December 21, 2025 • 29 mins
Newt talks with Brian Blase, president of Paragon Health Institute and former special assistant to the President for Economic Policy at the White House's National Economic Council. Their discussion centers on the rising cost of healthcare in the United States, a pressing issue that Blase recently addressed before the Senate Finance Committee. Blase explains the mission of the Paragon Health Institute, which he founded to fill a void in the free market community by analyzing government healthcare programs and developing policy solutions that expand choice and market competition. Their conversation highlights significant issues such as fraud and corruption in government healthcare programs, with examples of the massive fraud in Minnesota and improper enrollments in Obamacare. Blase emphasizes the need for reform in Medicare payment policies and the importance of consumer control over healthcare financing to reduce costs. They conclude their discussion with a call for transparency in healthcare pricing.
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Episode Transcript
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Speaker 1 (00:04):
On this episode of News World. I'm really pleased to
welcome my guests, Brian Blaze. He's the president of Paragon
Health Institute and former Special Assistant to the President for
Economic Policy at the White Houses National Economic Council from
twenty seventeen to twenty nineteen, where he coordinated the development
(00:28):
and execution of numerous health policies and advised the President,
NEC Director and senior officials. He recently testified before the
Senate Finance Committee on the rising cost of healthcare for
all Americans. And I'm really pleased to talk with him
today because I think solving the issue of the rising
(00:49):
cost of health care is one of the fundamental issues
at our time. And let me say, when you talk affordability,
affordability of health care is a dramatically bigger issue for
the American and the affordability of bacon or gasoline or
things that we normally put in that zone. But healthcare
today is extraordinarily expensive and a huge burden on the
(01:11):
American people. Brian, welcome, and thank you for joining me
on this world.
Speaker 2 (01:28):
Mister speaker, it is a privilege to be with you.
Thank you for having me on.
Speaker 1 (01:32):
You know, before we get into health was just I
think going to be given them pretty eminent domestic issue
of the next few years. Tell me for a couple
of monents about this what you have developed at the
Paragon Health Institute suddenly emerged, and frankly, I have found
the work of the Paragon Health Institute to be among
the most insightful and most interesting work being done in
(01:55):
Washington today. How do the Paragon develop and what is
your role in that development? Well?
Speaker 2 (02:01):
Thanks, I appreciate you saying that conservatives and those of
us who support the free markets haven't always been outfront
and leading on healthcare reform, and there was a real
void in the free market community for an organization that
would analyze how government healthcare programs were actually working, not
just the intentions behind the programs, and then to develop
(02:25):
a set of policy solutions that are consistent with our
principles of expanding choice, injecting market competition, and really making
sure that we have a regulatory climate that's conducive to innovation.
So I launched the organization just about four years ago,
and I've been really fortunate to work with some of
the best free market health policy minds in the country.
(02:50):
Filled out a team that was based on a lot
of the relationships that I had developed when I served
under President Trump in his first term, and we set
about thinking through what could be an agenda if President
Trump returned to office and if there would be a
congressional majorities in twenty twenty five. So we focused on
(03:11):
some big ideas, like how you could reform Medicare, how
you could reform Medicaid, how you could reform Obamacare, and
we also thought through what an administration could do on
its own. And after the twenty twenty four elections, we
really had an opportunity to reform government health programs and
(03:32):
the Medicaid provisions in the One Big Beautiful Bill. They're
really the most significant in tunement reform since you were Speaker.
I mean, when you were Speaker, there were significant Medicare reforms,
but the Medicaid reforms that passed in the Reconciliation Bill,
implementing work and community engagement requirements for able bodied, working
(03:52):
age adults and really reforming some of the underlying broken
parts of the Medicaid program were really instrumental. And we've
been focused the last four or five months on issues
with Obamacare, problems with Obamacare and fighting to make it
clear to Congress sort of the role that Obamacare had
and making healthcare unaffordable, and what is a better policy
(04:16):
direction rather than just increasing more subsidies to health insurance companies.
Speaker 1 (04:21):
The whole process of the way in which bureaucracies and
the lobbyists and the big corporations twist policies that on
the surface sound perfectly good, but by the time they
get implemented, they're so distorted to fit the interests of
the big powerful players that they really undermine the whole process.
(04:45):
And I think we just saw a really weird example
of this and what happened in Minneapolis, where people came
together to steal about a billion dollars, not a million,
a billion dollars in the city of Minneapolis alone, and
most of that involves stealing from health programs and programs
(05:09):
to help the poor, and these people were just looting
the government, and the bureaucrats were so slow and so
timid that they sat there passively while people stole about
a billion dollars. And my understanding is that there are
a number of areas now, including the recent case in
New Jersey where one of the New Jersey Blues I
(05:30):
think were required to pay back something like one hundred
and twenty million dollars that they had fraudulently taken. I'm
an org on a theory that one of the core
characteristics of big government socialism is it inevitably involves fraud
and corruption because the bureaucracies simply can't keep up with
the drive and the entrepreneurship of the crooks. The crooks
(05:53):
have a lot bigger incentive to steal than the bureaucrat
has to protect. Well, what's your general sense about the
depth of fraud and the depth of dishonesty buried in
these programs.
Speaker 2 (06:06):
It's massive, and it is because of the underlying incentives.
I mean the Medicaid program. At the core of the
Medicaid program, the federal government provides an open ended reimbursement
of state expenditures. So when states spend more, they get
more money from the federal government. And so the people
that were bankrolling the corruption and fraud in Minnesota, Yeah,
(06:27):
the Minnesota taxpayers bore some of that, but the majority
of the cost was born out by the federal taxpayer.
