Within our polarized, deeply divided population, there is one statement on which all Americans agree. U.S. healthcare is impossibly expensive, truly unaffordable, both for individuals and for the nation.
Washington promises the next round of upcoming legislative efforts will make healthcare affordable. The latest proposals, just like all the previous ones, won’t work. They will be “fixes that fail or backfire.”
First, what is proposed, then what will work though politically radioactive.
Federally legislated price transparency has recently been touted as a way to drive down prices. In a free market, transparency does work. Healthcare is the opposite: it is a centrally controlled economy where third parties – government and insurance – make spending decisions, not the persons who earned the money and who want to conserve it. Making prices transparent to a pubic that doesn’t control spending will not drive down prices.
Another recent federal solution is changing the tax code to increase contribution limits on and flexibility of health savings accounts (HSA). While such increases puts more control in patients’ hands (a good thing), putting more to a family HSA will not change the price of care one bit. It remains unaffordable.
Biden’s disingenuously titled Inflation Reduction Act of 2023 allows Medicare to “negotiate,” i.e., dictate, prices for pharmaceuticals and thus drive down – by fiat – prices for medications. Price fixing of drugs will accomplish what it always does: shortages, low quality, and lack of innovation, meaning no new miracle cures.
To understand and then fix healthcare affordability, start by analyzing dollar flow. As Cuba Gooding, Jr.’s character repeatedly exclaimed in the 1996 movie Jerry Maguire, “Show me the money!!”
For 173 million Americans with government insurance and 26 million who are uninsured, Washington directly determines spending via published allowable reimbursement schedules. For 134 million privately insured Americans, Washington indirectly controls payments since insurance sellers base their payments on aforementioned schedules. Washington is the decision maker for healthcare spending on all Americans.
Official figures just released indicate that in 2022, $2.6 trillion went to providers, hospitals, and pharmacies, i.e., paid for patient care. Total U.S. healthcare expenditure for 2022 was $4.5 trillion. (That amount is greater than the entire GDP of Germany.) Forty-one percent of all U.S. healthcare spending was taken from patient care to be spent on BARRCOME – bureaucracy, administration, rules, regulations, compliance, oversight, mandates, enforcement.
To demonstrate such "bureaucratic diversion," President Obama took $716 billion from the Medicare Trust to pay for BARRCOME in the Affordable Care Act. Those billions had been intended to pay for seniors’ in-hospital care. According to the Trustees, Medicare will run out of money by 2028 and be unable to pay for elders’ hospital care.
Healthcare is (or should be) a sustainable business. To survive, a business must maximize value to the customer and minimize expenditures that don’t add such value, wasteful spending. As paying for healthcare BARRCOME provides no benefit to patients, it should be eliminated.
Washington cannot simply cover-up its wasteful healthcare spending by accounting tricks and printing more dollars to spend on itself. This induces crushing inflation and piles on national debt, currently $33.9 trillion, an increase of more than 50 percent in five years ($21.5 trillion in 2018).
There is a way to make both healthcare, the system, as well as health care, the service, affordable.
Instead of worthless manipulations of the tax code, low-balling prices for drugs, or legislating ineffective price transparency, run healthcare like a business. Balance the books. No printing of money. Reduce wasteful spending. Stop paying for useless federal BARRCOME. Only spend healthcare dollars on patient care.
Washington politicos, both sides of the aisle, have a very powerful incentive not to cut BARRCOME – that would drastically reduce their power and influence. Only We the People, at the ballot box, can make them do what we need. Vote for those who work to reduce wasteful federal healthcare spending. When elected persons fail to do so and divert attention away from their failures with new grandiose promises, vote them out of office.
By cutting BARRCOME spending from healthcare, we can make healthcare affordable. By eliminating BARRCOME, we remove Washington as a third-party financial and medical decision maker. As stated in the Tenth Amendment, healthcare is a “power ... reserved to the states respectively, or to the people,” and thus prohibited from federal authority.
Using the ballot box, We The Patients can achieve affordable healthcare and regain our constitutionally protected medical freedom in 2024.
Deane Waldman, M.D., MBA is Professor Emeritus of Pediatrics, Pathology, and Decision Science; former Director of the Center for Healthcare Policy at Texas Public Policy Foundation; former Director, New Mexico Health Insurance Exchange; and author of the multi-award winning book Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine.
