October 15, 2025 • 40 mins
Health economist Devin Herrick joins AnneMarie Schieber to break down the fight over Obamacare subsidies behind the government shutdown, what happens if they expire, and how free-market reforms could reshape health care—from $2 million drugs to Costco’s new Ozempic plan.
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AnneMarie Schieber (00:00):
Hello, everyone, and welcome to the
Heartland Daily Podcast wherethe focus today is on health
care as we do a couple of timeseach month. My name is Ann Marie
Sheber. I'm the managing editorof Health Care News, and joining
me once again is Devin Herrick.He is the health care economist
who posts on the GoodmanInstitute health care blog. Good
(00:21):
to see you again, Devin.
Devon Herrick (00:22):
It's good to be here.
AnneMarie Schieber (00:24):
We we've got a lot to talk about. The
government has shut down, if younoticed. It's been about a week.
You know, the reason thegovernment has shut down is
because congress cannot agree onthe terms to provide stopgap
funding until November. This iswhen both political parties hold
(00:46):
each other hostage for policygains, I guess.
The policy grab this time,drumbeat, is health care. The
bottom line, the Democrats willnot agree to approve to approve
a funding bill unless theRepublicans agree to continue
subsidizing Obamacare at COVIDnineteen levels. Okay? Huge
(01:11):
increases in subsidies. Thosesubsidies expire at the end of
the year, and Republicans saythat this is a separate issue
and should not be part of acontinuing resolution.
Couple of things. I wannadiscuss this is gonna take up
(01:32):
much of our discussion today.What is going to happen if the
Obamacare subsidies go away? AndI wanna focus our discussion on
what's the best case scenarioand what is the most likely
scenario. Devin, you posted onthis stalemate on October 1.
I wanna read something from thisblog, and then I wanna hear your
(01:55):
your thoughts on this. You wroteObamacare is a bad deal
regardless of who is paying thetab, and taxpayers subsidizing a
bad deal to make it affordabledistorts the market further and
delays needed reform. Thereality is ACA marketplace plans
(02:17):
are beneficial for less than 10%of those who have them. Can you
explain what that means?
Devon Herrick (02:26):
Well, in health care, there is what's known as a
as an eighty twenty rule. Andthat is this about 20% of the
population accounts of theinsured population accounts for
about 80% of spending. And so bythat measure and oh, and then
there was another estimate. Ithink it was from, oh, the
(02:47):
Commonwealth Fund. Thatsomething like 80 to 90% of
Obamacare enrollees do notsurpass their deductible, which
means they might as well bepaying, you know, cash out of
pocket.
The insurance is doing them, youknow, really no good. I mean,
yeah, we can argue you have somelevel of protection. We don't I
(03:08):
mean, I don't want my houseinsurance to pay off with a
hailstorm or a fire. But at thesame time, I mean, my Obamacare
coverage is about double whatall my other insurances put
together. And so what Obamacaretried to do, and this has been
tried before and it always hadthe same result, which is very
(03:31):
high premiums, is Obamacaretried to force 90% of the
population, according tostatistics, to overpay for
health insurance so that the,you know, the less healthy 10%
or or 20% gets a good deal.
And it it's not an effective orefficient way really to to cross
(03:55):
subsidize the sick. It would be,you know, more efficient to have
a more direct subsidy becausethen the people who are
relatively healthy would nothave an incentive to bail out.
So, I mean, it was a bad deal bydesign. It had been tried in
states like New York, NewJersey, I think Washington
(04:17):
State, couple others, maybeConnecticut. I don't remember
exactly.
And it the results were known.It's like, yeah. It provides
coverage where you can buy inwithout having to be risk rated,
but it's also causes highpremiums. Right. At the time, we
already had a high risk pool,and the only complaint about the
(04:39):
high risk pool was, well, it hashigh premiums.
Okay. Obamacare is worse.
AnneMarie Schieber (04:45):
Right. And what you're saying is in
02/2010, we knew how this wasgonna fall out because other
states have tried similarprograms, and it just the
numbers just didn't add up. Butwe went full force with it and
forced it on the entire country.I wanna talk about a couple
things. First, I wanna ask you,maybe this is a good time to
(05:06):
bring this point up.