It was people outside of the state of Minnesota. And
when you have that set of incentives, when the interest
groups pressure the state and say, look, you'd expand this program.
Don't view it as a welfare program. View it as
an economic stimulus for the state. You're going to increase
(06:50):
the size of it, and we'll have money pouring in
from outside the country. One of the problems that we found,
and really the Biden administration, a lot of the grew
out of COVID. It grew out of Biden administration orientation
to just maximize enrollment in these programs and abandon program integrity.
(07:10):
But you see one of the most profound papers that
Paragon wrote, it's called the Great Obamacare Enrollment Fraud. President
Biden signed legislation that made coverage fully subsidized for people
purchasing Obamacare in a narrow income band. What we saw
is massive fraud schemes that benefited agents, brokers, and insurers
(07:33):
by manipulating applicant information on the application to have it
appear that they had that income even though they didn't.
Because that led to so much more money flowing to
the health insurance companies and then back to these conglomerate
broker and agent. We estimate that about actually more than
twenty five percent of all Obamacare enrollment in twenty twenty
(07:58):
five is improper, and many of these enrollees don't have
any idea that they're enrolled in the program. These schemes
got their information in order to sign them up for
an insurance card, and they're not aware of their enrollment.
They don't use the health insurance at all. And it's
just produced a windfall for big insurance, big broker, big
(08:19):
agent conglomerates, and those are the ones that lobby for
the status quo policy to continue. They've spent hundreds of
millions of dollars to continue to prop up a system
that is defrauding hard working American families.
Speaker 1 (08:33):
It seems to me that people with the best of
intention set up what looks like it'll be a very
good program, and then somehow, in the process of writing
either the law or the regulations, it gets perverted into
the money going directly to an insurance company. And as
(08:56):
you point out, maybe as many as one on every
four people who are supposed getting covered by the COVID
benefit subsidy don't even realize that they have an insurance plan,
never used it. Mostly they're healthy, young people, and the
insurance company pocketed the money. It's a little surprising that
the insurance companies didn't kind of report this to the government.
Speaker 2 (09:18):
So we quantified improper enrollment, and then we coined a
term phantom enrollment. So we're like, Okay, all these mrollees,
they're not aware that they're enrolled in coverage. We would
then expect that a lot of them wouldn't use any
healthcare services. The Biden administration refused to provide the information
on what we now call zero claim and rollees, people
covered but didn't use the plan, so no doctor visit,
(09:40):
no prescription, no lab test. Turns out that the growth
of zero claim and rollees went from four million in
twenty twenty one to almost twelve million people in twenty
twenty four, So forty percent of enrollees in twenty twenty
four in Obamacare they didn't use their health plan a
(10:02):
single time. Now, insurance companies knew this, They knew that
they were getting large number enrollees not using their coverage,
but they pointed the blame at the government. They said, well,
the government is the one responsible for these eligibility determinations.
We just accept all of the enrollees that the government's
enrollment system has sent our way.
Speaker 1 (10:24):
The insurance coming to defenses, the government made me take
the money.
Speaker 2 (10:28):
The government was responsible for the eligibility system you mentioned.
I testified in front of the Senate Finance Committee. I
also testified last week in front of the House Judiciary Committee,
the House issuy Committee. The witness next to me was
official from the Government Accountability Office. Starting in late twenty
twenty four into early twenty twenty five, they created twenty
(10:49):
four fictitious applications, so they submitted them to the Obamacare exchanges.
So they were missing information that you would need to
do a proper eligibility determination. And do you know how
many of its twenty four that got approved for coverage
by the exchange twenty three. So you would think in
a normal government program there's going to be some error rates.
(11:09):
You might expect a handful to get through, But ninety
six percent of the fake applications that GEO created were
able to get enrolled in an exchange plan with a
subsidy that paid the entire cost. Now, the insurers, to
your point, they know what they're getting a lot of
enrollees from certain brokers and agents. It's impossible to do
(11:30):
that many in a given period of time. I think
they should be held financially culpable. It is so corrupt,
mister speaker, because the subsidy goes directly from the US
Treasury to the health insurance company, and because of the
Biden policy, the enrollee is paying nothing, so they're not
aware that they're even enrolled in the coverage. So the
(11:52):
insurance companies have gotten rich off this system without providing
any healthcare services on behalf of millions of these enrollees.
Speaker 1 (12:00):
Well, it's sort of like a giant windfall profit disguised
as an insurance plan.
Speaker 2 (12:05):
And the insurance companies. We support private health insurance. People
should have private health insurance, but we want private companies
to be competing for patients' own dollars so that they're
serving the patient. In Obamacare, in twenty twenty five, eighty
five percent of all of the premium revenue is coming
(12:26):
from taxpayers. So for insurance companies, the federal treasury is
their main client. It's not individual consumers and patients.
Speaker 1 (12:54):
In that context, because the system is so out of way.
A friend of mine said, we actually need a new
bill entitled the Breathing Insurance Recipient Bill that if you're
not breathing, and we can't prove you real, then the
money doesn't go out.
Speaker 2 (13:11):
Yeah, I would endorse that bill. CMS has put out
information like there's people that are enrolled in multiple state
Medicaid programs simultaneously. There are individuals that are covered by
both Medicaid and buying Obamacare Exchange planned. So CMS released
data earlier this year that showed two point eight million
(13:32):
people are enrolled in multiple government programs when they should
only be enrolled in one.
