Trump is busy making plans for you. Do the same for him. #Obamacare Retweet
The Republicans have talked loud and long about replacing Obamacare. Now they must act. But will their actions be good or bad? We must tell them what “good” looks like.
We’ve each written an open letter to Trump’s transition team. It contains our proposals for repealing and replacing Obamacare. With 20 proposals, it’s a long document. But each proposal is fairly short and easy to read.
An Open Letter to the Trump transition team
Trump Transition Team 1717 Pennsylvania Avenue Washington, DC 20006
Politicians poisoned our healthcare system. They can only fix it by sucking out the politics.
With that in mind, please pursue the following policies to replace Obamacare…
PROPOSAL #1: Restore natural prices and make them visible to patients. This will enable consumer control, foster competition, increase supply, and reduce costs.
Patients currently have…
– No incentive for frugality because others (insurance companies and taxpayers) are paying nearly all of their healthcare bills. — No means to economize because they never get to see any prices for medical procedures.
Healthcare prices are set in secret by politicians, bureaucrats, and insurance companies. Medicaid and Medicare have the greatest price-fixing impact. Insurance companies take their lead from that source. So-called “cash prices” are set astronomically high to weed out cash customers and to manipulate tax filings with false losses from non-paying cash customers.
>>Natural prices, set by the decentralized forces of supply and demand, are nowhere to be found.
Third party payments and the lack of visible prices disconnect patients from their doctors. Doctors don’t work for patients. They work for the people who control the purse strings — the insurance companies and the big federal health care bureaucracies. This creates several distortions…
– Patients and doctors overuse medical services, pursuing tests and therapies that serve little purpose. — This overuse inflates the cost of healthcare services. — Costs increase faster than health outcomes improve. — Politicians exploit these problems to enact “reforms,” like Obamacare, that are simply larger versions of what caused the mess in the first place.
Americans must come to understand what natural prices can do for them. Natural prices are magic, while prices set by politicians and bureaucrats are a curse. Please understand how natural prices function…
– A higher relative price sends two signals — use medical services more frugally and produce more such services — This conservation and increased production combine to expand supply and reduce prices
This is the exact opposite of how tax-funded subsidies and third-party payments work.
– Third party payments reduce the need to be frugal, increase demand, and increase prices. — Subsidies tend to increase prices so as to absorb not only the subsidy, but also whatever the consumer is willing to pay on top of that. — This is why the three areas where politicians have done the most to reduce prices — housing, higher education, and healthcare — are also the areas where prices have risen most rapidly.
Political prices cannot improve upon natural prices. Natural prices create the incentives that provide consumers with store shelves that are always full. Politically set prices are what empty store shelves in places like the Soviet Union and Venezuela.
This magic can work as well in healthcare as it does in other sectors. Lasik eye surgery provides a good example. All LASIK procedures are paid for directly by patients, NOT by insurance or taxpayers. The result is that the cost of this procedure has constantly fallen while the quality has consistently improved. The same is true for cosmetic surgery. This is something we see in all areas (such as computers) where natural prices hold sway. We must do everything we can to restore natural prices to healthcare and make those prices visible to patients. The proposals offered below have this aim.
Politicians poisoned our healthcare system. They can only fix it by sucking out the politics.
PROPOSAL #2: Repeal Obamacare in its entirety before considering legislation to replace it.
This action will compel the Senate to cooperate with enacting a replacement. Absent this move the Senate may stonewall in an attempt to preserve all or part of the status quo. This must not be allowed. Full repeal should happen in spite of the fact that Mr. Trump wants to retain some politically popular aspects of Obamacare. Such matters should be dealt with in negotiation. “Mr. Art of the Deal” should understand better than anyone that the best way to foster negotiation is by quickly repealing all of Obamacare.
Remember, politicians poisoned our healthcare system. They can only fix it by sucking out the politics.
PROPOSAL #3: Politicians should make all sickness and wellness expenditures tax deductible, including insurance premiums and preventive measures, such as supplements and fitness clubs.
Congress should make all health expenditures tax deductible, without requiring a threshold to itemize. Make it so we can deduct our healthcare expenses in addition to our standard exemptions and/or other deductions. Americans should also be allowed to save unlimited amounts in their Health Savings Accounts. These changes will…
– Give Americans more control over their own healthcare spending, and a more secure future, through unlimited HSAs — Put individually purchased insurance on the same tax-footing as employer paid insurance. That will… — Create incentives where people prefer individual policies, which will… — Help decouple health insurance coverage from employment, so that… — People will no longer lose their coverage when they lose their jobs.