But in your blog, I thought youmentioned that this is gonna be
the end to $2,000,000 a yeardrugs. Now believe it or not,
they do exist. Right? These arefor rare illnesses and orphan
illnesses, and that's a wholedifferent discussion because
that is a real problem, andwe've gotta figure out a way to
(05:26):
help those people. But the waythis goes right now is nobody
sees any bill.
They don't pay anythingdirectly. So when you say we've
got a drug and it's gonna costyou a million, 2 doll millions a
year and somebody else is gonnapay for it, what are you gonna
say? You're gonna say, yeah.I'll go for it. You know?
I don't care if it doesn't work.I don't care if maybe even I get
harmed by it because I havereally no financial stake in
(05:50):
this to really evaluate. Tellyou wanna talk a little bit more
about that?
Devon Herrick (05:55):
Yeah. The one of the other costly regulations
that was imposed on, you know,by Obamacare is it banned all
annual caps and lifetime caps onbenefits. Before 02/2010, you
know, you could pick and choose,you know, what coverage or how
much coverage do you want. Ifyou want low deductibles with
(06:19):
$5,000,000 coverage, well, youcould get that through Blue
Cross. It was not cheap.
It was rather expensive. Thatwas a premium plan. Well, when
they were devising Obamacare,people thought, oh, you know,
the Democrats primarily thought,oh, it's horrible that some
people rent very, very fewpeople, max out their benefits.
(06:39):
So they banned any kind oflimits. Well, when you ban a
limit, you essentially, a, youincrease the price because the
risk has gone up, but you createan incentive for those that sell
treatments, you know, like,mainly drug companies and
hospitals and the like.
Well, the sky becomes the limitbecause there's automatically a
market. So you have no nothingto hold prices in check when you
(07:04):
basically give a blank check tothose that are providing care.
AnneMarie Schieber (07:11):
I'll tell you what. I think this is going
to be the beginning of the endof Obamacare. You know, we tried
to do this in 2017 and it fellshort. A couple of votes were
added again. If the politicalwill is there and that's a big
if, you know, if members ofcongress can resist the strong
arming of big hospitals and biginsurance.
(07:35):
Let let's talk about how thiscan this could be a war of
attrition that Obamacare isgoing to find a natural death.
Andy, I I've I've got a lot totalk about. So are you able to
pop up that graph? Because Iwanna go over some of these
points and then hear yourthoughts on them, Devin. You
know, the first one is premiumswould certainly so let's say the
(07:59):
subsidies do not go through.
Premiums would certainly go up.Right? Healthy people would go
without insurance. They wouldsay, I'm not bothering with
this. I'm not paying $17,000 ayear for a plan I'm never gonna
use.
And, you know, they could signon to alternatives, like short
term plans, which Trump now istrying to unleash. They were
(08:23):
restricted under the Bidenadministration, but now Trump
says he's not going to enforcethose rules and perhaps there
will be a, know, a number ofcompanies offering those short
term plans for longer period oftimes. They could also go to
health care ministries, whichare a lot cheaper than Obamacare
plans. The other thing aboutpeople is that they would be
(08:48):
more vigilant about theirhealth. They will I don't know.
Do we have that graphic? Oh,great. See, life will go on.
Alright? This is what's gonnahappen.
People are going to figure out away around Obamacare. They would
be more vigilant about theirhealth. They would scrutinize
treatment recommendations foreffectiveness and safety.
(09:10):
Everything has a risk andsometimes overtreatment or
incorrect treatment creates evenmore problems. There will be
pressure on lawmakers to openthe gate on indemnity style
health insurance plans.
Right now, these plans areoffered as supplemental plans,
not primary care or not primaryplans. Imagine picking up a
(09:33):
health insurance policy in yourtwenties with a cap on the
benefit amount over a particularperiod, let's say, twenty or
thirty years, similar to, like,how a term insurance policy
would work. And you say, I'mgonna buy this plan, and you
have an incentive not to get outof it because you're gonna have
to be rewritten. So you have astrong incentive to pay that
(09:53):
premium every year for theentire term of that plan. And
the insurance company will notlose money because you know they
know you're going to pay, andyou're probably gonna be more
vigilant about your health, andthey won't have to pay out this
big chunk of change.