Speaker 1 (13:38):
That makes you want to because they're not directly getting money,
then maybe getting enrolled several times, so I guess they
have several insurance cards. The interesting to see what the
correlation is between fraud and Medicaid and Medicare and people
who are multiply enrolled, and if that then becomes sort
of an identity theft opportunity. Let me ask you, because
(14:01):
the system is currently so badly designed, the average family
of four will pay twenty six thousand dollars a year
in healthcare costs in twenty twenty six. The system is
so badly designed that we're asking families to buy the
equivalent of a small car every year. You've done a
lot of research on this. I'm curious, what do you
(14:23):
think are the two or three biggest places that we
should be examining in order to help reduce costs.
Speaker 2 (14:31):
Yeah, that's a great question. I'd encourage the listeners to
look up AI's chart of the Century. They look at
the rising prices by economic sector from two thousand to
the present and they compare that with the rise in
inflation and the rise in wages. And the number one
area of the economy that has seen price inflation over
(14:53):
the last twenty five years as hospitals. Hospital prices have
risen three times faster than inflation. And there's a lot
of government policies that push up hospital prices. A good
example is how the Medicare program works. So the Medicare
program pays a lot more for a service delivered in
a hospital than delivered in an independent physician's office. What
(15:17):
that leads to is incentives for hospitals and physicians for
the hospital to acquire the physician office, because then they
can just change the ownership on the office, change nothing
else about it, and build a much higher rate. So
it leads to less competition and more consolidation in the market.
And unfortunately medicare has so much pricing power because commercial
(15:41):
payers tend to link their prices to how Medicare pays.
So one of the main areas we need to fix
is Medicare payment policy that advantages hospitals over independent physician
offices and leads to consolidation, you know. And then there's
just a lot of complexity, a lot of this result
of all Obamacare. There's other existing government regulations that add
(16:04):
to complexity. But the more complexity, the harder it is
on the small guys because there's fixed costs in complying
with all of this regulation and administrative burden. So the
rise in administrative complexity that has come from just the
growth of government has advantaged big hospital systems over smaller entities.
And Obamacare and we talk about Bombacare's problems in the
(16:27):
exchange market, but one of the things we don't talk
about so much of a problem with Obamacare is how
it increased consolidation and what that does on the supply
side of the market. And the last one I would
mention is consumer control. Consumers control so little of the
financing in healthcare. Ninety percent of our spending in healthcare
(16:48):
goes through third party payers, you know. And President Trump,
I think is spot on where He says, we should
move federal subsidies away from funding the system, away from
going directly to health insurance companies, and give the money
to the patients, so that the health sector has to
respond to the patient and meet their needs rather than
(17:09):
whatever the bureaucracy. Thanks his best, which gets.
Speaker 1 (17:13):
Back to my constant calling for transparency, because even if
you have the money in your pocket, unless you have
information about price and quality, you have no knowing where you're.
Speaker 2 (17:23):
Buying twenty percent of the economy, and prices are hidden
from patients, and they're hidden from employers because employers do
a lot of the shopping in healthcare. You know, the
Trump administration put out regulations in twenty nineteen and twenty
twenty to compel prices from hospitals and from insurers, and
that is a work in progress. The Buiden administration didn't
(17:46):
prioritize it. It is going to be a priority for
the president in his second term. So I think it's
something that we definitely need to build on. Is getting
Americans the right to know prices before they obtained healthcare.
Speaker 1 (17:58):
Well, if you're going to a sense of how big
the challenge is. In two thousand, health care costs thirteen
percent of the American economy. Now, in the last twenty
five years, our economy has grown dramatically, and health insurance
(18:20):
has gone up to eighteen percent of the US domestic product,
So it's actually growing much faster than the economy, and
in fact, there was a thirty eight percent increase in
its share of the economy from two thousand to twenty
twenty four. It seems to me if we don't get
(18:41):
an ability to get total costs under control, to give
people real power over their own future, in their own lives,
this is just going to become totally unmanageable.
Speaker 2 (18:54):
For American families. The health care inflation and the moro
on health insurance, it's crowding out wage increases. Most Americans
that don't get coverage through a government program, they get
coverage from their employer or employer of someone in their family.
And that is not a free gift from the employer
that comes out of the compensation that that employee would
(19:17):
have earned. So we're taking compensation out of wages into
health insurance benefits. And it's also vital that we get
a hold of this for the federal budget. I mean,
there's two areas of the federal budget that are growing
as a percentage of the economy. Health care entitlement spending
and interest payments on the debt and interest payments on
(19:38):
the debt are a function of health care entitlement spending.
And these programs grew exponentially under the Biden administration. Abomacare
and Medicaid. We're out of control with the focus on
the Biden administration of enrollment in any cost and really
tons of corporate welfare coming into the program. So the
(19:59):
Trump administry and the One Big Beautiful Bill, like I
mentioned before, was really important in reforming aspects of the
Medicaid program. It is crucial over the next several years
that we restore some sanity to these federal health care programs.
Speaker 1 (20:14):
It seems to me looking back that the Obamacare system,
the Affordable Care Act, which we all now understand, was
not affordable. It's actually the Unaffordable Care Act. But what
it's done is it's actually reduced the amount of competition.
Testimony that many of the county level exchange markets have
(20:37):
only two insurers who have seventy percent of enrollment. Ninety
seven percent of impatient hospitals lack meaningful competition. So you
now are building hospitals that don't have any competition, and
they're increasing their prices fifteen to thirty percent instead of
having competition drive costs down. I mean, you look at
(21:00):
Walmart or Target or Costco or any of the great
systems that deal with customers on a competitive basis, and
the pressure on them to be honest, to be efficient,
to be effective is just astonishing. And none of that
seems to apply to how we manage the largest single
(21:22):
sector of our economy, which is healthcare.
