The Corner

Gingrich on Health Care

On several occasions over the past few years, I’ve heard Newt Gingrich speak about the health-care debate in a way that suggested a deep and serious grasp of the issues involved — both the big picture and the little details. That’s why his remarks on Meet the Press yesterday were so surprising.


On the Ryan budget’s Medicare reform, Gingrich basically echoed the liberal talking point that moving to a premium-support system starting in ten years (and only for people who would retire at that point or later) was too radical. Instead, he said, “we need a national conversation to get to a better Medicare system with more choices for seniors.” His own contributions to that conversation, he suggested, would be ways of addressing fraud in Medicare and the notion that “I think what you want to have is a system where people voluntarily migrate to better outcomes.”


Fraud is, of course, a huge problem in Medicare and should be addressed, but it is hardly the essence of our health-care financing crisis. Gingrich’s second point was specific-sounding enough that it presumably refers to some particular idea. But what would that be? Perhaps a premium-support system as an option alongside today’s fee-for-service Medicare? Such an approach was considered during the Clinton years (a form of it was proposed by the Breaux-Thomas commission in 1997) but eventually killed by the White House and congressional Democrats. If that’s what Gingrich is saying, then let him say so and argue out its benefits and drawbacks compared to the (very similar) Ryan proposal, rather than just parrot Charles Schumer’s talking points about radicalism in a way that hands the Democrats a weapon to use against any real reform.


Here are some thoughts from yours truly on the “radical” charge. But for a particularly thorough and spirited defense of the Ryan budget from such charges, including a detailed defense of its Medicare reform, I recommend this excellent commentary published about three weeks ago . . . by Newt Gingrich.


Gingrich’s comments about the individual mandate were even more peculiar. He said he was in favor of “a variation” on the mandate (though he was not particularly clear about what kind of variation that would be), and he said this was necessary because “I don’t think having a free rider system in health is any more appropriate than having a free rider system in any other part of our society.”


This, again, is a triumph of liberal talking points over the reality of our health-care system. The reason an individual mandate is necessary to the architecture of Obamacare is that Obamacare creates a free rider problem by essentially banning the business of risk-based insurance. Liberal health wonks are clear about this; the administration is even making this case in court now. If you charge people the same price for coverage regardless of whether they are sick or healthy then healthy people will have no reason to buy insurance until they are sick, so you have to compel them to do so. But without Obamacare’s architecture, or with a better approach to containing health costs and covering people with pre-existing conditions, there is no argument for such a mandate.


There is, of course, a problem with uninsured people who cannot or do not pay for their health care today, but it is hardly a problem at the core of our health-care financing crisis. Recent estimates of the cost of that problem sometimes run as high as $50 billion — about half of which is “implicitly subsidized,” meaning passed on to other people. That’s real money, of course, but even the full $50 billion is about 2 percent of our health-care spending. (For some perspective on that figure, consider that the GAO recently found that Medicare and Medicaid wasted $70 billion on fraudulent or improper payments just last year.)


This “free rider” problem is a symptom of our health-care financing crisis, not a fundamental cause. Like the similarly symptomatic (and similarly limited) problem of people with pre-existing conditions being excluded from coverage, it was distorted and blown out of proportion by champions of Obamacare over the past two years to try to make a case for a system that would fail to address the real source of our health-care problem. The out-of-control inflation of health care costs (which is the essence of our problem) is to a very great extent the result of our third-party-payer system of health insurance, which prevents consumer pressure and other market forces from imposing efficiency on the health sector and bringing costs down. One key to addressing that (and so also the free-rider problem and the pre-existing conditions problem) is to empower consumers to make more health-care decisions. And one very good model of how to do that (at least in the context of Medicare, which is our largest single source of health-care spending) is the Medicare reform in the House Republican budget.


Calling such reforms radical while repeating unfounded Democratic talking points is certainly an effective way to undermine such solutions.

Yuval Levin is the director of social, cultural, and constitutional studies at the American Enterprise Institute and the editor of National Affairs.


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