I think hospitals and nonprofitorganizations will provide
(10:14):
charity care like they did inthe past before Obamacare. You
know, they get tax benefitsbecause of their nonprofit
status. I think it's somecommunities. I know this goes on
in my community. They don't payproperty tax, and that competes
with other people, who are maybetrying to do an independent
route of health care becausethey gotta pay the property tax,
(10:37):
and it also dries up real estateprices.
In my backyard, there thehospital construction and
expansion is unbelievable.They've created a city since
probably in the last ten years.You go down and every new
construction building is part ofa hospital. I mean, are we that
sick? It's just stunning.
Like, where is this money comingfrom? We wouldn't see
(11:00):
multimillion dollar packages forCEOs. Some of them are paid
$1,010,000,000 dollars a year.And what are they rewarded for?
They're figuring out the bestway to squeeze more money out of
taxpayers.
Right? Pretty much. Yeah. Withno subsidies, the ACA
marketplace yeah. What what'llhappen is with no subsidies, the
(11:24):
ACA marketplace will fall apart.
No one's gonna buy these plansif they're too expensive and
insurance companies are wannaget are gonna wanna get out of
it because they're not gonna bestuck with, you know, the the
20% because they just couldn'tmake it work. I mean, we can
rest assure that and and we canalso rest assure that there will
be no backdoor funding forillegal immigrant health care,
(11:48):
abortion, trans procedures.These are three three things
that people have a lot of moralobjection to, and they are paid
for under Obamacare. Thediscussions I've heard about
Obamacare subsidies is that'sthe big thing right now going on
because that's what's fundingthese these programs, legal
(12:09):
health care, legal immigranthealth care, abortion pills, and
the trans procedures becausethese plans, the Obamacare plans
have to cover these things. And,you know, we know with the three
forty b program, a lot of thosedrugs coming in involving trans
procedures and abortion, they'reall coming through Obamacare
(12:31):
plans.
So, you know, if these thingsfall apart, that industry those
industries would probably haveto compete, you know, on their
merits, and they could probablyalso fall apart as well. What
what is your thinking, Devin?
Devon Herrick (12:44):
Well, I just lost my camera for some reason. I
have to.
AnneMarie Schieber (12:49):
We can hear your voice.
Devon Herrick (12:51):
Oh, okay. Yeah. Sure. Sure. You won't see my
face.
But
AnneMarie Schieber (12:54):
Alright. Well, I'll tell you what. While
you're talking, I wanna pop upsomething. Well, let me just
tell you what I we'll talk aboutwhat I think is going to happen,
what we think is gonna happen.Maybe we can pop up yeah.
There's a lot to discuss. Iwanna pop up this a couple of
Devon Herrick (13:17):
Let's fix the camera first, then we'll then
we'll go back. This is gettingconfusing.
AnneMarie Schieber (13:22):
Alright. Should we That's okay. A choice
here in the recording? Can youedit it?
Devon Herrick (13:26):
Yes. Let me do that now.
AnneMarie Schieber (13:30):
So, Devin, what's your thinking on this?
Devon Herrick (13:34):
Well, if we step back to just oh, I think 2019,
there were only about 12,000,000people enrolled in the
marketplace plan. And the reasonis because it was a bad value.
The only people who thoughtmarketplace plans were a good
value were those that weregetting big heavy subsidies. The
middle class and everyone else,it was just a bad deal. And so
(13:58):
what Democrats are really tryingto do now is is they saw a
doubling of of the number ofpeople to roughly 24, 25,000,000
with a marketplace plan, andthey don't wanna give that up no
matter what the cost even if thecost is outrageous, about
$380,000,000,000 over ten years.