Speaker 2 (21:25):
Normal economics apply to the healthcare sector too, and where
we've lost competition, and that's one of the clearest things
from the literature. When markets get consolidated, when you have
hospital systems merging together, when you have hospital systems taking
over doctors practices, that leads to upward pressure on prices,
(21:45):
and it actually also worsens quality because you need to
have competition for healthcare quality as well. Really, what we
need to do at a basic level is go through
all federal programs and any policies that incentivize consolidation and
reduce competition we need to reverse. There's also a lot
(22:07):
of state level policies that restrict competition, say one other
benefit of the One Big Beautiful Bill. It created a
Rural Health Transformation Fund, and that fund provides extra funding
for states if they take actions that open up competition
within their markets.
Speaker 1 (22:24):
When you look at our various anti trust efforts, whether
it's media or manufacturing or other things, is there anything
comparable that looks at these huge hospital systems or these
huge insurance companies and measures whether or not their activities
will end up being anti competition and inevitably leading towards
(22:45):
monopolistic behavior.
Speaker 2 (22:48):
It's a good question. So the Federal Trade Commission and
the Anti Trust Division at the Department of Justice, they
do I think some high quality work looking at mergers
and acquisitions. There's been mergers between big insurance companies that
have been blocked before. The problem is just the quantity
of the mergers and acquisitions and the capacity of the
(23:11):
anti trust agencies to really look at them. So it
is just so limited in the scope of what they
can look at. So I think it's an important tool
to have, but it's also limited in just the capacity
of the federal agencies versus the magnitude of the murders
and acquisitions that have been proposed.
Speaker 1 (23:48):
You end up with some efforts to really look at
what's going on, and consistently those efforts produce astonishing numbers
of either people who are already dead but they're still
getting money, or people who are getting money from two
or three different places. I mean, are you surprised that
(24:08):
the degree to which the bureaucracy has broken down in
terms of being able to monitor and ensure honest activities.
Speaker 2 (24:17):
It's a really good question because a lot of the
things you hear from the Democrats are, well, don't throw
the baby out with the bath water, just have better enforcement.
And the problem with that line of thinking is when
you have incentives that make cheating and frauds so profitable,
it's very hard the government. It's enforcement capabilities are limited.
(24:42):
They only have so many staff, they only have so
much that they're going to go after. In terms of enforcement,
in some places, you're just playing wlack a mole where
you're cutting down one problem, but you're going to see
a problem merge somewhere else. Fundamentally, with respect to the
Minnesota example that you brought up, if Minnesota was spending
its own money rather than the federal money, they would
(25:03):
have large incentives to crack down on the fraud and
abuse within the program, but when it's mostly federal spending,
they have incentives to just look the other way. Same
thing with what's happening on Obamacare. There's so much money
for the health insurers, for the brokers, for enrollees to
cheat when they all have large incentives to cheat and lie,
(25:24):
you're going to get that now. DOJ has come in
and there's been a couple of major suits to get
after some of these brokers. Two guys in Florida were
basically paying homeless individuals to give them their identification, They
enrolled them in Obamacare. Large subsidies then went to the insurers.
The brokers then got to cut and commission those two guys.
(25:46):
The amount of this subsidies that those two individuals produced
was two hundred and thirty million dollars. So you're going
to catch some cases like that and that money is gone,
That money has gone that will never be recovered.
Speaker 1 (26:00):
The amount of mine you just described, how could you
physically do that?
Speaker 2 (26:05):
So there's a lot of money in these subsidies and
they went around pockets of South Florida and just enrolled
massive numbers of individuals, and some of them fictional like
I mean, I think the GAO report showed that there's
like no program integrity controls. Something shock you about how
(26:25):
bad government is it? To me, is shocking that ninety
six percent of fake applications got through.
Speaker 1 (26:31):
That's why I was sitting here thinking, you almost can't
get your head around. That's why I think the Minnesota
case where you had in one city a billion dollars
being stolen in a very systematic way, and you had
a bureaucracy that just wrote the checks.
Speaker 2 (26:50):
Think about that. If there's a five times increase in
autism diagnoses in a very short period of time, and
so the Minnesota example, they were paying parents to have
kids diagnosed for autism because then that led the provider
to be able to bill higher amounts. The bureaucracy, if
they are sophisticated and they say they're so good now
(27:10):
they should be able to analyze all this data. If
you're having a five times increase in autism diagnoses and
then a massive spending on all of these specific services
for kids that have autism, that should have been caught.
It should have been caught within a few months of
that happening. Another example with Medicare a couple years ago,
they paid for all these catheters, huge search like thousand
(27:32):
percent increase in Medicare spending on Cather. They never went
to patients. They should have caught all of this stuff
early on.
Speaker 1 (27:40):
It's just wild. Look, this is a huge area, largest
single sector of the economy. You will never balance the
federal budget until you hit this under control. And it's
just wrong. It also gives the American people and more
inadequate and a weaker health system and healthcare system. And
the work you're doing at the Paragon Institute, I think
(28:02):
it is a significant step towards opening up the facts
and allowing the Congress and the President to really talk
about big, serious reforms. And Brian, I want to thank
you for joining me. I want to encourage our listeners
to keep following the work you're doing by visiting your
website at Paragon Institute dot org. And course ONO wish
(28:24):
you a very very merry Christmas.
Speaker 2 (28:27):
Merry Christmas, mister Speaker. Really is a privilege to be
with you.
