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With Gingrich, Be Sure to Read the Fine Print on Medicare Reform

In some circles, Newt Gingrich has the reputation of being a man with unsurpassed mastery of the issues. He is offering the “most substantive campaign in modern history.” He is all about offering “solutions.” And it’s said that one of the appeals of Gingrich is that he wouldn’t simply defeat President Obama; he would “intellectually flatten” him in debates.

Perhaps. But here’s a warning: When it comes to the former Speaker of the House, be sure to read the fine print. Take as one example this recent hour-long interview with Gingrich. At first blush he seems totally in command of the issues. But if you carefully parse what he says, potential weaknesses begin to appear.

To be specific: Representative Paul Ryan’s Medicare reform, released in April, would fundamentally restructure the program by transforming it from a fee-for-services system (FFS) to one that is based on premium support (in which the federal government would give people money, increasing slowly over time, to shop around for their own private insurance plans). According to Gingrich, who earlier this year characterized the Ryan plan as an example of “right-wing social engineering” (a description he defended as accurate in his interview), “I would approach the Medicare differently. I would actually offer [Ryan's] Medicare choice next year. But I’d offer it as a choice if people could take — if they thought it was better for them, not as an imposition.”

This comment cries out for a clarification. Because if Gingrich means that an individual could stay in today’s (uncapped, fee-for-services) Medicare system without paying anything more, then his plan is not reform in the slightest. Every one of the problems that exist with the current Medicare system would remain, including massive underpayments to providers, shrinking trust funds, and government price setting. Unless federal expenditures are capped — as they are in a defined contribution system — Medicare will continue to grow at unsustainable rates. An uncapped FFS option ignores the largest driver of the country’s fiscal crisis. With government’s price setting and existing Medicare customer base, no private company could possibly compete against today’s uncapped fee-for-service option. There would be no incentive for a private company to enter this market.

It’s no accident that all of the fiscal scorekeepers — including the Centers for Medicare & Medicaid Services (CMS) actuaries, the Congressional Budget Office, and more —assume no savings from a plan that keeps an open-ended FFS plan in place. Their (correct) assumption is that no one would ever choose a capped plan over an uncapped plan. In terms of taming our deficit, it would be useless.

This is no small matter. There is simply no way to avert a fiscal catastrophe without fundamentally reforming Medicare’s payment system. It is arguably the single most important domestic issue facing our nation. And Gingrich’s proposal, at least as a fair-minded observer can interpret his comments, would be utterly worthless. The same cannot be said about the proposals of many of the other GOP candidates (see here for more).

But let’s give the former Speaker the benefit of the doubt. Does he embrace moving America away from a defined benefit to a defined contribution system? If so, more power to him. If not, then Gingrich is articulating a proposal that would be a huge substantive and intellectual retreat for conservatives. It would be a solution to nothing at all. And one would think this would matter, to conservatives more than anyone else.



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