Newt Is the Problem
On health-care entitlements, Newt has moved left.


Avik Roy

Worst of all was Gingrich’s conduct during the 1995 government shutdown, a catastrophic failure that directly caused a decade of Republican spending indiscipline. Pres. Bill Clinton refused to sign Gingrich’s balanced-budget legislation, which included $270 billion in Medicare cuts (using something, incidentally, quite similar to Paul Ryan’s plan), $183 billion in Medicaid cuts, and $245 billion in tax cuts. Clinton portrayed the Republicans’ proposal as cutting taxes for the wealthy while undercutting Medicare and Medicaid.

Initially, it appeared that Republicans were winning the public debate. But then came the infamous comment by Gingrich that Clinton’s decision to put him on the back of Air Force One during a trip to Yitzhak Rabin’s funeral was “part of why you ended up with us sending down a tougher continuing resolution” budget bill, ending any hope of compromise and guaranteeing the shutdown. Leon Panetta, Clinton’s chief of staff at the time, called it “bizarre.” “Everybody knew this was about a funeral . . . and even if [this was a snub], which it isn’t, why would you want to shut down the government because you feel snubbed?”

From that point onward, Gingrich was on the defensive. Clinton held firm, and Gingrich caved. Once again, Gingrich had achieved the worst of all possible outcomes: He’d successfully branded Republicans as anti-government radicals, willing to shut down the government, while accomplishing little of policy substance. Clinton was reelected, in part due to his defeat of Gingrich in 1995, and Republicans, scarred by this experience, spent the next ten years avoiding any tough fights over the size of government.

As Brian Bolduc recalls in his Gingrich profile, erstwhile Gingrich acolytes such as Tom Coburn (R., Okla.) saw Newt change before their eyes. “Before the government shutdown, we thought Newt Gingrich was invincible. After the shutdown, however, he was like a whipped dog who still barked, yet cowered, in Clinton’s presence.”

But that’s all in the past, some say. What about Gingrich’s proposals for reforming health-care entitlements today? Gingrich, like nearly everyone in the Republican field, has endorsed block-granting Medicaid, and that’s great. But it’s Medicare that is the most difficult and most dangerous federal entitlement, and the one that anyone sincere about taming the growth of government must tackle.

And it is here that Newt, for all his sound and fury, signifies nothing. He proposes to give seniors “the option to choose, on a voluntary basis, either to remain in the existing program or to transition to a more personalized system in the private sector, with greater options for better care.” But that’s exactly what seniors have today: They can choose between traditional, 1965-vintage Medicare (Parts A and B), or choose a more market-oriented version called Medicare Advantage (Part C).

As the Wall Street Journal puts it, Gingrich’s approach to our most important fiscal challenge is “merely a gloss on Medicare Advantage, which has done some modest good . . . but without turning the fiscal battleship.” Indeed, in a Friday interview with Ben Domenech, Gingrich conceded that his program is designed as a modest tweak to Medicare Advantage, and decried Ryan’s plan as “suicidal”:

What I was saying [about Paul Ryan’s plan] was in answer to a very specific question, which was: If there’s a program which is very, very unpopular, should Republicans impose it, and my answer was, no! When we passed welfare reform, 92 percent of the country favored it, including 88 percent on welfare. Reagan ran to be a popular president, not to maximize suicide . . . 

So, let’s take the example. Where I think Ryan’s onto something I actually support, which is that you ought to have a premium-support option, I wouldn’t do it in ten years, I would do it next year, but I would do it as a voluntary program. And then I would go to the insurance industry and say to them, “Is there a way you could make a premium-support option really desirable?” Well it turns out that Medicare Advantage has 25 percent of the market despite the opposition of the bureaucracy. So if you had a bureaucracy that favored market-oriented systems, you might actually get to 50 percent much faster than you think.

This sounds nice in theory, but as a matter of policy, it’s wrong. Medicare Advantage has 25 percent of the market in part because, prior to Obamacare, the government paid 14 percent more for a senior in Medicare Advantage than for one in traditional Medicare. (Obamacare significantly trimmed this subsidy.) Medicare Advantage has many qualities, but it has not reduced Medicare spending at all.


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