Speaker 1 (28:33):
Thank you to my guest, Brian Blaise. New Chworld is
produced by Gamish three sixty and iHeartMedia. Our executive producer
is Guarnsey Sloan. Our researcher is Rachel Peterson. The artwork
for the show, who's created by Steve Penley. Special thanks
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(28:54):
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Join me on substat at Ginghish three sixty dot net.
I'm new Gingwich. This is Neutroble
On this episode of News World. I'm really pleased to
welcome my guests, Brian Blaze. He's the president of Paragon
Health Institute and former Special Assistant to the President for
Economic Policy at the White Houses National Economic Council from
twenty seventeen to twenty nineteen, where he coordinated the development
(00:28):
and execution of numerous health policies and advised the President,
NEC Director and senior officials. He recently testified before the
Senate Finance Committee on the rising cost of healthcare for
all Americans. And I'm really pleased to talk with him
today because I think solving the issue of the rising
(00:49):
cost of health care is one of the fundamental issues
at our time. And let me say, when you talk affordability,
affordability of health care is a dramatically bigger issue for
the American and the affordability of bacon or gasoline or
things that we normally put in that zone. But healthcare
today is extraordinarily expensive and a huge burden on the
(01:11):
American people. Brian, welcome, and thank you for joining me
on this world.
Speaker 2 (01:28):
Mister speaker, it is a privilege to be with you.
Thank you for having me on.
Speaker 1 (01:32):
You know, before we get into health was just I
think going to be given them pretty eminent domestic issue
of the next few years. Tell me for a couple
of monents about this what you have developed at the
Paragon Health Institute suddenly emerged, and frankly, I have found
the work of the Paragon Health Institute to be among
the most insightful and most interesting work being done in
(01:55):
Washington today. How do the Paragon develop and what is
your role in that development? Well?
Speaker 2 (02:01):
Thanks, I appreciate you saying that conservatives and those of
us who support the free markets haven't always been outfront
and leading on healthcare reform, and there was a real
void in the free market community for an organization that
would analyze how government healthcare programs were actually working, not
just the intentions behind the programs, and then to develop
(02:25):
a set of policy solutions that are consistent with our
principles of expanding choice, injecting market competition, and really making
sure that we have a regulatory climate that's conducive to innovation.
So I launched the organization just about four years ago,
and I've been really fortunate to work with some of
the best free market health policy minds in the country.
(02:50):
Filled out a team that was based on a lot
of the relationships that I had developed when I served
under President Trump in his first term, and we set
about thinking through what could be an agenda if President
Trump returned to office and if there would be a
congressional majorities in twenty twenty five. So we focused on
(03:11):
some big ideas, like how you could reform Medicare, how
you could reform Medicaid, how you could reform Obamacare, and
we also thought through what an administration could do on
its own. And after the twenty twenty four elections, we
really had an opportunity to reform government health programs and
(03:32):
the Medicaid provisions in the One Big Beautiful Bill. They're
really the most significant in tunement reform since you were Speaker.
I mean, when you were Speaker, there were significant Medicare reforms,
but the Medicaid reforms that passed in the Reconciliation Bill,
implementing work and community engagement requirements for able bodied, working
(03:52):
age adults and really reforming some of the underlying broken
parts of the Medicaid program were really instrumental. And we've
been focused the last four or five months on issues
with Obamacare, problems with Obamacare and fighting to make it
clear to Congress sort of the role that Obamacare had
and making healthcare unaffordable, and what is a better policy
(04:16):
direction rather than just increasing more subsidies to health insurance companies.
Speaker 1 (04:21):
The whole process of the way in which bureaucracies and
the lobbyists and the big corporations twist policies that on
the surface sound perfectly good, but by the time they
get implemented, they're so distorted to fit the interests of
the big powerful players that they really undermine the whole process.
(04:45):
And I think we just saw a really weird example
of this and what happened in Minneapolis, where people came
together to steal about a billion dollars, not a million,
a billion dollars in the city of Minneapolis alone, and
most of that involves stealing from health programs and programs
(05:09):
to help the poor, and these people were just looting
the government, and the bureaucrats were so slow and so
timid that they sat there passively while people stole about
a billion dollars. And my understanding is that there are
a number of areas now, including the recent case in
New Jersey where one of the New Jersey Blues I
(05:30):
think were required to pay back something like one hundred
and twenty million dollars that they had fraudulently taken. I'm
an org on a theory that one of the core
characteristics of big government socialism is it inevitably involves fraud
and corruption because the bureaucracies simply can't keep up with
the drive and the entrepreneurship of the crooks. The crooks
(05:53):
have a lot bigger incentive to steal than the bureaucrat
has to protect. Well, what's your general sense about the
depth of fraud and the depth of dishonesty buried in
these programs.
Speaker 2 (06:06):
It's massive, and it is because of the underlying incentives.
I mean the Medicaid program. At the core of the
Medicaid program, the federal government provides an open ended reimbursement
of state expenditures. So when states spend more, they get
more money from the federal government. And so the people
that were bankrolling the corruption and fraud in Minnesota, Yeah,
(06:27):
the Minnesota taxpayers bore some of that, but the majority
of the cost was born out by the federal taxpayer.
It was people outside of the state of Minnesota. And
when you have that set of incentives, when the interest
groups pressure the state and say, look, you'd expand this program.
Don't view it as a welfare program. View it as
an economic stimulus for the state. You're going to increase
(06:50):
the size of it, and we'll have money pouring in
from outside the country. One of the problems that we found,
and really the Biden administration, a lot of the grew
out of COVID. It grew out of Biden administration orientation
to just maximize enrollment in these programs and abandon program integrity.