(14:19):
But I I think you're correct if,really, all you have to do to
reform the market is just allowthe market to offer products
that consumers want. Forexample, if you were to allow me
to buy a plan that had maybe amillion dollar cap or even a
(14:40):
$500,000 cap, that would be morethan sufficient for probably 98%
of the population, and it wouldbe much cheaper to subsidize
those 2% that were extremelyunhealthy or or, you know,
needing a lot of care. And sothere's all kinds of market
innovations that would occur ifyou would just allow the market
(15:04):
to offer plans. It might belimited benefit plans. It might
be, you know, short term plans,indemnity plans.
It's just it's just hard toexplain how convoluted, how
inflationary, and how poorlyconceived and designed the
Obamacare market plans are. AndI I think that, I mean, it would
(15:29):
it would be really muchhealthier for the marketplace to
find what people are willing topay for.
AnneMarie Schieber (15:36):
Yeah. Andy, maybe this would be a good time
to pull up that meme. This wasthis I thought was pretty funny,
if you can do it now. This wasin the committee to unleash
prosperity. They had a funnymeme about Obamacare when it was
started.
So it's named after presidentObama. He was the one behind it.
(16:00):
Do we do we have that meme thatwe can pop up? Alright. Maybe
we'll come back to it later.
Let's talk about what we thinkis really gonna happen. Here
here's my thinking. I thinkRepublicans are going to agree
to a temporary extension ofsubsidies just to get them past
the midterms. And they might seta limit on the subsidies to
(16:24):
insurance, to insurers. I thinkthey might demand more
flexibility for states to set upreinsurance markets for their
residents.
That's what's existed. Those arefor people with significant
disabilities, and that's whatexisted before Obamacare. So
they were great programs. Theyin my state, they were known as
(16:44):
the insurer of last resort, andpeople got really good care. It
was a small percentage of peoplethat really had significant
health care needs.
But what it did was it put thosepeople in a separate pool and
found a separate fundingmechanism for them. And then it
protected it kept people in theinsurance market, and that's how
(17:06):
insurance works. You get somepeople to support it at various
points in time. And sometimesyou'll be the big user,
sometimes you won't. But overtime, it stretches out and it
makes it feasible for insurancecompanies.
It's really risk protection, andwe don't do that. We've we've
turned it into a payment plan. Ithink maybe what we might be
(17:30):
able to do also, the Republicansmight try to squeeze and get
some more movement on HSAs. Youknow, we got a little bit of
movement under the one bigbeautiful bill. We expanded it
to, I think, 10,000,000 people.
We might be able to do that for$20,000,000, and maybe we expand
HSAs to cover all the plans inObamacare. Right now, the bronze
(17:55):
plan, I think, is the only oneor the catastrophic plans. Some
of those plans do not allowpeople to have HSAs.
Devon Herrick (18:03):
Mhmm.
AnneMarie Schieber (18:03):
And then, it would be also really great,
and I don't know that this wouldever happen, is to give that
subsidy directly to the enrolleein the form of a tax credit so
that they could use it in thefollowing tax year. And I know
that's a long stretch, but whatand and the insurance companies
will go ballistic over itbecause they think they'll never
(18:25):
get their money from theenrollee. But right now, you
know, people are applying forthese subsidies and basically
working through agents who teachthem how to game it. And they
predict what their income isgoing to be. And then they the
subsidies are given onsomebody's, you know,
(18:46):
declaration of what their incomeis going to be.
And then I don't know howvigilant they are in making sure
that they lived up to that. Soit's possible somebody makes
$500,000 a year and gets asubsidy to pay for Obamacare.
We've got a lot of sloppiness,and I know they tried to, you
know, take care of that in thesome of the provisions in the
(19:07):
one big beautiful bill. Whatwhat do you think is gonna
happen? Are we gonna keep thegovernment shut down?
I mean, November, the clock isticking. That's like a month and
a half away.
Devon Herrick (19:17):
Well, yeah, I I think you raised an important
point, that is this is a goodopportunity to negotiate reforms
to Obamacare, rather than justrubber stamp. Okay. We'll spend
$380,000,000,000 over ten years.You know, we'll get we'll that
maybe the Republicans will saywe will extend some of the
(19:38):
subsidies in return for somemarketplace reforms that will
make Obamacare, you know, morestable. And I think that that
would be the the most logicalcompromise, I guess.
