ObamaCare isn’t working. The only people benefiting from ObamaCare are the ones who receive government subsidies to pay for the premiums. But if you’re earning enough money to disqualify yourself for the subsidies, you’re in a real bind. You can’t pay for the premiums or you can’t pay for the treatment; which is worse?

Healthcare economist John C. Goodman tells us how bad it really is for most Americans. He says, “If you combine the average premium with the average deductible in the ObamaCare exchanges, a family of four not getting a subsidy has to pay more than $25,000 before getting any benefit at all from their health plan.” (emphasis mine) “Even after paying these huge sums, people are often denied access to the best doctors and the best hospitals.” (Those doctors and hospitals don’t accept the ObamaCare plans.)

Some employer plans, especially in such low-wage industries as fast food, are almost as bad, which is why millions of employees turn down their employer’s health insurance offer. Employees who do sign up for employer plans often cannot afford to enroll their families. Fortunately, Rep. Pete Sessions (R-TX) and his colleagues have come to the rescue with a reform plan that is a pro-patient, pro-family, pro-free enterprise alternative. It is based on three fundamental values.

Affordability

Under the plan, every family will potentially have the opportunity to obtain health insurance that meets their financial and medical needs. Most readers are aware that Congress effectively abolished the Obamacare individual mandate to buy expensive health insurance regardless of personal needs. But while the mandate to buy is gone, Congress left in place the mandate on the seller side. Obamacare plans are the only insurance that can be sold in the marketplace exchanges and they are the only insurance that qualifies for a full tax subsidy.

The Sessions bill leaves the marketplace exchanges alone and grandfathers anyone who is there and wants to stay. But it allows people to get generous tax relief if they obtain, say, Blue Cross individual insurance that looks just like the plan Blue Cross sells to employers. It also allows people to get tax relief for purchasing limited benefit insurance or short-term insurance. These are alternatives that have lower premiums and lower deductibles. They are likely to better meet the medical and financial needs of young, healthy families with moderate incomes and very few assets. (President Trump made these plans more available, but President Biden has reversed his executive orders, making them less available.)

Fairness

For the first time in the 80-year history of the IRS involvement with healthcare, the Sessions bill would treat everyone the same, regardless of where the insurance is purchased. Roughly 90% of people with private insurance get it from an employer, and for many decades now employer-provided health insurance (unlike wages) has been excluded from the taxable income of the employee. Yet, according to the most recent estimate of the Congressional Budget Office, families in the top one-fifth of the income distribution are getting four times the tax subsidy from this practice as families in the bottom one-fifth. There is nothing wrong in principle with deductions and exclusions, but if there is a national consensus that we want everyone to have health insurance and the tax system is the primary way that government helps bring that about, then the current system is hard to defend.

Another source of unfairness arises when we compare tax relief in the individual insurance market with tax relief for employer-provided plans. Take a family of four earning $45,000 a year. If this family obtains a typical health insurance plan in a marketplace exchange, the tax subsidy is so generous they will pay no premium at all. Yet if the same plan is provided to the same family by an employer, there will be one-fifth as much help from the government. Among high-income earners, the unfairness is reversed. At $180,000 of income, the typical tax subsidy will cover about one-third the premium at work, but until recently, there was no tax relief at all in the individual market. These discrepancies would disappear under the Sessions bill.

Opportunity

When you talk to a lawyer or an accountant by phone, email, or Zoom, do you worry about whether you are violating a federal law? What about talking to a professional in some other state? I’m guessing the answers are “No.” The Sessions bill would extend those same freedoms to the practice of medicine. The bill would allow employer-purchased personal and portable insurance and access to 24/7 care from primary care doctors for a monthly fee. It would also allow health savings accounts designed to meet the needs of the chronically ill. These benefits are currently unavailable.

These are good reforms that would benefit millions of Americans, while not having any negative impact on those who benefit from ObamaCare. But the goal of progressives is complete government- controlled healthcare. Unless we elect politicians who want the best for the American people, rather than the American government, we’ll continue down the path to socialized medicine.