(07:10):
But you see one of the most profound papers that
Paragon wrote, it's called the Great Obamacare Enrollment Fraud. President
Biden signed legislation that made coverage fully subsidized for people
purchasing Obamacare in a narrow income band. What we saw
is massive fraud schemes that benefited agents, brokers, and insurers
(07:33):
by manipulating applicant information on the application to have it
appear that they had that income even though they didn't.
Because that led to so much more money flowing to
the health insurance companies and then back to these conglomerate
broker and agent. We estimate that about actually more than
twenty five percent of all Obamacare enrollment in twenty twenty
(07:58):
five is improper, and many of these enrollees don't have
any idea that they're enrolled in the program. These schemes
got their information in order to sign them up for
an insurance card, and they're not aware of their enrollment.
They don't use the health insurance at all. And it's
just produced a windfall for big insurance, big broker, big
(08:19):
agent conglomerates, and those are the ones that lobby for
the status quo policy to continue. They've spent hundreds of
millions of dollars to continue to prop up a system
that is defrauding hard working American families.
Speaker 1 (08:33):
It seems to me that people with the best of
intention set up what looks like it'll be a very
good program, and then somehow, in the process of writing
either the law or the regulations, it gets perverted into
the money going directly to an insurance company. And as
(08:56):
you point out, maybe as many as one on every
four people who are supposed getting covered by the COVID
benefit subsidy don't even realize that they have an insurance plan,
never used it. Mostly they're healthy, young people, and the
insurance company pocketed the money. It's a little surprising that
the insurance companies didn't kind of report this to the government.
Speaker 2 (09:18):
So we quantified improper enrollment, and then we coined a
term phantom enrollment. So we're like, Okay, all these mrollees,
they're not aware that they're enrolled in coverage. We would
then expect that a lot of them wouldn't use any
healthcare services. The Biden administration refused to provide the information
on what we now call zero claim and rollees, people
covered but didn't use the plan, so no doctor visit,
(09:40):
no prescription, no lab test. Turns out that the growth
of zero claim and rollees went from four million in
twenty twenty one to almost twelve million people in twenty
twenty four, So forty percent of enrollees in twenty twenty
four in Obamacare they didn't use their health plan a
(10:02):
single time. Now, insurance companies knew this, They knew that
they were getting large number enrollees not using their coverage,
but they pointed the blame at the government. They said, well,
the government is the one responsible for these eligibility determinations.
We just accept all of the enrollees that the government's
enrollment system has sent our way.
Speaker 1 (10:24):
The insurance coming to defenses, the government made me take
the money.
Speaker 2 (10:28):
The government was responsible for the eligibility system you mentioned.
I testified in front of the Senate Finance Committee. I
also testified last week in front of the House Judiciary Committee,
the House issuy Committee. The witness next to me was
official from the Government Accountability Office. Starting in late twenty
twenty four into early twenty twenty five, they created twenty
(10:49):
four fictitious applications, so they submitted them to the Obamacare exchanges.
So they were missing information that you would need to
do a proper eligibility determination. And do you know how
many of its twenty four that got approved for coverage
by the exchange twenty three. So you would think in
a normal government program there's going to be some error rates.
(11:09):
You might expect a handful to get through, But ninety
six percent of the fake applications that GEO created were
able to get enrolled in an exchange plan with a
subsidy that paid the entire cost. Now, the insurers, to
your point, they know what they're getting a lot of
enrollees from certain brokers and agents. It's impossible to do
(11:30):
that many in a given period of time. I think
they should be held financially culpable. It is so corrupt,
mister speaker, because the subsidy goes directly from the US
Treasury to the health insurance company, and because of the
Biden policy, the enrollee is paying nothing, so they're not
aware that they're even enrolled in the coverage. So the
(11:52):
insurance companies have gotten rich off this system without providing
any healthcare services on behalf of millions of these enrollees.
Speaker 1 (12:00):
Well, it's sort of like a giant windfall profit disguised
as an insurance plan.
Speaker 2 (12:05):
And the insurance companies. We support private health insurance. People
should have private health insurance, but we want private companies
to be competing for patients' own dollars so that they're
serving the patient. In Obamacare, in twenty twenty five, eighty
five percent of all of the premium revenue is coming
(12:26):
from taxpayers. So for insurance companies, the federal treasury is
their main client. It's not individual consumers and patients.
Speaker 1 (12:54):
In that context, because the system is so out of way.
A friend of mine said, we actually need a new
bill entitled the Breathing Insurance Recipient Bill that if you're
not breathing, and we can't prove you real, then the
money doesn't go out.
Speaker 2 (13:11):
Yeah, I would endorse that bill. CMS has put out
information like there's people that are enrolled in multiple state
Medicaid programs simultaneously. There are individuals that are covered by
both Medicaid and buying Obamacare Exchange planned. So CMS released
data earlier this year that showed two point eight million
(13:32):
people are enrolled in multiple government programs when they should
only be enrolled in one.
Speaker 1 (13:38):
That makes you want to because they're not directly getting money,
then maybe getting enrolled several times, so I guess they
have several insurance cards. The interesting to see what the
correlation is between fraud and Medicaid and Medicare and people
who are multiply enrolled, and if that then becomes sort
of an identity theft opportunity. Let me ask you, because
(14:01):
the system is currently so badly designed, the average family
of four will pay twenty six thousand dollars a year
in healthcare costs in twenty twenty six. The system is
so badly designed that we're asking families to buy the
equivalent of a small car every year. You've done a
lot of research on this. I'm curious, what do you
(14:23):
think are the two or three biggest places that we
should be examining in order to help reduce costs.
