Understanding Newt Gingrich’s 21st Century Contract with America (Pt 1)

As many of you have probably noticed, I’ve recently changed my leanings on my 2012 preference for Republican nominee to Newt Gingrich.  (I say leaning because I still haven’t 100% made up my mind.  There’s still room for Rick Perry to gain my vote or Herman Cain to move back into my top spot.  As it sits now, those are my choices.)  One of the questions that has been repeatedly posed to me has been “can you please explain the 21^st Century Contract with America?”  My response, until now, has been “sure, but it’s going to take some time.”  Unlike the 9-9-9 Plan or Rick Perry’s Flat Tax, it will take more than just a few calculations against the median income to break down this plan…the Contract is twenty-six pages long and covers ten different legislative plans. 

If I were to attempt to deal with the entire thing in one post, the entirety of it would result in the longest post I’ve ever written, including the overall thesis I wrote and refined for the blog over many months.  Rather, I decided it would be better to break it down into a series of posts, ideally over one week but I don’t expect that ideal to be achieved.  Please note that throughout this series, all quotes, unless otherwise noted, are directly from Gingrich’s plan.

So today, let’s take a look at the first two items in the Contract:

1. Repeal Obamacare and pass a replacement that saves lives and money by

empowering patients and doctors, not bureaucrats and politicians.

The Obamacare law is unconstitutional, unaffordable, unworkable, and stunningly unfair.  Its so-called "individual mandate" is blatantly unconstitutional and an unprecedented expansion of federal power. If the federal government can coerce individuals—by threat of fines—to buy health insurance, there is no stopping the federal government from forcing Americans to buy any good or service.

Boy does Newt nails the problem with Obamacare on the head.  I don’t care what the beloved, “nonpartisan” Congressional Budget Office is telling us…Obamacare is an absolute financial fire pit.  It creates 1932 new federal expenditures and creates 192 new boards and federal agencies which will make decisions that belong to doctors and patients.  It’s a fiscal mess and an absolute attack on our fundamental liberty to choose what we buy. 

Secondly, and just as importantly, the Federal government has no authority to mandate a purchase.  Unlike auto insurance, which is mandated only if one wants to use the public roads, this is a mandate for all people in order to exist in America.  The government has no more right to mandate that we buy insurance than it does to mandate that we eat our vegetables to solve the national obesity problem or buy houses to solve the problem of homelessness.  The entire premise is preposterous.  Newt is absolutely correct in saying “We must either limit government or we will have government limit us.”

Thirdly, the requirement to provide insurance to all employees has cost jobs.  It raises the cost of hiring employees to small businesses and other companies, making the cost of a new employee higher and causing companies to choose to do without a new hire.  It also has cost more than a few people their Sickness and Accident coverage that so many companies like McDonalds, Burger King, and others, had previously offered to all their employees (full and part time) which covered their doctor visits when they were ill and accidents (broken limbs, hospital care, etc.) because the new requirements of Obamacare have raised their costs of doing business. 

Replace

As I carry the banner in fighting for the repeal of Obamacare, I will advocate for specific replacement health policies that will create a free market framework for healthcare, provide affordable, portable, and reliable healthcare coverage, and establish a healthcare safety net focused on those in need. This system will assure healthcare for all with no individual mandate or employer mandate of any kind.

This alternative to Obamacare begins with patient power and localism and the many

common sense ideas developed over the past eight years at the Center for Health

Transformation.

Replacement legislation must build on these strengths. It must include provisions to make health insurance more affordable and portable by allowing Americans to purchase insurance across state lines. It must increase price competition in healthcare. It must improve patient safety and decrease overhead costs by digitizing all medical records, and it must introduce lawsuit reform to stop the frivolous lawsuits that drive up the cost of medicine.

Portable healthcare is the most important part of this solution.  Current regulations stops individuals from buying medical insurance polices across state lines.  For those of you from Palm Beach County, FL, that means if you live in say, Florida, you can’t buy an insurance policy in Georgia, no matter how much less expensive it may be.  This is going to open up competition and create lower prices across the marketplace.  That competition is going to cause prices to drop. 

It will cause prices to drop for those who work for small companies by allowing them to buy the cheapest policies as a group available anywhere in the nation, not just in their own state.  It will also allow individuals who buy their own insurance to buy the most affordable individual policy available anywhere in the nation.  Finally, it’s going to allow major companies with locations across the country, like the media company which I work for, to buy insurance for the entire company and not state by state, raising the total number of policies being bought and thus lower the price.  My company, for example, based on current regulations, buys it’s insurance for just the two markets in New York.  Now when you buy insurance for over 100 people, you’re still looking at a great rate.  But if the company could buy for all 23 markets across the nation, those very affordable rates would go down even more. 

Another great free market solution would be removing the regulatory burdens that don’t allow small businesses to group together and buy insurance for their employees at the lower rate.  As I mentioned, my company, which purchases insurance for about 100 from the two groups of radio stations we own in two cities in New York State.  Now a small business of ten employees is going to pay ten times for their insurance.  I know.  My last job was for a company with only about 30 employees.  Although I had the same salary at both jobs, it was like I received a sizable raise just by going to a larger company and paying far less for insurance.  Yet if ten small businesses of ten employees each could combine together to pay the same rate as one company of 100 employees, how much would that save each employee and the company at large?  The answer is a great deal.

Furthermore, repealing the frivolous lawsuits that drive up the cost of insurance for individual doctors, of group practices, of hospitals, raises the cost of medicine for all.  That’s the reason why your medical bills charge $100 for a band-aid and $150 for a dose of Extra Strength Tylenol.  It’s covering the cost of those high insurance premiums and lawsuits.  Remove the frivolous lawsuits and enact Loser Pays requirements wherein an individual who files a frivolous lawsuit and loses would be required to pay for the defendant’s legal bills.  That means medical practices won’t decide to settle frivolous out of court rather than fight them because the cost of fighting it would be more than the cost to settle out of court.  So they settle. If the loser was required to pay, all of a sudden you’ll see less frivolous suits and practitioners willing to fight those suits.

Instead of an individual mandate penalty for not buying government approved health

insurance, the federal tax code should be reformed to provide every American the choice of a generous tax credit or the ability to deduct the value of their health insurance up to a certain amount. The federal tax code should provide the same tax relief for the individual buying his own insurance as the employer providing health insurance to its employees.

It is a well known adage that if you want to discourage an activity, you tax it.  This aspect of the Contract turns that adage on its ear by applying a positive incentive instead.  This is taking an activity that most people are doing anyway, and making it more affordable by giving a tax credit for that purchase or a tax deduction, whichever is ultimately more affordable for that individual or family, just like mortgage deductions often make buying a home more affordable.

Repealing Obamacare is a cornerstone of every single Republican candidate.  Newt has further explained the why as well as the common sense solutions to replace it in the 21^st Century Contract with America.  Tomorrow, we’ll deal with Newt’s tax plans and reforms to bring about robust growth in the economy.