The White House would have you believe President Biden is fighting a war on drug prices, but they won’t tell you what’s he’s doing is really a war on drugs. This issue was first discussed in two blog posts nearly a year ago, The Real Cost of Lowering Drug Prices and Cancer Drug Breakthroughs Threatened.

Fast forward to today when The Wall Street Journal editorial board wrote Drug Price Controls Mean Slower Cures. They say, “The Inflation Reduction Act (IRA) is the worst legislation to pass Congress in many years, and its drug price controls are especially harmful. On Tuesday President Biden announced the first 10 drugs for controls, and he’s exaggerating the benefits while ignoring the larger damage.”

The IRA legislation requires the Centers for Medicare and Medicaid Services to “negotiate” prices for the top-spending Medicare drugs, starting with 10 this year and a total of 60 by 2029. The law sets the drug price ceiling at between 25% and 60% of its list price, with no price floor. Drug makers that don’t participate or reject the government’s price will incur a crippling daily excise tax that starts at 186% and eventually climbs to 1,900% of the drug’s daily revenues. WSJ’s editors say, “This is extortion, not a negotiation.”

In the first round of 2023, the Biden Administration is targeting drugs that treat common conditions such as Bristol Myers Squibb’s blood thinner Eliquis, Boehringer Ingelheim and Eli Lilly’s diabetes drug Jardiance, Johnson & Johnson’s blood thinner Xarelto, Amgen’s rheumatoid arthritis drug Enbrel and Novo Nordisk’s insulin Novolog. The President proclaimed “This plan is a key part of Bidenomics.” 

But WSJ editors say this plan relies on deceptive advertising, like his other command-and-control government plans. Start with the claim that the 10 drugs accounted for $50.5 billion – or about 20% of “gross” costs for Medicare’s Part D drug program. “Gross” spending excludes the discounts that drug makers pay Part D plans for higher placement on formularies. Medicare drug prices are already negotiated by insurers, and Part D net spending is about half Medicare’s “gross” costs. The Administration also overstates the rise in prescription drug costs. Medicare spending on prescription drugs has grown less than for hospital and physician services in the last decade. Total U.S. out-of-pocket spending on prescription drugs in nominal dollars is lower than it was in 2003 and accounted for only 1% of the $4.25 trillion the U.S. spent on healthcare in 2021.

The real problem is the impact the IRA will have on new drug innovation. This legislation will discourage investment in new generics and biosimilars because their manufacturers could later be undercut by government price controls on brand drugs. That means Americans may end up paying more for prescription drugs thanks to the IRA. The law will also give companies the incentives to launch drugs at higher prices and raise prices for privately insured patients to compensate for the Medicare cuts. That means the 218 million Americans with private insurance will pay more for drugs. Call it the Private Insurance Inflation Act.

President Biden also claims this will decrease prices “for up to 9 million seniors.” That sounds good if you’re campaigning for senior votes. But WJS editors say this claim is also inflated. Several drugs on its list will soon lose market exclusivity and could face competition from generics that reduce prices without government intervention. Now those generics might not be developed or launched.

The IRA encourages drug makers to slow-walk development of treatments for smaller populations since Food and Drug Administration approval would start the clock on eligibility for price controls. The law will also discourage drug makers from studying and launching drugs for new indications, as AstraZeneca explained in a lawsuit last week. A study in the Journal of the American Medical Association this month estimated that about a quarter of FDA-approved orphan drugs were developed for at least one follow-on indication. Under the IRA, many wouldn’t have been. There’s no such thing as a free drug.

What will be the impact of the IRA on research and development of new drugs?

A University of Chicago study estimated that the drug price controls would reduce research and development by $663 billion through 2039 and result in 135 fewer new drugs being approved. These are among the IRA’s unseen costs, which will include lives that could have been saved or extended by new treatments that were delayed or never developed.

I’ll bet that won’t be included in President Biden’s next campaign speech.