Newt Gingrich’s new 21st Century Contract For America would give seniors the choice of opting out of the Medicare program and buying health insurance coverage in the private market. The former House speaker unveiled the plan in Iowa this afternoon, where he mocked “liberals” for claiming that seniors would be confused by too many choices and compared the purchase of health insurance to shopping at Walmart. “You know there are 250,000 items in a Walmart,” he said. “Maybe you don’t want to go to all the aisles.” Watch it:
Far from a new idea, Gingrich’s proposal is very similar to one he himself considered as speaker and Sens. John Breaux (D-LA) and Bill Frist (R-TN) offered in 1999 and then again in 2001. The idea is to replace the current Medicare program with competing health plans, while maintaining the CMS-sponsored Medicare fee-for-service coverage as an option. Seniors would receive “premium support” that would either be pegged to some economic indicator (like inflation) or compiled through the percentage of actual plan bids for a comprehensive set of benefits. The beneficiary would pay the difference between the the government’s contribution and the cost of the actual plan.
Analysts at the time argued that the proposal would lead to severe adverse selection for seniors who remain in traditional Medicare — increasing their premiums — and would be unlikely to produce significant savings. Henry Aaron — who developed the premium support concept with Robert Reischauer in 1995 — has since walked away from the plan, arguing that the Affordable Care Act may do a better job of lowering costs.
Furthermore, the concern about seniors being overwhelmed with too much choice is a real one, partly because buying health insurance is nothing like shopping at a Walmart. It’s nothing like buying an iPod or a desk lamp. It’s ultimately about extending life and delaying death and asking anyone — particularly older Americans — to bare the brunt of making those decisions when they know so little about the complexities of medicine and insurance policies is not only fool-hearted but also fairly cruel.
If anything, choices have to be very well regulated and few. Surveys conducted by the Massachusetts Connector — that state’s exchange — revealed that even once insurance policies are standardized (so they would be comparing apples to apples), consumers still feel that too much choice is “confusing” and “overwhelming.” “Participants expressed a desire a for manageable numbers of plans (e.g. three to four) offered by four to six carriers. In addition, consumers expressed difficulty making plan comparisons under the existing model,” Massachusetts found. “Instead, consumers preferred for information to be presented in a simple and standardized format that clearly distinguished between different benefit design options.”