Increasing the number of Individual policies will also curtail the pre-existing-conditions (PEC) problem that happens when people get sick during periods of unemployment. The PEC problem was state-caused. Politicians paved the way with tax policy. The way out naturally involves fixing tax incentives.
Preventative measures, such as fitness clubs, vitamins, and other supplements should also be tax deductible. Everyone agrees on the preventative power of exercise, and the Life Extension Foundation has marshaled overwhelming evidence that many supplements outperform pharmaceuticals both in preventing and treating disease. More investment in prevention will lower medical costs over time.
Remember, politicians poisoned our healthcare system. They can only fix it by sucking out the politics.
PROPOSAL #4: Revive true health insurance (and make it affordable too) by removing all the expensive mandates imposed by Obamacare and the states.
Numerous state and federal laws dictate what health insurance policies must cover. These mandates (and defective federal tax policies that incentivize employer-provided “Cadillac plans”) have replaced real health insurance with expensive bill paying services that masquerade as insurance. True insurance (major medical/hospitalization) protects against expensive risks, it does NOT pay for every expense. Car insurance that paid for oil changes would be prohibitively expensive too. Remove all the mandates. We’ll have true insurance again, and several things will happen…
– Premiums will plummet because mandates drive up costs. — The number of insurance providers will skyrocket, creating competition that will further reduce insurance premiums. — The number of people lacking insurance will fall dramatically. — New products will appear. You will be able to choose between different kinds of insurance with different prices to meet your unique needs. For instance, we could have health-status insurance to protect against pre-existing conditions.
The Constitution’s Commerce Clause gives Congress the power to end insurance mandates. The Commerce Clause was intended to prevent the states from erecting trade barriers. State insurance mandates are an example of such a barrier. They restrict consumers to only those policies that comply with the mandates imposed in the state where the purchaser lives. Candidate Trump pledged to let consumers buy policies across state lines. The cleanest and most beneficial way to do that is to outlaw all mandates at all levels, including the Obamacare mandates. This would have at least two other beneficial results…
– It would allow insurance companies to offer a wider variety of products. — It would permit insurance companies to price coverage based on the risk involved. You could cut your insurance premiums by adopting healthier habits.
Remember, politicians poisoned our healthcare system. They can only fix it by sucking out the politics.
PROPOSAL #5: Outlaw monopolistic “certificates of need.”
“Certificates of need” are trade barriers. They limit the number of hospitals in a given area, protecting established interests at the expense of consumers. “Certificates of need” raise costs by restricting the supply of healthcare services.
The law of supply and demand does a wonderful job bringing the right amount of food to your grocery stores. It can do the same for hospitals and other forms of medical care. No intervention by central planners is needed or desired. If you want to lower healthcare costs, you must increase the supply of healthcare providers. Banning “certificates of need” will accomplish that.
PROPOSAL #6: End punitive damages that enrich lawyers with no compensating health benefit.
Punitive damages increase the malpractice premiums doctors pay. We’ve lost thousands of doctors because of these high costs. Fewer doctors means higher prices for medical care and for health insurance too. It also means longer waits to see a doctor.
A court finding of malpractice is punishment enough. The doctor has to pay for the harm done to the patient. The judgment goes on a doctor’s record. It could end his or her career, or it could reduce the number of patients he or she has. There’s no reason to pile on punitive damages.
Punitive damages do nothing to reduce malpractice. Quite the contrary — they encourage doctors to order unnecessary tests. Limiting judgments to actual damages will…
– Decrease the cost of malpractice insurance — Increase the supply of doctors — Reduce the number of unnecessary procedures — Lower the cost of healthcare — Lower health insurance premiums
Most people understand this, yet reform has been impossible because trial lawyers have so much influence in Washington, especially within the Democratic Party.
PROPOSAL #7: Make the FDA advisory, not dictatorial.
The Food & Drug Administration (FDA) adds billions of dollars to drug costs. Does it deliver an equal value in safety? It’s hard to imagine that it does. Consider the example of Underwriter’s Laboratory, a non-state provider of testing and regulation for product safety. UL delivers safe products without adding huge amounts to their cost.
So how can we get the FDA to be as cost effective as UL? The answer is actually very simple…
Make the FDA compete, in an open marketplace, by removing its dictatorial powers.