And, you know, how how that'llwork? Well, I don't know. Maybe
they'll extend the subsidies,but not to families of four
(19:59):
earning a $128,000 a yearbecause, you know, that's that's
well well in the middle class Imean, upper middle class. Maybe
they will have them taper off.You know, there's a variety of
things, but we're out of time.
It's the only problem. So maybethey can do a stop gap measure
for a couple months while theytry to agree on some some
(20:22):
reforms that will help themarket. And I I think, you know,
I I I think we're going to talkabout some of those in a minute
that have been suggestedincluding
AnneMarie Schieber (20:32):
I wanna point this out. Ovik Roy, who is
well known in the free marketspace for health care, wrote an
op ed in the Washington Post. Iwonder if we could pull that up.
This came out last week, October1. This would be the Washington
Post op ed.
We have that there. There we go.Is that it? Yep. I think that's
(20:58):
it.
Yeah. That's it. So what he saidbasically is that a bipartisan
compromise could end thegovernment shutdown. So maybe
Republicans might be smart toget some really good reforms in
Obamacare. Use this opportunity.
(21:18):
And what he's recommending is,you know, he points out to
extend the subsidies would costtaxpayers $350,000,000,000 over
the next decade. That isamazingly unbelievable. He said
there will be people who willreally be out if the subsidies
were to expire, and that isgonna cause a political problem
even to some people who arekinda neutral, even Republicans.
(21:43):
You know? There's a bigpolitical concern here that the
balance of power could shift incongress if this thing becomes
out of goes out of control.
He proposes a one to two yearextension, includes a premium
reduction to young people, andthen he wants to put aside
(22:03):
$10,000,000,000 for areinsurance fund for those
people with significant illnessand disabilities that we talked
about. Now I don't know. I don'tthink the Dems wanna give too
much control back to the states.I think they wanna make this
idea that the whole thing has toapply for the whole country.
Devon Herrick (22:21):
Mhmm.
AnneMarie Schieber (22:22):
And that's how they you know, that's the
part of their party mantra.Lower premiums for young people
may come at the expense also ofpre Medicare folks. Their
premiums could go up. So, like,if we made the premiums cheaper
for younger people to keep themin Obamacare, somebody's
premiums are gonna go up, and somaybe they might drop it. I
don't know.
(22:43):
Do do you
Devon Herrick (22:43):
think this is the my worry.
AnneMarie Schieber (22:44):
Really that the Republicans could take
advantage of?
Devon Herrick (22:49):
I mean, I it'd be interesting to see what the
actuaries say about because asas you said, they currently
require a a one to three rateban. In other words, that 22
year old that is not likely tosee a doctor for any reason
would pay only or I would payonly three times more than that
22 year old. And there's been alot of discussion that maybe
(23:12):
that should be five to one.Yeah. Yeah.
Would that raise my premiums?You know, I'd wanna see the
numbers. So it's it's you know,I'd rather see a little bit of
risk you know, rating for riskthan just arbitrarily creating
bands you shove people into. Buthe also mentions as you we've
kinda touched on direct fundingfor preexisting conditions. I
(23:38):
mean, like, kinda like a highrisk pool, like you said.
Yeah. And before we get there,I'd wanna I'd probably wanna
allow or reduce the ban onlifetime or annual caps because
that would just be a blank checkto from the government. You
know, it's a subsidy is fromtaxpayers, and that would also
be from taxpayers. We need tolook for what would make it more
(24:01):
efficient. It's currently notefficient because people are
over you know, 80% of thepopulation who wants who enrolls
is overcharged so that, youknow, 10, maybe 15%, you know,
get a better deal.
Right. You know, that's notstable because people like me
say, you know, what are the oddsthat I'm going to need, you
(24:23):
know, more than $20,000 with thecare, which is which is the
threshold I would have to paybefore I would get any kind of
coverage? So Yeah. You know, I'mlooking at what is my risk? What
is my expected cost?
The odds of having more than$20,000 is less than one percent
probably.
