March 14th, 2017

Dear President Trump:

Listening out here to all the talk about what repealing Obamacare would mean, I am struck by the thought that most of the consequences are phrased in terms of how many people would lose health insurance. The talk is about that, instead of about reducing the cost of health care to most people.

The point is, it really is of no interest how many people have health insurance. In fact, the more people covered, the more people are paying an intermediary (the health insurance industry) a commission over and above their health care costs - thus increasing the total cost to society for healthcare. What you really want is to create a situation where you reduce normal healthcare costs to the point that people can afford (and expect to pay for) most healthcare WITHOUT insurance. We really need to change the conversation here - and get people to talk about health care differently.

The first thing is to give people the option (and expectation) of being able to say - "No, I dont want coverage - because it is too costly" - thus giving the insurance industry motivation to price premiums in an affordable range. Eliminating the mandate is the first step to doing this, and I am glad the proposed AHCA is doing this for both individuals and businesses.

A tax credit for contributing to an HSA (as in the proposed AHCA) is a great idea - particularly if you remove the limitation that you have to be covered by a health insurance plan to be able to get the credit*. Let people set aside money for future health care whether or not they have health insurance. They are being responsible, and society should reward them for it**. Many people wont need insurance for regular health care, because they have already put away money for it.

Then we need to focus on emergency or "catastrophic" care. There are already laws on the books mandating the provision of emergency care. Let them be. We do need to compensate providers for doing this, and local taxes can pay for it. With regard to "catastrophic" care, it is important to remember that what is "catastrophic" is determined by the person's wealth. So, expect people to pay something; e.g. at least 20% of their annual income towards such care. But, here is where we really need your leadership in re-educating the country by saying the politically incorrect thing. Part of why we voted for you is that you seem to able to call out "bullshit" and say "pussy" when others would devolve into meaningless blather. Claim that as your mandate - it is! - then start talking. The law needs to control people's expectations by explicitly (and harshly) stating when an emergency ends. It needs to explicitly allow hospitals to evict "stabilized" emergency patients if they cant show ability to pay (via balance statements or evidence of health insurance coverage). As an example, the law should explicitly allow a person in a coma to be discharged with a feeding tube and instructions to the care of their family if the hospital expenses cant be paid by the person or their family. I'm sure you and your team can come up with more "tough shit" examples that you can talk about. Talking about them enough will provide the political cover for Congressmen to pass laws that define when and for how much it is OK for society to say "the end" - which is something we badly need. And if somebody wants to define a costlier "the end" for somebody they love, thats OK, but they better be able to pay for it.

You do need to help the insurance industry reduce costs. Removing the limitations across states, and allowing insurers to offer bare essential plans or tailored to individual need is good. Another thing you can do to help is by limiting the guarantee of insurance availability regardless of pre-existing conditions to some kind of bare essential/catastrophic coverage plan. If they want more, the proposed AHCA has a 30% penalty on coverage cost for people who were not being responsible and were not covered. The 30% premium should be eliminated for those who have been contributing at least (lets say) 10% of their income to an HSA.

Finally, the health care industry has gotten really good at getting people to bend over for a wallet extraction. People who are desperate will sign anything to get health care. In practice, medical care providers often charge people without insurance 10X or more what they charge insured customers. What we need is some way of forcing the price negotiation to happen in an environment where people can step back because the need is not urgent. We can attack this problem directly, by allowing medical care providers to charge whatever they want ONLY if the price is negotiated more than (lets say) a month in advance of the medical procedure - otherwise the providers can only ask for (lets say) 10% above the Medicaid rate for the procedure. This will do two things - 1) put price limits on non-negotiated care, and 2) change the marketing the insurance industry employs to "first class care at reasonable markup" rather than just "care". ***

I hope you see this letter as what a lot of us are thinking. I wish you the best, and if I can help you in any way in the next four years please let me know.


Footnotes Last Updated 2017-07-03
* An executive order could make the IRS consider having "no health insurance plan" as having a "high deductible health insurance plan (HDHP)" as it is equivalent to a health insurance plan with an infinite deductible. This would allow people without a health insurance plan to contribute to a HSA, but allow them to use price negotiation or cost delaying/prepayment plans.
** Given that the repeal of Obamacare did not happen, if a person contributes enough of their income to an HSA that person should automatically get an exemption from the Obamacare penalty. As for what the limit should be: under Obamacare, if a person would have to pay more than a certain fraction of their income for health insurance meeting Obamacare standards, they can be exempted from the penalty if they fail to purchase such health insurance. This may require an act of Congress.
*** We could also have a program to increase the availability of doctors at remote locations by modifying the student loan program so that loans would be forgiven if a newly minted doctor works at a location determined by a federal agency for 5-10 years.