If pharmaceutical companies value the FDA seal of approval, then they can continue to pay for the FDA evaluation and approval process. If doctors and patients value FDA approval, they can decide to only buy FDA approved medicines. If the FDA’s seal of approval is really so valuable, then it does NOT need to be mandatory. No coercion is needed. Instead…
The FDA should be able to sell its services through voluntary means, just like Underwriter’s Laboratory does. Companies such as UL, NSF International, and others might even compete with the FDA to ensure drug safety. Such competition would improve quality and lower costs, just as competition does in every other arena. This change would also give us competing standards of safety. This is important because…
Each human being is unique. Treatments that might be dangerous for one person, could be the only possible solution for another. One-size-fits-all dictates cannot possibly account for the vastness of human variability. Patients and doctors should have the flexibility to deal with individual uniqueness. Consumers should be free to consult available science and make their own decisions about which treatments to try.
If you think this suggestion is novel or strange, think again. Something similar to this approach has already been tested. It’s how we ended up with the drugs that prevent HIV from being the death sentence it was in the early 80s. FDA rules were relaxed in order to make these drugs possible. We could gain the same benefit for other diseases while also lowering costs. The case for this change is truly overwhelming. Stated simply, the FDA should serve, not rule.
PROPOSAL #8: Restrict the FDA to certifying safety only.
If our proposal to make the FDA entirely advisory fails, then Congress should at least restrict the FDA to certifying safety only, not efficacy. The clinical trials for efficacy are the most expensive part of the process. They’re also unneeded if a substance has been certified as safe.
Doctors and patients should be free to conduct their own experiments about whether or not a substance works. The answer to that question will vary for different patients. Consider the case of a boy named John Owen Dumm…
The FDA prohibited Dumm from using a muscular dystrophy drug that had allowed some sufferers to stand up from their wheelchairs. Why did the FDA do this? Because the patients who benefited from the drug did not walk far enough to satisfy the FDA’s arbitrary dictates about what is means for a drug to be effective. This isn’t protection. It’s arrogant tyranny.
There’s zero reason to have one small set of know-it-alls decide for all of diverse humanity which substances work and which do not. The answer will be different for different patients. No one size fits all determination is even possible.
PROPOSAL #9: End the FDA’s power to regulate generic drug factories.
We’ve all heard the horror stories — high prices for generic drugs that cost pennies to make. This is not a free market problem. Quite the contrary. The problem is caused by FDA cartel creation. The New England Journal of Medicine has exposed the details of this generic drugs price scandal.
The solution? End the FDA’s monopoly power to regulate generic drug factories. Make the FDA compete with other certification firms such as Underwriter’s Laboratory and NSF International. Do this by making the FDA advisory, rather than dictatorial. This change will…
– Cause drug prices to plummet. — Lower overall healthcare expenses. — Help make drugs so cheap, you won’t need insurance to buy them (our other proposals will do the rest). — Lower health insurance premiums.
PROPOSAL #10: Limit pharmaceutical patent protection to the recovery of research costs.
Be clear about what a patent is: It’s a state-created monopoly. The owner of that monopoly gets to charge higher prices than the market would otherwise bear. Can this be justified?
Proponents say that innovators deserve to profit from their discoveries and inventions. That’s certainly true, but being the first to market is already a huge advantage that will lead to considerable profit. Should consumers really have to pay more to increase the reward even further?
The best argument for patents is that innovators spend huge sums on research, and have more misses than hits. This issue is where the compromise should be made…
Patents should last only as long as needed to recover research costs, including the amortized cost of failures.
This will protect innovators from loss while giving them plenty of time to establish a commanding brand position with significant market share. Examples of this include products like Tylenol, Advil, and NyQuil. These brand names continue to enjoy significant market share and profitability, in spite of the fact that the underlying substances…
Please notice that the more important the drug or invention is, the more customers it will have and the faster the development costs will be paid. This should serve to bring the most effective drugs off patent sooner than currently happens. This change will…
– Cause the price of drugs to plummet. — Lower overall healthcare expenses. — Remove much of the need for insurance to cover medications (our other proposals will do the rest). — Lower health insurance premiums.
PROPOSAL #11: Outlaw redundant licensing requirements.v
If your doctor spent a zillion years and well over a hundred thousand dollars on diplomas, do you really need him or her to obtain a license on top of that? If he or she also has continuing education diplomas on the wall, isn’t that better than a license? The fact is, licensing requirements are a redundant expense. But they have an even worse flaw…
They presume there’s One Best Way™ to do things. That’s simply untrue. There are hundreds or even thousands of good ways to do things. Even if there really was only One Best Way™, how could you be sure it was the one you codified into law? In reality, we make the most progress and get the best results when multiple ideas compete with each other.