AnneMarie Schieber (24:40):
Yeah. I mean, somebody with significant
disabilities may not have thelifespan that a healthy person
would have. Right? So you're notgonna be paying they're not
gonna be covered in a planthat's going to take them to age
100. That may not be realistic.
And so they may not you know,those limits may not be all that
(25:01):
devastating to them, But I seewhat you're saying that I, you
know, I will tell you I've hadpersonal experience with this
with a very sick loved one. AndI will tell you straight face,
we spent more time in thefinancial aid office where they
mined the insurance policy thanwe did before a doctor. And what
they would do is they'd max outthe policy. They'd see what how
(25:24):
much they could bill to get awaywith. And my loved one here was
like $4,000,000 before he died.
And I I just thought it wasstunning. And I think that's why
these hospitals, they look atthis stuff and they mine the
plans. And when there is nolimit, they will go for the sky.
And that's what we're dealingwith right now. I wanna pull up
(25:47):
a couple of things here.
We'll leave this we could talkabout this for hours, but there
is an interesting editorial inthe Washington Post. Now
remember, I don't know if wecould pull that up. The
publisher of the Washington Postis Jeff Bezos, the founder of
Amazon, a pretty successfulcompany. So, you know, Jeff
(26:10):
Bezos knows what he's doing.This was on October 5.
Do we have that, Andy? Can wepull up that editorial? Alright.
So I wanna pull up this op ed oractually an editorial in the
Washington Post. The publisheris Jeff Bezos, the founder of
Amazon, a pretty successfulcompany.
He knows what he's talkingabout. This was on October 5,
(26:33):
and this line in in theeditorial said this. The real
problem is that Obamacare wasnever actually affordable. This
is how entitlement programswork. Once you habituate people
to some generous governmenthandout, they grow dependent on
it, and it becomes politicallyperilous, if not impossible to
(26:55):
fully claw it back.
Now they're basically saying astatement of fact. They're not
recommending that we do claw itback. So I guess there's that in
there. The other thing I wannapull up, I so I thought that was
kinda significant coming out ofthe Washington Post. Mhmm.
The other thing is a reallyfunny meme that was, in the
(27:15):
committee to unleash prosperityblog post. That's the one there
we go. Okay. We told them healthcare was free. Here's Obama
laughing.
I thought that was pretty funny.You know, it's 15 out. Obamacare
(27:39):
went into effect 02/2014. Ittook us a couple of years to
kind of figure out how thisthing was gonna play out. It's
now eleven years, and we we knowfull well that this thing is not
working.
So time to end it. And I I Idon't know. I guess we will see.
Alright. Let's move on to ournext topic, which is kind of
(28:01):
related to Obamacare because,like I mentioned earlier, I have
seen an explosion of hospitalconstruction and expansion in my
little neck of the woods.
And I keep wondering, mygoodness, are we getting sicker?
Where are these sick peoplecoming from? This was a great
(28:21):
little article by the the,American Association, the
Association of AmericanPhysicians and Surgeons. If we
can go down, scroll down to thegraphic that they have here, it
shows look at this map. Okay.
(28:41):
So this is the industry thatexisted in 1990. And you can see
1990, most of the country, thebiggest driver for the economy
in states was measuring. Lookwhat it is. This is 02/2013.
Okay?
So imagine what it's like today.I bet the whole thing is blue.
(29:01):
But look at all the blue states,and that's health care. Are we
sicker? I mean, my goodness.
I know that we have babyboomers, and they're getting
older and maybe that's whatwe're seeing. But my goodness,
you know, technology alsoimproves. So we shouldn't see
this level of, you know, healthcare spending in our economy. It
(29:24):
just doesn't make sense. Wedon't see other countries
spending money like this onhealth care.
What do you think, Devin?
Devon Herrick (29:30):
Yeah. Nearly $1 and 5. 20 nearly 20 percent of
the economy is now health care.And, I mean, do you really it's
it's hard to explain in in termsthat people can fathom that, you
know, one fifth of our entirenational income goes for
(29:51):
hospitals and drug companies anddoctors. Because the average
person, the average worker,let's say, is probably yeah.
