America’s health care system faces three related crises, each predating the wrecking ball wielded by the second Donald Trump administration and its subservient GOP-controlled Congress. It costs too much. It doesn’t provide equal access. And it delivers inferior outcomes.
Things have only gotten worse under the current GOP’s reign of terror and error. This week, a leading business benefits consultant reported in its annual survey that employers expect their insurance costs to rise 11 percent next year, the most in decades, and plan to shift nearly 30 percent of those costs onto their employees.
Prices for every service (except a handful of drugs subject to the negotiations passed during the Joe Biden administration) are soaring. The main reason is that millions of people are being forced off the insurance rolls. And, despite giddy headlines celebrating the United States finally surpassing its pre-COVID life expectancy, the nation lags behind other industrialized nations in that and other public health measures.
In the face of this social disaster, various factions of the Democratic Party are offering a wide range of solutions, from single-payer and a public option to price controls and caps on out-of-pocket expenses. Passing anything will depend on Democrats winning control of both chambers of Congress and the White House over the next two election cycles. Even then, nothing is guaranteed given the sharp divisions among Democrats and the lobbying muscle of the medical industrial complex.
Health care is not just any issue. Three-quarters of voters say it is either their first or second major concern heading into the midterms. Let me attempt to address what I see as the strengths and weaknesses of various ideas for addressing the health care system’s failings. Progressive fans of Dr. Abdul El-Sayed, the Democratic U.S. Senate nominee in Michigan, might not like what I have to say about the grave fiscal and political weaknesses of the candidate’s Medicare for All proposal. But neither will moderates who think less drastic measures, like a public option, will gradually fix what ails the system. Instead, I argue, as I have previously in these pages, for altogether different policies, including ending price discrimination, that not only get at the root causes of the health care crisis, but do so in a way that is both politically feasible and delivers what no other plan can and voters most want: immediate relief from their high and skyrocketing costs.
But let’s start by describing what the Republican-run Congress and the White House have managed to destroy over the past 20 months.
- While Republicans claim their work requirement policy is aimed at eliminating waste, fraud, and abuse in Medicaid, the truth is that 85 percent of beneficiaries already meet the requirements. They are losing coverage because of bureaucratic barriers erected under the One Big Ugly Bill passed last year. An estimated 10 million poor people will be forced into the ranks of the uninsured.
- Millions more people are dropping Affordable Care Act plans because they can’t afford premiums that are rising sharply due to Republicans’ refusal to renew subsidies passed by the Biden administration.
- When people lose government-subsidized insurance, their costs don’t go away. They obtain uncompensated care later, when they are sicker, and in emergency rooms, where it is the most expensive. Those uncompensated costs are passed along to everyone else as higher prices. The Trump regime’s policies are not only cruel, but they are also stupid because they are more costly.
- Next year, the president and the GOP-controlled Congress will begin their program of slashing federal support for state Medicaid agencies, which was included in 2025’s One Big Ugly Bill to pay for a small portion of the tax cuts showered on corporations and the rich. This will force most states to raise taxes, cut deeper in enrollment, or some combination of the two.
- New rules finalized earlier this year will allow insurers to begin offering skimpy plans with fewer benefits and higher out-of-pocket costs. These will impose new cost-sharing burdens on the sick along with higher deductibles and new co-pays for previously free preventive care. These new options will also raise Obamacare premiums, since mostly healthy people will abandon the comprehensive coverage offered on the exchanges.
- In the public health arena, the regime has imposed its ideological agenda on the scientific research community, all but banning research on the causes of disparate health outcomes for women, minorities, and LGBTQ+ groups. Such research is crucial to closing the longevity gap between the U.S. and other countries. Yet DEI research is out; more research on the disproven vaccine-autism link is in.
- Leadership at the National Institutes of Health is refusing to spend money Congress has already appropriated, eroding the nation’s leadership in basic science research, which has generated virtually every advance in modern medicine over the past 75 years.
- Republicans are substituting quack science for proven medical interventions, especially in vaccine policy. These policies are already killing people and will force future generations to experience preventable illnesses that had previously been all but eliminated.
The extensive damage the Trump administration and the Republican-controlled Congress have imposed on the existing health care financing system amounts to a massive tax hike on the general population. The average cost of a family health insurance plan will increase somewhere between 8 percent and 11 percent next year, up from 4 percent to 6 percent for most of the previous decade. A 4-percent increase in the average family plan is $1,080.
To sum up: Tens of millions of working Americans will see next year’s wage increases lag the inflation rate due to the rising cost of their share of their employers’ premiums. To keep their own costs in check, employers plan to raise co-premiums, deductibles, and co-pays, further eroding workers’ paychecks. They also plan to narrow networks and expand prior authorization, which will only exacerbate patients’ and providers’ frustration with the system.
