is the core of the Medicare program would erode. That is why many economists are wary of a pure premiums support model.

At the very least, it makes sense to see how premium-support works in the non-elderly population, since their health needs overall are less severe. The Affordable Care Act does that, by creating “exchanges” for people who don’t have employer-sponsored coverage. Watching and learning from that initiative would help in designing a workable system for the elderly. That is why, on many counts, the biggest lesson is that allowing the Affordable Care Act to work—rather than trying to take it off the books—might be the best way for premium support to succeed.

David Cutler is Otto Eckstein Professor of Applied Economics at Harvard University. In 2008, he was senior health care advisor to the Obama Presidential campaign.