Here’s to our Health!
For months members of Congress have been pointing fingers at each other and trying to generate hysteria over the “health care crisis” expected on January 1 when astronomical rate increases go into effect for most private sector health insurance plans. Market place filings suggest the median increase will be 18% on the Affordable Care Act (ACA) marketplace with employer-based plans and small business plans rising 10% or more. Americans all across the country are in sticker shock as they get the first looks at their insurance premium increases. Many will pay thousands of dollars more for health insurance or drop their coverage altogether.
Democrats have tried to make the government insurance subsidies, which were increased during COVID for 22 million people and set to expire on December 31, the focal point of the debate, though all Americans who have private insurance plans are being hurt by these increases. The Democrats were willing to shut down the government on October 1 because the extreme liberals in their base want them to fight! Fight! Fight! against everything that Donald Trump says or does. For 43 days, the longest shut-down in history, members of both Parties jockeyed for time in front of media cameras to explain why the other guys are the real villains. They inflicted real harm on millions of Americans and, in the end, nothing of substance had changed. (With Gross Domestic Product (GDP) far above expectations in November and inflation trending down, expect the Democrats to try to shut down government again at the end of January. A strong economic recovery will not be good for their midterm chances and they would rather hurt Americans than lose elections).
With January 1 right around the corner and anxious Americans watching and waiting to see if any relief would be coming, Congress made its next bold move. They closed up shop on December 19 and headed home for the holidays. They won’t be back until early January, confirming that the growing contempt of the American people for the members of Congress in both Parties is well-deserved.
The Magnitude of the Healthcare Problem
The bureaucratic monstrosity that we call a health care delivery system developed under the noses of our legislators over many decades and is the product of ineptitude and corruption. It is a disgrace that the greatest medical know-how and technology in world is delivered ineffectively and at a cost that is breaking the American people. Congress is not going to “fix” this.
The American people should calibrate their expectations using the recent experience from the Department of Government Efficiency (DOGE) initiative. When bureaucracies grow in size and complexity to the extent we see in the Federal Government and in health care, there is tremendous, almost insurmountable, resistance to change. The private sector professionals Trump brought in to eliminate waste, fraud, and abuse in government had track records second to none in producing results. Yet they were severely limited in what they could accomplish by the massive pushback from insiders, allies in Congress and the media.
Most members of Congress know little, if anything, about producing real results of any kind in the private sector or elsewhere. Couple their ineptitude with the massive payoffs they have been accepting from the health care industry in the form of lobbying and campaign contributions for years and it becomes clear Congress is not capable of meaningful health care reform. If they make the foolish mistake of trying to reconceptualize the entire system, health care bureaucrats will rest easy. The system is entrenched and largely immovable.
In 2010, the ACA was signed into law. At that time total health care spending was about $2.6 trillion each year. Today, it is expected to exceed $5 trillion. Analyses have shown that the increase in spending is driven by pricing, not some dramatic change in how Americans are utilizing health services. The Affordable Care Act did nothing to make care affordable and was about as aptly named as the more recent Inflation Reduction Act.
Enter the Master of the Art of the Deal
Donald Trump spent most of his adult life in private sector real estate. He’s a builder. He came to the Presidency with the skills he learned working in an environment where you either produce value for your customers or your competition eats you for lunch. Seeing possibilities where others see none is a hallmark of successful entrepreneurs and Trump came to office viewing the workings of government through the lens of someone who sees opportunities and knows how to produce results.
Last May, Trump put pharmaceutical companies on notice that he expected them to provide their drugs to the American people at the lowest prices being paid by any developed country. He called this most favored nation (MFN) pricing and gave them until September to commit. He used the threat of tariffs to motivate their cooperation. This move was necessary because Presidents and members of Congress over many years have allowed the American people to be saddled with all of the costs of research in the pharmaceutical industry and tolerated prices that are astoundingly higher than the same drugs in other countries.
On December 19, Trump held a press conference with the Chiefs of 9 of the largest pharmaceutical companies in the world to announce they had reached agreements on most favored nation status. This was the second conference of its kind and brought the number of companies on board to 14. Trump signaled more companies will be announcing before the year ends.
Their commitments will be extremely consequential for the American people.
Among the examples of price reductions were a cholesterol lowering drug going from $573 to $239; an HIV medicine going from $1,449 to $217; a diabetes medication going from $525 to $55; an asthma inhaler going from $265 to $89; and the “blood thinner” Plavix going from $756 to $16.
President Trump is also developing a website called Trump Rx, through which patients will be connected directly with the lowest priced provider of the medications they are taking. This will cut “middle men” out of the process. The site is scheduled to be operational in January.
The 9 companies participating in the announcement with Trump have collectively committed to $150 billion in investments in manufacturing their products in the United States. One of the participating companies has 9 new manufacturing plants in the works. Ground has already been broken on 7 of them.
Finally, and very significant to our security, these pharmaceutical companies have agreed to stockpile the active ingredients for key products in a Strategic Active Pharmaceutical Ingredient Reserve (SAPIR) to protect Americans from having to rely on foreign sources for key drugs in the event of a future national emergency.
It will not surprise anyone to learn that very few media outlets covered the press conference announcing these agreements live. Coverage has been shamefully sparse to non-existent since. In one news report, the anchor informed the viewing audience that “experts” are skeptical whether these agreements will have much impact. We didn’t hear any such reservations expressed when Joe Biden and Kamala Harris were touting negotiating discounts on 10 drugs. Prescription drugs are estimated at 10% of total healthcare spending or $500 billion. If American journalists were ethical, they would follow the truth where it leads and we would have serious investigative reporting; objectively analyzing the impact of MFN pricing on specific drugs. For example, comparing a list of the top drugs by usage and by cost to determine what Americans are currently paying and what the reduction to most favored nation pricing will mean in real terms.
A Glimpse at Trump’s Next Strategic Target for Those Who Are Paying Attention.
During the news conference, Trump casually remarked that the insurance company profits are interfering with affordable health care for the American people. He suggested he will convene a meeting of the major insurance companies within weeks and is certain that, like the pharmaceutical companies, they will reduce premiums to contribute their part in making health care affordable. Private sector health care insurance accounts for about 33% of total health care spending or $1.65 trillion. In previous writing, I have suggested that our strong preference for capitalism with its competition and free markets is going to have to be tempered when Americans are dependent on some industries for their very existence. Governing Boards and Executives of health care insurance companies need to put concern for the American people’s access to health care over concern for shareholder earnings. This will not interfere with our basic economic principles. Ethics supersede profitability and ethical companies do what is right.
Liberal ideology supports a single payor government run health insurance system. There are more than a few Democrats in Congress who would jump at the chance to eliminate the private health insurance industry altogether. The industry leaders’ desire to survive will serve as strong motivation for them to cooperate with Trump on reducing expense for the American people.
My Money is on Trump
Trump approaches problems that need to be fixed from the vantage point of someone who sees opportunities and knows how to get things done. Congress is steeped in bureaucracy and mired down in “how things work in Washington”. Anyone who is paying attention can see that Trump is segmenting the work into manageable parts. He is making changes that will translate into real savings for the American people. He has recruited a capable team with the expertise and sense of urgency to produce results. If his next move is working with the insurance industry, he will have 43% of health care spending in play. The media won’t provide us factual information on the work Trump is doing but the White House is publishing Fact Sheets on all of this work that will keep us informed.
If I were a betting woman, my money would be on Trump. I expect him to sidestep Congress while they bicker, pander, and accomplish nothing to spearhead real improvements in the American health care system. As we enter this New Year full of optimism and determination to make America great again, here’s to our health!