Newt Gingrich, a former Republican congressman from Georgia, has been involved with health care legislation in the past and during his bid for the 2012 GOP presidential nomination his campaign website boasted his past health care accomplishments, stating, (Gingrich's) leadership helped save Medicare from bankruptcy. At the Iowa Faith and Freedom Dinner in October 2011, Gingrich stated that during his tenure as speaker of the House, Congress “reformed Medicare and saved it for more than a decade financially.”
The Washington Post Fact Checker blog identified Gingrich’s claim of reforming Medicare as alluding to the Balanced Budget Act of 1997. This act, passed while Gingrich was speaker of the House, was designed to save $115 billion on Medicare during a five-year period. The budget bill did this by creating a method for reimbursing doctors, called the Sustainable Growth Rate (SGR) formula, which is designed to ensure that Medicare spending on doctor payments does not grow faster than the economy as whole.
In order to maintain a balanced budget, the SGR reimburses providers less than the full amount of care and necessitates lower reimbursement rates as health care costs increase. To avoid dramatic payment cuts to providers, Congress temporarily overrides the SGR each year, passing legislation that is now infamously known as the “doc fix.” For example, in 2011, the SGR would have cut provider reimbursement rates by as much as 27 percent, a drastic reduction that prompted the American Medical Association (AMA) to intervene and negotiate with Congress to abort the rate change.
Both Democratic and Republican politicians recognize that the SGR must be reformed, yet a permanent fix is difficult to achieve, given that the Congressional Budget Office (CBO) estimates that keeping provider reimbursements at current rates would cost the government nearly $138 billion during a 10-year period. Thus, Gingrich’s Medicare reforms balanced the budget through a tricky formula that has created unintended problems for health care providers without addressing Medicare’s true solvency issues.
The Balanced Budget Act of 1997 also created Medicare Advantage (Part C), which gives beneficiaries the option of enrolling in private insurance plans as an alternative to the traditional fee-for-service (FFS) coverage. While Part C does increase choices for seniors, a characteristic that Gingrich touts, it is more expensive for the government than traditional Medicare (Medicare Hospital Insurance (Part A) and Medicare Medical Insurance (Part B)). In 2007, the CBO analyzed the Part C program and found that “Medicare’s payments for beneficiaries enrolled in Medicare Advantage plans are higher, on average, than what the program would spend if those beneficiaries were in the fee-for-service (FFS) sector.”
Thus, while Gingrich’s budget did enact significant Medicare reform, some of these reforms increased government costs while others, such as the SGR, are not sustainable solutions. Furthermore, Gingrich’s 1997 budget did not address the most serious issue with Medicare — rising health care costs — and, as a result, further reform is necessary.
Newt Gingrich and the Affordable Care Act (ACA)
Every 2012 Republican presidential candidate denounced, and promised to repeal, President Obama’s Affordable Care Act (ACA). The ACA includes an individual mandate requiring that all adult U.S. citizens purchase health insurance or pay a tax penalty of the greater of $695 per year per family or 2.5 percent of household income. This mandate is among the provisions that Republican presidential candidates find most egregious, claiming that it is a violation of states’ and individuals’ constitutional rights. However, it remains unclear whether their opposition is ideological or merely political, as various news sources have reported that the individual mandate was originally a Republican policy idea, endorsed by numerous conservative think tanks and politicians, including both Republican presidential candidates Gingrich and Mitt Romney
The Individual Mandate
Like Republican presidential nominee Romney, Gingrich made repealing and replacing "Obamacare" — the Affordable Care Act (ACA) — a cornerstone of his candidacy. Gingrich said, “I am completely opposed to the Obamacare mandate on individuals … I am for the repeal of Obamacare and I am against any effort to impose a federal mandate on anyone because it is fundamentally wrong and I believe unconstitutional.” Yet, before Gingrich was against the individual health care mandate, he was for it. In 2006, Romney’s Massachusetts health care reform mandating that all adult Massachusetts citizens purchase health insurance passed into law, and Gingrich praised the legislation. In his “Newt Notes” e-newsletter, published in April 2006 for his consulting company, the Center for Health Transformation, Gingrich wrote:
“The health bill that Governor Romney signed into law this month has tremendous potential to effect major change in the American health system … We also believe strongly that personal responsibility is vital to creating a 21st Century Intelligent Health System. Individuals who can afford to purchase health insurance and simply choose not to place an unnecessary burden on a system that is on the verge of collapse; these free-riders undermine the entire health system by placing the onus of responsibility on taxpayers … The individual mandate requires those who earn enough to afford insurance to purchase coverage, and subsidies will be made available to those individuals who cannot afford insurance on their own. We agree strongly with this principle.”
Gingrich has since reversed his stance on the individual mandate, explaining that he only supported the policy as an opposition platform to Hilary Clinton’s 1993 health care reform proposals. Nevertheless, Gingrich championed the individual health care mandate as recently as 2006, which has led many to criticize and question the authenticity of his reversed position.