Attention, Trump voters. Higher costs; less access; worse health. Is this what you voted for?
Growing support for radical change
Given those realities, it should come as no surprise that more Americans are backing radical proposals for change. Medicare for All (M4A), which would end or sharply curtail the private health insurance system and merge state-run Medicaid into the federal system, has proven to be an electoral winner this year for a growing number of Democratic Socialist and left-of-center candidates, albeit in Democratic primaries.
A Democratic win in the U.S. Senate race in Michigan—a purple state—could give M4A advocates a major boost in 2027. The Democratic nominee, Dr. Abdul El-Sayed, is the former head of the Detroit and Wayne County health departments and a forceful advocate for M4A. He is locked in a tight race against the nominee, former U.S. Representative Mike Rogers. A few years ago, El-Sayed co-wrote a book that includes detailed options for financing it. Should he overcome the tens of millions of dollars spent on negative advertising peddling Islamophobia and terrorism accusations, he will likely become a powerful voice in the upper chamber for federalizing the nation’s health insurance system.
If one were designing a system from scratch, Medicare for All would be the logical choice. Many M4A backers point to Taiwan as the model, which implemented its single-payer system as recently as 1995. What that ignores is that Taiwan had almost no private insurance before its adoption. It also had a range of government programs that already covered about 60 percent of the population.
The U.S., by contrast, has the world’s most fragmented health insurance system. Employers, their employees, and individual plan purchasers use private insurers to cover about 170 million people, or about half the population. Government payers cover most of the rest. Yet, despite paying prices that on average are 2.5 times what Medicare pays, private insurance collectively pays just 31 percent of the nation’s total health care bill. No surprise there. Government-financed Medicare and Medicaid beneficiaries, being older and poorer, are sicker and therefore collectively more expensive to cover.
Any M4A financing plan will need to recoup the share employers now pay, and even more if its advocates succeed in relieving families from some or all of their soaring out-of-pocket expenses. Even if M4A saves $250 billion a year by eliminating wasteful administrative overhead, the government would still need to raise about $1.2 to $1.4 trillion a year from corporate and individual taxpayers. Add in the $344 billion needed to relieve states of their Medicaid responsibilities by merging that program into the single-payer system (a form of revenue sharing that ought to be embraced by the states), financing the transition would require raising an amount that is more than the combined total paid last year in Social Security and Medicare payroll taxes. Another comparator: It is three times more than the amount the IRS collected in income taxes from all businesses, large and small, last year.
In other words, implementing M4A will not only require major health insurance reform, but it will also require major tax reform.
There is a strong argument to be made for linking tax reform to adoption of a single-payer system, or any health care reform bill, for that matter. Internal Revenue Service data shows the business share of overall income taxes collected fell from 26 percent in the late 1970s to 16 percent last year. Individuals, families, and the growing federal debt absorbed the cost of reducing corporate taxes.
Reversing three generations of corporate tax breaks while lowering business health insurance premiums will reduce those two costs combined for many businesses. Less profitable firms with older, sicker workers (this includes most manufacturers, which have the highest premiums) will pay less. Ditto for low-margin service and small business firms that do the right thing and provide health insurance for their employees. On the other hand, it will raise costs for highly profitable firms with younger, healthier workers (like infotech, biotech and Big Pharma), who have the lowest health care bills and therefore the lowest premiums.
M4A advocates rarely talk about delivery system reform. Medicare, as currently structured, can control prices but not volume. Medicare spending per beneficiary in Florida, Texas, and other Deep South states (after adjusting for price, age, sex, and race differences) is 20 percent to 30 percent higher than states like Vermont, Montana, and Oregon. In part, those deep red states are epicenters of waste, fraud, and abuse. And there are some physicians and hospitals everywhere, especially in states like Florida and Texas that have become centers for private equity inroads into the provider sector, who are being encouraged to overprescribe the most highly profitable services.
M4A payment reform could become a fiscal disaster if it isn’t coupled with delivery-system reform. To the credit of Senator Bernie Sanders, the Vermont Independent and self-identified democratic socialist, the most recent iteration of his M4A bill (and a companion bill in the House with 104 co-sponsors) calls for putting providers on global budgets, a reform that deserves wider attention. Putting providers on budgets will require major changes in how hospitals and physicians practice medicine. Fixed reimbursement will incentivize provider organizations to beef up primary care and prevention, limit unnecessary utilization, and push harder for lower prices from drug and equipment manufacturers.
Needless to say, M4A will continue to draw vociferous opposition from the combined lobbying clout of the hospital, insurance, and corporate tax-cutting lobbies. Passage will remain a heavy lift, drawing unified opposition from Republicans while dividing the Democratic caucus.
