Meet the Candidates: Newt Gingrich on “Entitlements”
Tuesday, November 1st, 2011
The most recent Fox News and CBS News/New York Times polls show former Speaker of the House Newt Gingrich in third place behind Mitt Romney and Herman Cain in the race for the Republican presidential nomination.This is a remarkable development, since Mr. Gingrich’s campaign was considered to be mortally wounded just a few weeks ago.
We’ve been looking at candidates’ positions on the future of Medicare and Social Security, which politicians sometimes call “entitlements.” These are vital issues to most Americans, who including those with mesothelioma, who are usually in or nearing their retirement years when diagnosed.
Mr. Gingrich’s campaign site does not specifically address Social Security. However, in a September 12 debate in Tampa, Florida, he said,
“Now, I just want to make two simple points about Social Security and how you save it. The first is, you get back to a full employment economy. The second is, everybody who is older and wants to be totally protected, fine, no change. But if you’re younger and you would like a personal account, you would control instead of the politicians. And you know you’ll have more money at the end of your lifetime if you control it than the politicians. Why shouldn’t you have the right?”
This appears to suggest allowing people to set up a personal investment account in place of joining the regular Social Security system, which is also the position taken by Herman Cain.
One huge flaw in such a change is that if people working now are no longer paying into the regular Social Security system, the system will quickly run out of money to pay current benefits. There have been estimates that the only way such a reform could be put in place would be to either cut current benefits in half, or somehow squeeze another trillion dollars or so out of the budget to cover the shortfall.
Another flaw is that privatized systems tend to be at the mercy of fluctuations in the stock market. Current Social Security recipients get a fixed benefit every month. Where the system is based on market investments, the monthly check can shrink considerably if the investment markets decline.
Regarding Medicare, according to Mr. Gingrich’s campaign website, he wants to “Create more choices in Medicare by giving seniors the option to choose, on a voluntary basis, a more personal system in the private sector with greater options for better care. This would create price competition to lower costs.”
This is an idea Mr. Gingrich has been touting for a long time. In 1997, Gingrich oversaw the creation of the Medicare+Choice or “Part C” plan, in which the government subsidized health insurance policies for seniors managed by private insurance companies. Mr. Gingrich predicted Medicare+Choice would be so popular that seniors would leave regular Medicare in droves, and the original program would “wither on the vine.”
It turned out that not only did most seniors stick with original Medicare, but Medicare+Choice plans actually were more expensive to administer than regular Medicare. In 2003 Congress voted to add prescription drug benefits to Part C and renamed it Medicare Advantage. Medicare Advantage has proved to be somewhat more popular than Medicare+Choice.
However, taxpayers are still paying more to provide the same benefits through Medicare Advantage than they do for regular Medicare. In fact, a small amount of what seniors pay for Part B benefits under regular Medicare has had to be diverted to Medicare Advantage to keep it going. This is supposed to change under the Affordable Care Act, which provides that Medicare Advantage plans have to keep their costs in line with regular Medicare.
Mr. Gingrich has not provided any details to explain how his current proposal to create ” a more personal system in the private sector” would be different from Medicare+Choice or Medicare Advantage, or how his new plan would lower costs, which the older plan he helped create did not.