Newt Gingrich’s Health Care Industry Relationships
The Center for Health Transformation is a strategic advisory and consulting firm founded by Gingrich in 2003 as part of the Gingrich Group. According to the Center for Health Transformation website, its mission is “helping organizations create and implement high-impact strategies and solutions that leverage the scientific breakthroughs, new technologies and transformational opportunities present in times of great change. Our consulting clients come from a variety of industries, including healthcare, education, safety and technology among others.” Yet, the Center for Health Transformation came under fire in the media, as voters and politicians question whether the center is only a consulting company, or whether it in fact acted as a lobbying firm under Gingrich’s leadership from 2003-2010.
The Center for Health Transformation’s website states, “We do no lobbying for clients and always make that very clear from the outset.” However, some politicians and Washington insiders have come forward to say that Gingrich’s activities on behalf of the center more closely resembled lobbying than consulting.
From 2003-2010, the Center for Health Transformation collected tens of millions of dollars in fees from clients such as AstraZeneca, Blue Cross Blue Shield, Novo Nordisk, Allscripts, Siemens, Microsoft, GE Healthcare, and WellPoint, the nation’s largest health insurer — all of whom had specific financial interests in the health care industry. In return for his firm’s fees, Gingrich gave his clients access to key legislators and policymakers. He also provided Washington lawmakers with information and recommendations on pieces of legislation that affected his clients — essentially working to pass legislation that his clients favored — which some would say is the definition of lobbying.
Specifically, Gingrich advocated for the creation of a national electronic health records system. He promoted the idea of allocating government funds to help health care providers adopt electronic records, which many of his clients, including Allscripts, Siemens, Microsoft and GE Healthcare, stood to benefit from. The electronic health record funding was part of President Obama’s 2009 stimulus bill, which Gingrich publicly criticized and denounced; yet, he favored the part of the bill that included $19 billion in incentives that benefited his clients. “The New York Times” recently reported that, “When the bill passed, providing more than $19 billion in incentives and grants to help health care providers buy electronic systems, the center and its health technology clients were in a celebratory mood. In presentations to investors, the Allscripts chief executive, Glen Tullman, called it ‘the most expansive opportunity in our company’s history.’”
Role in Expanding the Medicare Prescription Drug Plan (Part D)
Gingrich’s role in passing legislation during the George W. Bush administration that expanded Medicare to include prescription drug benefits — the section known as the Medicare Prescription Drug Plan (Part D) — came under scrutiny during the 2012 GOP presidential primaries. In the South Carolina Republican debate, Romney described how Gingrich had lobbied lawmakers to pass the Part D program in 2003. Many Republicans were reluctant to expand Medicare coverage to include prescription drugs, fearing that it would be too costly, so, according to former Rep. C. L. “Butch” Otter (R-Idaho), Gingrich convened a meeting of about two dozen Republican House members who opposed the $395 billion Part D benefit and pitched them on why they should support it.
Furthermore, according to “The New York Times,” when Gingrich urged Republicans to support the expansion of Medicare’s prescription drug benefit, “he worked to ensure that it would cover new diabetes treatments sold by Novo Nordisk, a Danish drug company and a founding member of Mr. Gingrich’s Center for Health Transformation.”
The Citizens for Responsibility and Ethics in Washington, a group that monitors federal officials’ activities, filed a complaint against Gingrich for his role in the expansion of Part D, saying that his actions constituted lobbying and that he therefore should have been registered as a lobbyist. This type of behavior has raised eyebrows inside the political community as well, and Gingrich’s ethics have come into question. Romney attacked Gingrich in the South Carolina primary, saying, “If you're getting paid by health companies, if your entities are getting paid by health companies that could benefit from a piece of legislation and you then meet with Republican congressmen and encourage them to support that legislation, you can call it whatever you'd like. I call it influence peddling. It's not right.” Gingrich countered that he only offered his clients “strategic advice” and says he only acted as a “public advocate,” which every citizen is allowed to do, and never as a lobbyist.
Newt Gingrich and Medicare Reform
During his bid for the GOP presidential nomination Gingrich proposes 13 bullet point reforms that are loosely related to a broad range of health care topics, and include various suggestions for reform, such as: cover the sickest; reform Medicaid; extend Health Savings Accounts (HSAs); and stop junk lawsuits. Yet these recommendations include very few specific details. For example, his Medicare reform plan states: “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.”
Gingrich has consistently opposed Rep. Paul Ryan’s (R-Wis.) plan to fully privatize Medicare and eliminate the traditional fee-for-service (FFS) program, telling Sean Hannity on his Fox News talk show, “I would approach Medicare differently. I would actually offer his Medicare choice next year, but I would offer it as a choice that people could take if they thought it was better for them, not as an imposition.”
Under Ryan’s premium support plan, Medicare beneficiaries would receive payments, or subsidies, to buy private insurance on a health care exchange, instead of participating in the traditional Medicare fee-for-service (FFS) model that is paid for almost entirely by the government. Ryan has been the biggest advocate of this type of reform. In 2011, Ryan released his plan to replace traditional FFS Medicare with vouchers for private insurance, causing an uproar among voters. Gingrich did not initially support Ryan’s proposed reforms, saying that the Ryan plan went too far and amounted to “rightwing social engineering.”