Return of the public option
That’s why Democrats across the ideological spectrum are offering their own plans, most of which fail to solve most voters’ immediate problems. More pragmatic progressives, while sympathetic to M4A, are calling for incremental changes that point in its direction.
Last month, Paul Krugman, the Nobel Prize-winning economist, endorsed creating a public option in Medicare, which employers and their workers could purchase. He says this will attract a growing number of employers and eventually lead to universal coverage through a government-run insurance system. The public option was included in the House version of the Affordable Care Act, but was stripped out of the Senate bill, which was enacted in 2010.
In his argument for the public option, Krugman noted that public distrust of government is even greater than public distrust of the health care industry. He predicted that a public option would gradually erode employer-based coverage as soaring premiums encouraged many to switch.
That’s the public option’s greatest strength. The government could set its plan prices for providers somewhere between what Medicare now pays and the exorbitant rates providers now charge private payers. When Washington State created a public option to compete on its Obamacare exchange, it set prices at 160 percent of Medicare, well below average commercial prices.
But will it succeed in convincing many major corporations or Taft-Hartley plans (many of them either union-run or jointly managed with management) to make the switch? While Fortune 500 firms employ only 10 percent of the U.S. workforce, they set the benchmark for benefits companies must offer to attract and retain workers.
Allowing individuals to opt out of employer plans will probably prove most attractive for those with already high out-of-pocket health care costs, thus reducing employer costs while leaving the government to pick up their cost in its “lemon socialism” plan. That, too, will sharply reduce employers’ incentive to make the switch.
Moreover, the public option plan will have very little leverage for controlling long-term costs. The increasingly monopolized and private equity-influenced provider sector could continue to impose high prices on employers and their private insurers, which remain wedded to a fee-for-service reimbursement model where neither prices nor volumes are controlled.
Finally, if the public option is structured like Affordable Care Act plans—with tiered benefits, limited subsidies, and variable and often high out-of-pocket costs—its lower upfront premiums (through government price-setting) will not be enough to encourage significant enrollment among the young and healthy. The legislation will need to restore the financial penalties for those remaining uninsured, which were eliminated in the 2017 Trump corporate tax giveaway bill.
A renewed push for using antitrust
Senators Elizabeth Warren and Josh Hawley recently reintroduced one reform drawing bipartisan support. The Break Up Big Medicine (BUBM) and Patients Before Monopolies (PBM) Acts will renew use of the nation’s antitrust laws to curb pricing power within the medical industrial complex. A number of centrist Republicans and Democrats have signed onto the Senate and House versions of the latter bill offered by the Massachusetts Democrat and Missouri Republican.
The more ambitious BUBM Act will prohibit a parent company from owning a medical provider or management services organization and a pharmacy benefit manager or an insurer. It also prohibits a parent company of a prescription drug or medical device wholesaler from owning a medical provider or management services organization. The PBM Act will ban owners of pharmacy benefit managers or an insurer from owning a pharmacy business, whether local or a national chain. The legislation will levy automatic penalties if a company fails to comply within a year of enactment, including disgorgement of profits and forced sales of assets.
The bills are a direct assault on conglomerates like UnitedHealth and CVS, which over the past several decades have created vertical monopolies in which parent companies own insurers, specialty physician practices, pharmacy chains, and claims processors. The conglomerates use transfer pricing between subsidiaries to inflate costs and avoid the ACA and Medicare limits on overhead costs and profits.
Here’s how the two senators described why the bill is necessary:
The largest insurance conglomerates are some of the largest employers of physicians in the country. The three largest PBMs—middlemen between insurance companies and pharmacies—manage 80 percent of prescription drug claims, and each is owned by a company that also owns a health insurance company and a pharmacy chain. At the same time, just three prescription drug wholesalers control 98 percent of U.S. drug distribution, and have been busy acquiring companies that purchase and prescribe prescription drugs, like specialty medical practices. This not only harms patients and taxpayers, but has also left independent doctors and pharmacists unable to compete—nearly 4,000 independent pharmacies have closed since 2019, and almost 80 percent of physicians now work for a corporate parent.
The legislation doesn’t go far enough. Neither bill addresses consolidation within the hospital and insurance sectors.
A recent study found that just one or two health care systems, which usually own or control a significant share of local physician practices, control the entire market for inpatient hospital care in nearly half of all metropolitan areas. The Peterson-KFF Health System Tracker reports that a single at-risk insurer has over a 50 percent market share in every state, whether one gauges the fully insured large group, small group, or individual markets.
