Mr. President, End the Collusion . . . in the Healthcare Industry

By | 2018-04-29T11:04:24+00:00 April 28th, 2018|
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Between December 31, 2008 and April 2018, the S&P 500 saw 177 percent growth. By any measure, a strong performance for that nearly 10 year stretch.

But the S&P 500’s performance pales in comparison to that of Aetna Insurance. The health insurance giant saw its stock value go up by 445 percent in that same time frame. However, Aetna was outshone by Humana, which saw its stock go up 608 percent. Not to be outdone, United Health saw its stock grow by 655 percent. But the real winner in that time frame was Cigna, whose stock value grew by a whopping 866 percent.

To put a fine point on it, insurance companies outperformed the S&P 500 by anywhere from 2.5 times up to five times over nearly a decade.

What a coincidence. Or not, actually.

Insurance companies have been making record profits, as have health providers in the United States, specifically non-profit hospitals (which a majority of our hospitals are) over the last 10 years; the largest 84 hospital systems in the United States generated $535 billion in revenue in 2017 alone. One might actually be forgiven for thinking that ObamaCare has caused massive windfalls for insurance companies and healthcare providers.

Because, in fact, it did.

Americans need to understand that healthcare providers and health insurance companies really have the same goal: to increase prices. Which is perfectly fine if we were discussing a true free market approach to healthcare, which we’re not.

While we’ve heard the term “collusion” bandied about incorrectly for over a year regarding the fairytale of Trump/Russia collusion in the 2016 election, the term actually applies to businesses. The term is defined as “a secret arrangement between two parties whose interest seemingly conflict to commit fraud upon another party.”

We need to realize that health care providers and insurance companies have created a mutually beneficial racket. While on the surface it would appear they’re competing, by the numbers, they’re actually not and have created a very beneficial system for themselves while sticking it to the American people.

They are, in the truest sense of the word, colluding against the American people.

All of this has created a real problem for Republicans. They’ve done nothing while the insurance companies and providers have colluded against the American people to increase costs. They failed miserably to repeal ObamaCare last year, and as the clock keeps ticking on this time bomb of the American people’s anger at rising costs, Democrats are going to offer up their solution: socialized medicine. Single payer has always been a Progressive dream, and thanks to the dithering GOP leadership in Congress, the stage is being set for that very thing to happen.

Yet not all is lost. In fact, in one swift move, President Trump could completely flip the tables on Democrats, insurance companies, and nonprofit hospital systems while also rescuing Republican leadership from their idiocy. How? By going around Congress and using the power of the executive branch.  

Trump should inform Secretary of the Treasury Steve Mnuchin that the tax regulation regarding nonprofits offering services, should it be hospitals or even higher education, should be compelled to post prices once $20 million in revenue for services is reached.

It should be clear that this reform would only deal with nonprofits that offer services. Entities like the United Way or the Salvation Army would be excluded. And even the nonprofits that offer services would be allowed to keep their non-profit status if they post prices after a certain amount of revenue.

Trump can do this do this because it’s not tax code; it’s a regulation. Congress is not needed. All that needs to be done is to change the wording in regulation 1.501(c)(3)-1(A)(2)(I), (II) & (III) under IRC 501(c)(3) to say this:

An exempt purpose shall not include revenue from services exceeding $20,000,000, unless pricing for those services are readily available to the general public in the same manner as which they appear on an invoice for those services. Pricing shall include the list price, the average discount or grant, median price paid and average price paid. Readily available is defined as availability on public facing websites or on demand phone access.

That simple paragraph would revolutionize healthcare as we know it. It would turn the industry upside down.

By forcing pricing transparency, it would open up the industry to true free market forces: imagine hospitals forced into competitive pricing for procedures. Imagine insurance companies, because the costs are being driven down by competitive forces, not being able to gouge the American people with higher premiums and deductibles.

It’s not that hard to imagine. All Donald Trump has to do is decide he’s done seeing the American people abused by the health industry, he’s done watching GOP leadership dither away their majorities and then strike a bold and decisive move on behalf of everyday Americans.

Photo credit: Mark Ralston/AFP/Getty Images

About the Author:

Ned Ryun
Ned Ryun is a former presidential writer for George W. Bush and the founder and CEO of American Majority. You can find him on Twitter @nedryun.