Speaker 2 (14:31):
Yeah, that's a great question. I'd encourage the listeners to
look up AI's chart of the Century. They look at
the rising prices by economic sector from two thousand to
the present and they compare that with the rise in
inflation and the rise in wages. And the number one
area of the economy that has seen price inflation over
(14:53):
the last twenty five years as hospitals. Hospital prices have
risen three times faster than inflation. And there's a lot
of government policies that push up hospital prices. A good
example is how the Medicare program works. So the Medicare
program pays a lot more for a service delivered in
a hospital than delivered in an independent physician's office. What
(15:17):
that leads to is incentives for hospitals and physicians for
the hospital to acquire the physician office, because then they
can just change the ownership on the office, change nothing
else about it, and build a much higher rate. So
it leads to less competition and more consolidation in the market.
And unfortunately medicare has so much pricing power because commercial
(15:41):
payers tend to link their prices to how Medicare pays.
So one of the main areas we need to fix
is Medicare payment policy that advantages hospitals over independent physician
offices and leads to consolidation, you know. And then there's
just a lot of complexity, a lot of this result
of all Obamacare. There's other existing government regulations that add
(16:04):
to complexity. But the more complexity, the harder it is
on the small guys because there's fixed costs in complying
with all of this regulation and administrative burden. So the
rise in administrative complexity that has come from just the
growth of government has advantaged big hospital systems over smaller entities.
And Obamacare and we talk about Bombacare's problems in the
(16:27):
exchange market, but one of the things we don't talk
about so much of a problem with Obamacare is how
it increased consolidation and what that does on the supply
side of the market. And the last one I would
mention is consumer control. Consumers control so little of the
financing in healthcare. Ninety percent of our spending in healthcare
(16:48):
goes through third party payers, you know. And President Trump,
I think is spot on where He says, we should
move federal subsidies away from funding the system, away from
going directly to health insurance companies, and give the money
to the patients, so that the health sector has to
respond to the patient and meet their needs rather than
(17:09):
whatever the bureaucracy. Thanks his best, which gets.
Speaker 1 (17:13):
Back to my constant calling for transparency, because even if
you have the money in your pocket, unless you have
information about price and quality, you have no knowing where you're.
Speaker 2 (17:23):
Buying twenty percent of the economy, and prices are hidden
from patients, and they're hidden from employers because employers do
a lot of the shopping in healthcare. You know, the
Trump administration put out regulations in twenty nineteen and twenty
twenty to compel prices from hospitals and from insurers, and
that is a work in progress. The Buiden administration didn't
(17:46):
prioritize it. It is going to be a priority for
the president in his second term. So I think it's
something that we definitely need to build on. Is getting
Americans the right to know prices before they obtained healthcare.
Speaker 1 (17:58):
Well, if you're going to a sense of how big
the challenge is. In two thousand, health care costs thirteen
percent of the American economy. Now, in the last twenty
five years, our economy has grown dramatically, and health insurance
(18:20):
has gone up to eighteen percent of the US domestic product,
So it's actually growing much faster than the economy, and
in fact, there was a thirty eight percent increase in
its share of the economy from two thousand to twenty
twenty four. It seems to me if we don't get
(18:41):
an ability to get total costs under control, to give
people real power over their own future, in their own lives,
this is just going to become totally unmanageable.
Speaker 2 (18:54):
For American families. The health care inflation and the moro
on health insurance, it's crowding out wage increases. Most Americans
that don't get coverage through a government program, they get
coverage from their employer or employer of someone in their family.
And that is not a free gift from the employer
that comes out of the compensation that that employee would
(19:17):
have earned. So we're taking compensation out of wages into
health insurance benefits. And it's also vital that we get
a hold of this for the federal budget. I mean,
there's two areas of the federal budget that are growing
as a percentage of the economy. Health care entitlement spending
and interest payments on the debt and interest payments on
(19:38):
the debt are a function of health care entitlement spending.
And these programs grew exponentially under the Biden administration. Abomacare
and Medicaid. We're out of control with the focus on
the Biden administration of enrollment in any cost and really
tons of corporate welfare coming into the program. So the
(19:59):
Trump administry and the One Big Beautiful Bill, like I
mentioned before, was really important in reforming aspects of the
Medicaid program. It is crucial over the next several years
that we restore some sanity to these federal health care programs.
Speaker 1 (20:14):
It seems to me looking back that the Obamacare system,
the Affordable Care Act, which we all now understand, was
not affordable. It's actually the Unaffordable Care Act. But what
it's done is it's actually reduced the amount of competition.
Testimony that many of the county level exchange markets have
(20:37):
only two insurers who have seventy percent of enrollment. Ninety
seven percent of impatient hospitals lack meaningful competition. So you
now are building hospitals that don't have any competition, and
they're increasing their prices fifteen to thirty percent instead of
having competition drive costs down. I mean, you look at
(21:00):
Walmart or Target or Costco or any of the great
systems that deal with customers on a competitive basis, and
the pressure on them to be honest, to be efficient,
to be effective is just astonishing. And none of that
seems to apply to how we manage the largest single
(21:22):
sector of our economy, which is healthcare.
Speaker 2 (21:25):
Normal economics apply to the healthcare sector too, and where
we've lost competition, and that's one of the clearest things
from the literature. When markets get consolidated, when you have
hospital systems merging together, when you have hospital systems taking
over doctors practices, that leads to upward pressure on prices,
(21:45):
and it actually also worsens quality because you need to
have competition for healthcare quality as well. Really, what we
need to do at a basic level is go through
all federal programs and any policies that incentivize consolidation and
reduce competition we need to reverse. There's also a lot
(22:07):
of state level policies that restrict competition, say one other
benefit of the One Big Beautiful Bill. It created a
Rural Health Transformation Fund, and that fund provides extra funding
for states if they take actions that open up competition
within their markets.