Neither hospitals nor insurers have an interest in seeking lower prices during their annual negotiations. Both sectors are low-margin businesses where the more they bill (hospitals to insurers; insurers to employers), the more they profit. Insurer efforts to hold down costs by requiring prior authorization for many services and narrowing networks—an impossibility in monopolized hospital markets—have not only alienated patients and providers, but they have also proven ineffectual.
Finally, it will take years for a more aggressive antitrust policy, given its implicit faith in marketplace competition, to deliver lower prices. It took nine years for the Department of Justice to break up AT&T’s telephone monopoly. Given the inevitable court challenges, breaking up the medical industrial complex’s multiple monopolies could take far longer.
Householders suffering from the rising cost of health care can’t afford to wait that long. They need help now.
Programs from the Fix-It Caucus
There will be no shortage of bills introduced in the next Congress seeking to fix specific health care problems, especially those created or worsened by the second Trump administration. Passage during the next two years is highly unlikely since the president will still wield his veto pen.
At a minimum, a Democratic Congress will vote to repeal the Medicaid cuts; repeal the work requirements; and reinstitute the expanded exchange plan subsidies, which are the immediate causes of the looming sharp uptick in the uninsured rate. It should insist on NIH spending its appropriated monies; restore normalcy to the operations of the Centers for Disease Control and Prevention; and overrule Robert Kennedy Jr.’s HHS department on vaccine policy.
We’re also likely to see bills addressing looming physician and nurse shortages, which are already affecting many parts of rural America and will soon spread to cities as the Baby Boom generation fully retires. There’s growing recognition that the nation needs to make significant new investment in training and deploying more primary care physicians, who need the time and resources to improve their patients’ overall health at lower cost.
Yet none of those measures—each of which will cost taxpayers more—directly addresses the core problem faced by the majority of voters. What they are looking for, and any astute politician should want to deliver, is immediate relief from their high and skyrocketing out-of-pocket costs; the high prices behind those costs; and the dysfunctional front door for accessing health care when needed. Overturning Trump II’s policies will only return conditions to an inadequate status quo, albeit one that did lower the uninsured rate to 8 percent.
At least one forthcoming bill will deliver on more far-reaching goals. Sources on Capitol Hill have shared with me the outlines of that bill that will place a firm cap on every household’s out-of-pocket health care costs at 8.5 percent of annual income. Since this can be enforced at the provider level, it should not run afoul of ERISA rules. This federal law sets minimum standards for private-sector retirement and health plans to protect workers’ benefits. The bill will also place strict limits on prior authorization. Both are key planks in the bold health care reform plan offered in the Washington Monthly and my Substack, GoozNews, in December.
The bill also requires providers to charge patients and their insurers the same price for the same service, regardless of insurance or service type. To repeat the arguments in favor of single-pricing: A blended federal price that is capped for all payers (Medicare, Medicaid, as well as private insurers) at about 160 percent of current Medicare prices (insurers will still be allowed to negotiate lower prices) should achieve all the administrative savings anticipated through M4A, but without the cost of federalizing the entire system.
Single pricing should weaken opposition from the insurance industry, which M4A existentially threatens. It will divide the hospital lobby, since safety-net hospitals, which are heavily dependent on Medicaid and Medicare funding, will benefit substantially from higher government prices. As outlined above, many, if not most, employers will benefit from lower commercial prices because the savings from lower insurance costs will outweigh the higher taxes needed to raise government rates. Moreover, the firms hit with higher taxes than savings will be those with high profits and younger, healthier workforces, which benefited most from the 2017 and 2025 (Trump I and Trump II) tax cuts and can afford it.
I would encourage Democrats to add one more plank to the bill: Move hospitals and large physician practices onto global budgets that rise annually at a rate slightly below economic growth, as included in Sanders’ M4A bill. Keep those budget growth targets steady for the next several decades, or until the U.S. health care costs as a share of GDP are comparable to the second-highest among G-7 countries, currently Germany at 12.5 percent. The U.S. is currently at 18 percent. Those budgets should be guaranteed, which means the government will need to adjust prices upward as providers become more efficient and deliver a healthier population requiring less sick care. A guaranteed budget allows providers to deploy their resources in ways designed to achieve both goals.
As for the politics of such a plan, allow me to repeat what I wrote nine months ago when working out its details.
To win back working- and middle-class voters who already trust them more than Republicans to do the right thing on health care, Democrats need to offer a plan that immediately limits workers’ out-of-pocket costs. For employers, unions, and others who want to “keep what they have,” single pricing tied to annual budgets preserves the employer-based system while providing them with the long-term benefit of slower-growing costs. For the millions of small businesses that don’t currently provide coverage, the plan will make it much cheaper to do so. Such a plan might even win support from the few GOP officials willing to free themselves from the fear-driven grip of Trump’s faux populism.
