Politico’s Jonathan Allen recalls Newt Gingrich’s role in urging conservative Republicans to approve the 2003 Medicare Modernization Act, an unfunded expansion of Medicare that provided a drug benefit to American seniors through Medicare Part D. The Congressional Budget Office (CBO) initially estimated that the MMA would add to the deficit by $395 billion between 2004 and 2013 and the actuaries at the Center for Medicare and Medicaid Services (CMS) now project that the program will cost the government $16.1 trillion “through the infinite horizon.”
But ironically, Gingrich convinced Republicans to support the measure by appealing to their sense of fiscal responsibility:
If you are a fiscal conservative who cares about balancing the federal budget, there may be no more important vote in your career than one in support of this bill. Since health expenditures comprise almost 14 percent of the U.S. GDP, a shifting away from the failed bureaucratic third-party payer model and back to a market-mediated binary payer model, where the customer controls his own first health dollars, is the single most significant reform that can be made in saving the country from skyrocketing health costs and steadily increasing calls for taxpayers to finance more and more of the healthcare system through higher taxes.
Gingrich also argued the the measure — which subsidized Medicare Advantage and introduced Health Savings Accounts — would begin to shift more seniors into private programs, noting that “it is a major step toward giving the baby boomers a multi-choice Medicare system for the 21st century.”
That “choice” has come at a cost, however. Private plans that participate in the program receive a 9 percent or $8.9 billion subsidy from the federal government and have so far produced few savings. Over the years, a number of government reports and independent estimates have found that some plans use the taxpayer subsidies to pad their bottom lines and expose beneficiaries to serious financial risks. A recent report from the Government Accountability Office (GAO) concluded that some MA plans used lower premiums to attract healthier enrollees, but then hit them “with high and unexpected out-of-pocket costs.”