Speaker 1 (22:24):
When you look at our various anti trust efforts, whether
it's media or manufacturing or other things, is there anything
comparable that looks at these huge hospital systems or these
huge insurance companies and measures whether or not their activities
will end up being anti competition and inevitably leading towards
(22:45):
monopolistic behavior.
Speaker 2 (22:48):
It's a good question. So the Federal Trade Commission and
the Anti Trust Division at the Department of Justice, they
do I think some high quality work looking at mergers
and acquisitions. There's been mergers between big insurance companies that
have been blocked before. The problem is just the quantity
of the mergers and acquisitions and the capacity of the
(23:11):
anti trust agencies to really look at them. So it
is just so limited in the scope of what they
can look at. So I think it's an important tool
to have, but it's also limited in just the capacity
of the federal agencies versus the magnitude of the murders
and acquisitions that have been proposed.
Speaker 1 (23:48):
You end up with some efforts to really look at
what's going on, and consistently those efforts produce astonishing numbers
of either people who are already dead but they're still
getting money, or people who are getting money from two
or three different places. I mean, are you surprised that
(24:08):
the degree to which the bureaucracy has broken down in
terms of being able to monitor and ensure honest activities.
Speaker 2 (24:17):
It's a really good question because a lot of the
things you hear from the Democrats are, well, don't throw
the baby out with the bath water, just have better enforcement.
And the problem with that line of thinking is when
you have incentives that make cheating and frauds so profitable,
it's very hard the government. It's enforcement capabilities are limited.
(24:42):
They only have so many staff, they only have so
much that they're going to go after. In terms of enforcement,
in some places, you're just playing wlack a mole where
you're cutting down one problem, but you're going to see
a problem merge somewhere else. Fundamentally, with respect to the
Minnesota example that you brought up, if Minnesota was spending
its own money rather than the federal money, they would
(25:03):
have large incentives to crack down on the fraud and
abuse within the program, but when it's mostly federal spending,
they have incentives to just look the other way. Same
thing with what's happening on Obamacare. There's so much money
for the health insurers, for the brokers, for enrollees to
cheat when they all have large incentives to cheat and lie,
(25:24):
you're going to get that now. DOJ has come in
and there's been a couple of major suits to get
after some of these brokers. Two guys in Florida were
basically paying homeless individuals to give them their identification, They
enrolled them in Obamacare. Large subsidies then went to the insurers.
The brokers then got to cut and commission those two guys.
(25:46):
The amount of this subsidies that those two individuals produced
was two hundred and thirty million dollars. So you're going
to catch some cases like that and that money is gone,
That money has gone that will never be recovered.
Speaker 1 (26:00):
The amount of mine you just described, how could you
physically do that?
Speaker 2 (26:05):
So there's a lot of money in these subsidies and
they went around pockets of South Florida and just enrolled
massive numbers of individuals, and some of them fictional like
I mean, I think the GAO report showed that there's
like no program integrity controls. Something shock you about how
(26:25):
bad government is it? To me, is shocking that ninety
six percent of fake applications got through.
Speaker 1 (26:31):
That's why I was sitting here thinking, you almost can't
get your head around. That's why I think the Minnesota
case where you had in one city a billion dollars
being stolen in a very systematic way, and you had
a bureaucracy that just wrote the checks.
Speaker 2 (26:50):
Think about that. If there's a five times increase in
autism diagnoses in a very short period of time, and
so the Minnesota example, they were paying parents to have
kids diagnosed for autism because then that led the provider
to be able to bill higher amounts. The bureaucracy, if
they are sophisticated and they say they're so good now
(27:10):
they should be able to analyze all this data. If
you're having a five times increase in autism diagnoses and
then a massive spending on all of these specific services
for kids that have autism, that should have been caught.
It should have been caught within a few months of
that happening. Another example with Medicare a couple years ago,
they paid for all these catheters, huge search like thousand
(27:32):
percent increase in Medicare spending on Cather. They never went
to patients. They should have caught all of this stuff
early on.
Speaker 1 (27:40):
It's just wild. Look, this is a huge area, largest
single sector of the economy. You will never balance the
federal budget until you hit this under control. And it's
just wrong. It also gives the American people and more
inadequate and a weaker health system and healthcare system. And
the work you're doing at the Paragon Institute, I think
(28:02):
it is a significant step towards opening up the facts
and allowing the Congress and the President to really talk
about big, serious reforms. And Brian, I want to thank
you for joining me. I want to encourage our listeners
to keep following the work you're doing by visiting your
website at Paragon Institute dot org. And course ONO wish
(28:24):
you a very very merry Christmas.
Speaker 2 (28:27):
Merry Christmas, mister Speaker. Really is a privilege to be
with you.
Speaker 1 (28:33):
Thank you to my guest, Brian Blaise. New Chworld is
produced by Gamish three sixty and iHeartMedia. Our executive producer
is Guarnsey Sloan. Our researcher is Rachel Peterson. The artwork
for the show, who's created by Steve Penley. Special thanks
to the team at Gamish three sixty. If you've been
enjoying New World, I hope you'll go to Apple Podcasts
(28:54):
and both rate us with five stars and give us
a review so others can learn what it's all about.
Join me on substat at Ginghish three sixty dot net.
I'm new Gingwich. This is Neutroble
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