Congress should outlaw the requirement for a state or local license.
PROPOSAL #12: Incentivize the frugal use of medical services by creating the equivalent of Medicaid and Medicare HSAs.
Services tend to be overused when other people are paying the bill. Subsidies increase demand, and increased demand raises prices unless supply expands equally fast. Medicaid and Medicare (M&M) have both had this effect — they have increased the demand for medical services without expanding the supply of those services. The result is costs that spiral higher and higher.
To fix this problem Congress needs to give M&M recipients a reason to economize. The best way to do that is by giving them a financial stake in the outcome. Let them own some or all of the money they spend on healthcare. People are frugal when it’s their money.
– Congress should set a budget for how much it will spend on each person’s healthcare. — Congress can adjust this budget to account for each person’s net worth and health status. — Give this money to M&M patients. Let them manage it. — If they run out, they get no more for that year and will have to pay out of pocket for additional care. But if they have money left over they can use it for future medical expenses.
This one simple change would give M&M patients an incentive to economize. It would cause them to ask doctors for prices, and the return of visible prices could go a long way toward lowering healthcare costs.
PROPOSAL #13: Increase co-pays for Medicare and Medicaid patients.
People economize as prices rise. They ask themselves, “Do I really need that?” We need to foster this kind of thinking in healthcare. A small increase in copays could cause a large increase in frugality, with zero harm to health outcomes. It’s important to remember that much of the “care” funded by Medicare and Medicaid is low value or no value that drives up prices.
PROPOSAL #14: Reduce doctor visits by ending the need for prescriptions.
The prescription requirement is just another state-created cartel system. It has raised medical costs more than it has protected health. Will some people make bad decisions if we dispense with the prescription requirement? Of course they will! But please recognize…
Hundreds of drugs that once required prescriptions no longer do. The list includes substances such as acetaminophen, ibuprofen, Tagamet, and much more. Some people misused these substances both before and after prescriptions were required. But, as you can see for yourself, dropping the prescription barrier has helped far more people than it has harmed.
– Doctors have over-prescribed antibiotics for decades. — Doctors were also wrong about the need to follow the full course of antibiotics. The intuition of patients that they could stop taking antibiotics when the infection receded turned out to be correct. — These mistakes by supposed experts were a major contributor (though not the only cause) of the resistant bacteria crisis.
So, if our supposed protectors, the doctors, can make such huge mistakes, how big a protection is the prescription requirement? Here’s the truth…
– Many people fail to get the drugs they need because they cannot afford BOTH the prescription and the trip to the doctor to get the prescription. — The need for many medications can be determined by online protocols — oral communications between doctors and patients are not the only way to provide guidance, nor the most efficient. A doctor’s time should be reserved for the harder cases instead of being consumed by minor matters. — Pharmacists, upon seeing a client request a drug without a prescription can also serve as a line of guidance and defense. They can ask patients why they want a particular medication and then warn them of the risks. — There’s ample evidence that consumers start to pay more attention when presumed safeguards are withdrawn. For instance, people drive more safely, with fewer accidents, when traffic signs are removed. The same can and should happen with pharmaceutical use.
Perfection cannot be legislated but mistakes can be. The prescription requirement is a problem, not a solution. It leads to unnecessary doctor visits and increased costs. The prescription requirement should end.
PROPOSAL #15: The State should stop defining dietary guidelines.
Federal politicians and bureaucrats spent decades waging a war on dietary fat. The result was an epidemic of obesity, diabetes, and heart disease. America was mocked around the world as the land of fat people. Healthcare costs soared. This statist policy must rank as one of the biggest mistakes in history. Here’s how it happened…
A few “scientists,” with powerful connections, persuaded politicians to make their personal speculations about dietary fat into official U.S. policy. Some have described this as a case of eminence-based rather than evidence-based science. It took The State to leverage a bad theory into top-down policies that impacted everyone. The solution?
No more top-down healthcare policies. The statist practice of setting health or dietary guidelines is unscientific and dangerous. It must end. Instead, ideas must compete with each other in the free market, where the best ideas tend to prevail.
PROPOSAL #16: Create an exchange for pro-bono services and voluntary funding.
