Making Healthcare Affordable

In recent elections, Americans have sent a clear message: they want life to be affordable again. Many feel worn out from working harder while seeing their wages stagnate, especially as costs for housing, education, and insurance rise. This affordability crisis is impacting families everywhere, largely driven by a factor that seems to be overlooked by Washington: healthcare.

Currently, healthcare accounts for nearly one-fifth of the economy. It’s the biggest expense for employers, a growing burden for families, and a significant hindrance to national economic growth. When businesses spend more on healthcare, there’s less money available for wages, new jobs, or investments. Similarly, every dollar families dedicate to premiums or copays is a dollar that can’t be saved or used for housing or other opportunities. So, without changes in healthcare, achieving affordability will remain out of reach.

It’s not that healthcare is ignored in Washington; it’s viewed through a very narrow lens. Politicians often focus on temporary measures like subsidies and tax credits, but don’t address making healthcare itself more affordable. The ongoing debate over extending insurance subsidies during the pandemic highlights this point. Even some advocates of Obamacare now recognize that the Affordable Care Act didn’t ultimately meet its affordability goals. The solution many propose involves borrowing more money to support a system that continues to face decline. This approach doesn’t signal reform; it feels more like giving up.

There are three key realities both political sides must acknowledge.

Firstly, the current system is too expensive and locked in an ongoing cycle of rising costs.

Secondly, decades of bureaucratic control—both public and private—have failed to rein in expenses.

And thirdly, to bring about the changes Americans desire, a new model is needed—one that prioritizes patients, doctors, and employers over large bureaucracies, like government and insurance companies.

This model isn’t just theoretical; it’s already working well in other sectors. When consumers have clear information on prices and quality, competition can enhance innovation, expand choices, and drive down costs. We’ve seen technology enable this across industries—travel, retail, manufacturing. If we apply these same principles to healthcare, the potential to lower costs and elevate quality is substantial.

Unfortunately, our current healthcare system is complex and opaque, obscuring prices and increasing the number of intermediaries. Right now, the average family of four spends approximately $27,000 each year on health insurance. That’s a hefty sum—essentially the cost of a new car annually. Most families don’t even see the total cost since a significant portion is covered by employers or government programs, impacting their overall take-home pay. Paying what amounts to a car payment each year for insurance leads many Americans to cite affordability as their biggest financial worry.

Moreover, costs remain uncertain. Patients and families, as well as self-funded employers, often receive invoices long after care is provided, following a convoluted route through various third-party entities. This lack of transparency fosters waste, fraud, and confusion. It’s estimated that 30% to 50% of healthcare spending goes toward administrative costs rather than actual medical care. In essence, our healthcare system has more middlemen than it does actual medical services.

Who benefits from this? Mostly powerful interest groups, insurance companies, and various consultants who gain from the complexity and confusion. As famously stated in “Jerry Maguire,” it’s about showing the money. Beneath the surface-level discussions aimed at defending this flawed system are individuals setting out to protect their interests in a financially unsustainable environment.

While politicians might find it tough to take on entrenched interest groups, millions of informed patients and doctors can drive change. Transparency can empower those who both provide and receive care. Knowing prices allows for better decisions, promotes efficient services, and holds overspending accountable. It’s not merely about lowering costs; it reshapes power dynamics.

This is where former President Donald Trump’s initiative for price transparency came into play. His executive order required hospitals and insurers to share negotiated prices and included provisions for easier cost understanding via the No Surprises Act. While Trump initiated this shift, its enforcement took a backseat under the current administration, preventing patients from fully benefiting.

Now, there’s a chance to solidify this transparency and ensure it lasts.

The administration can utilize existing authority under Trump’s earlier initiatives. Prompt action from the Centers for Medicare and Medicaid Services to enforce transparency rules can help. Furthermore, Congress is encouraged to pass the bipartisan Patient Price Tag Act to guarantee that price information isn’t concealed by third-party administrators.

If everyone could access price information, the market might self-regulate, eliminating excess waste. This transparency would empower employers to negotiate effectively with healthcare providers, and it allows patients to make well-informed decisions. When prices are made public, increased competition forces intermediaries out of the equation, naturally driving costs down and creating a ripple effect that enhances wages and investment across the economy.

For a real change in affordability, improving transparency in healthcare is the crucial first step. It’s bold, achievable, and essential for restoring a sense of economic stability for working families.