Wither Medicare?

In 1995, when he was speaker of the House, Newt Gingrich told a gathering of Blue Cross/Blue Shield executives that he and his fellow Republicans planned to present "a free-market plan" that would compete with Medicare and ultimately drive it out of business. "We believe it's going to wither on the vine," he said, "because we think people are voluntarily going to leave it."

Ever since then, Gingrich's critics on the left have been citing that comment to portray him as a hardhearted ideologue bent on tearing up the social safety net. Gingrich, who last week announced he is running for the Republican presidential nomination, is so eager to shed this image that he is willing to endanger Medicare reform by badmouthing a plan that by his own account is very similar to his own.

During a "Meet the Press" appearance on Sunday, Gingrich condemned House Budget Committee Chairman Paul Ryan's proposal to transform Medicare from an open-ended entitlement into a means-tested premium support system. Gingrich called this plan, which was endorsed by all but four House Republicans last month, a "radical change" that amounts to "right-wing social engineering."

Although Gingrich insisted that Ryan's plan is "too big a jump," it would not take effect for a decade. Furthermore, its impact would be gradual, with plenty of time to see whether the health insurance subsidies Ryan envisions are generous enough to provide medical care for retirees who otherwise cannot afford it.

The only alternative offered by Gingrich during the interview -- rooting out fraud -- is plainly inadequate to address Medicare's looming collapse. He said eliminating fraud might save something like $100 billion a year, or "almost $1 trillion over a decade."

That may sound like a lot. But according to a report released last Friday by Medicare's trustees, the difference between the benefits promised by current law and the money available to pay for them amounts to $25 trillion during the next 75 years, when Medicare's share of gross domestic product will rise from 3.6 percent to 6.2 percent.

The outlook may in fact be much worse, since the trustees' projections are based on highly unrealistic cost-saving measures included in the Patient Protection and Affordable Care Act.

"The actual future costs for Medicare are likely to exceed those shown by the current-law projections in this report," the trustees warn. Medicare's chief actuary concurs that "the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range ... or the long range."