All of The State’s policies involve violence: “Do what you’re told and pay this tax, or we will harm you.” Our previous proposals have shown how healthcare can be improved by moving away from violence-based methods. That approach should be our default mode of thinking for all issues. We must constantly ask ourselves…
– Is there some way to achieve our goal without threatening violence against people? — How far can we go using only non-violent policies?
Many people fear that voluntary compassion would fail to deliver enough assistance to those in need. Those who have this intuition believe their fear justifies violence in the form of taxation. Is there a non-violent way to alleviate their apprehension? Can we demonstrate exactly how much people are willing to do for others?
Imagine online software where…
– Doctors, hospitals, and clinics could register the kind and amount of aid they’re willing to provide on a pro bono basis (professional services offered free of charge) — Donors and foundations could also register how much funding they’ll provide to pay for other people’s medical bills. — Patients could apply for treatment and/or funding for their problem. — Service providers and funders could grant or deny aid to applicants based on their own criteria (this would give us competing approaches to filtering out freeloaders).
One of three things would be true…
– There would be zero participants, in which case all the needed aid would have to be tax funded. — The offered services and funding would be equal to the amount needed, in which case no tax funding would be required. — The offered services and funding would meet part of the need, thereby reducing the amount that would have to be tax-funded.
Two of those three outcomes would reduce the amount of violence employed.
Nothing prevents this idea from being executed in the voluntary sector. It’s not necessary for Congress to act. But consider…
“The United States of America” is a very good brand name, and such a system executed under that name would doubtless attract more visibility and support. More importantly, Congress needs to train itself to think in this way more often. Congress needs to learn how to reduce its use of violence-based methods. This proposal for a pro bono healthcare exchange could be a first-step in that direction. Indeed…
No violence is needed at any step of this process.
– Congress should raise voluntary donations to offer a prize to the person or group who creates the best software for a pro bono healthcare exchange. — Citizens should choose the winner of that prize by interacting with the software entries, rendering their verdict using rank order voting.
The federal bureaucracy should play no role in this beyond raising the money for the prize and providing a system for citizens to choose a winner. Federal bureaucracies have a long, sad history of spending billions on failed software projects. Often the software is so bad that it has to be scrapped entirely and the project restarted from scratch. There’s absolutely no reason to use The State’s normal violence-based methods of taxation and cronyism at any stage of this process.
This pro bono exchange could serve as a model for future efforts to fund other government services and programs using the same kind of voluntary approach. This post-statist methodology could improve performance by facilitating consumer control.
PROPOSAL #17: Provide a 100% tax credit to anyone who pays for a needy person’s healthcare expenses.
This policy would make our proposal #16 even more effective. It’s a good way to fund indigent healthcare with reduced state violence.
PROPOSAL #18: Make Medicare a safety net rather than a dragnet.
Those with the means to fund their own healthcare shouldn’t be able to tap the taxpayers to foot their bills. Medicare should be means-tested on a sliding scale — the more you have the less you get. This would transform Medicare from a dragnet program that ropes in everyone, to a true safety net that helps only the indigent. This will reduce the reliance on violence-based funding (taxation).
PROPOSAL #19: Make indigent access to the tax-funded safety net contingent on a history of personal responsibility.
All forms of assistance carry the risk of encouraging irresponsible behavior. Some people avoid work if tax-funded assistance is too easily available. And people who could afford to maintain health insurance fail to do so if they can fall back on the taxpayers. Something must be done to counteract these bad incentives.
– If a person had the resources to maintain health insurance but simply failed to do so, he or she must appeal to charity for help (perhaps through the software exchange described in our proposal #16). — Only those in trouble because of an inability to buy health insurance, or because of a condition developed during a period of low income, should have access to the tax-funded safety net.
This approach would further reduce the need for violence-based funding.
PROPOSAL #20: Create a schedule to devolve Medicare and Medicaid to the states or localities.
Doing this would create incentives for frugality, as areas compete with each other to provide the right mix of benefits. It would also allow the benefits to vary according to local conditions. These are things no national system can do. What we need instead are 50 different approaches, competing with each other.
A FINAL NOTE: Downsize DC helped me research and deliver these policy proposals to you. Nearly all of them came with hyperlinks substantiating the claims made here, but your webform does not accept hyperlinks, and so you lose the benefit of receiving links to sources. If you are in doubt about any claims made above, or if wish to access this research, please visit the blog post at the Downsize DC website: 20 powerful ways to replace Obamacare.
–END OF PROPOSALS–
Copy and paste our proposals to the Trump transition team.
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Thank you for your participation.
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