They're paying for insurance,but they're not going to the
doctor ever every week. They'renot going to the doctor ever
once a month. They're probablygoing maybe every other month.
Some some of that will be wellvisits. So but, yeah, it is I I
(30:13):
looked at this graph before westarted, and I thought, you
know, good lord.
That's the I mean, health careis the is the biggest industry
in many states. And and, likeyou said, it's in my
neighborhood. Every hospital hasa construction crane. Yeah. And
they're adding on and adding on,and new hospitals are going up.
(30:36):
You know, I'm in a growing area,so that makes a little bit of
sense. But, I mean, where's thismoney coming from? Well, you
know, I can tell you where it'scoming from. It's coming from
about half from the federalgovernment or federal and state
government, and the other halfis coming from our wages mostly
or our take home pay. And it'sand for the average well, you
(30:57):
know, one thing I always go backto, for the average worker, if
they really understood thatabout $2,526,000 dollars of
their wages is being, you know,diverted for health care that
they may not be using much of orthey demand control of that
money.
And that would be better becausecross subsidies don't work.
(31:21):
They're never efficient, butbecause it breaks the feedback
loop between consumers andproducers. You know, you go to
your local Kroger, and they knowyou're price sensitive. They
know you might want a premiumbrand, but you're still price
sensitive. In health care, we'vebroken that link by
intentionally creating crosssubsidies, and this blue atlas
(31:45):
is the result.
AnneMarie Schieber (31:47):
Yeah. I mean, what we have is a churning
economy. We're not producingthings. We're taking capital
from one sector and moving it toin another to another. That's
what a service economy does.
You know? And here's the thing.We're spending all this money on
health care. We have a shortageof doctors and medical
(32:07):
professionals. Most of thismoney is going to administration
and middlemen, and they are notproducing anything really except
taking the money from one handand passing it over to another.
A churning economy, and that'swhat we're seeing in health care
today. That's why we have sixpeople because that money is not
(32:28):
going into health care. It'sgoing into all the regulation
compliance, construction,administrators. I mean, my
goodness. And that's whathappens because you're right.
Half that money comes from thegovernment. CEOs are rewarded
for figuring out the best waysto get that money. Hospital
(32:49):
CEOs, insurance companies havehave figured out the best way to
get their premium premiums paidby the government. You know,
they don't have to go chasingafter consumers to pay their
premiums. They just get themoney directly from the
government.
So I don't know. I thought thatwas a very good graphic, and
maybe I'd love to see what itlooks like today. Let's move on
(33:13):
to our final topic. This cameout this week. Costco is going
to sell Ozempic and Wacobi.
These are the fat reductiondrugs. And I think this is a
really good development becauseright now, this is direct pay.
(33:34):
So Mhmm. They're gonna sell itfor $500, which means that
perhaps insurance companies anddrug plans will say, no. We're
not gonna pay for this.
You can pay for it. $500 a monthis affordable if you value it.
And, you know, these drugs,people don't forget. One in
eight people have used thesedrugs in our country. Insurance
(33:58):
companies up until this pointloved it because, you know, they
it was driving people toinsurance plants or whatever.
But if this coverage drops,imagine what would happen.
People would have to evaluatethe drug on its merits. This
drug has to be taken for alifetime. That's a lot of money.
It's $6,000 a year for alifetime.
(34:21):
And, you know, we how much wasit selling for before we had,
reports that compound pharmacieswere making semaglutides for,
like, $200 a month. That was alittle more reasonable. But the
price to insurers was, like,950, a thousand dollars, a
little over a thousand dollars amonth. You know, a couple of
(34:47):
other things, $500 a month couldreally get you you know, you
could spend a lot of money. $500a month, you could join the
nicest health care club in thecountry, go to a nice gym, even
hire a personal trainer by get abetter diet.
And, you know, I think I don'tknow. What what do you think?
Devon Herrick (35:07):
Oh, I I agree. It is a great great development.
500 or $4.99 a month isdefinitely a a discount. Some of
these drugs have a list priceof, I don't know, like, 1,200,
1,300 a month. So, yeah, that'sthat's a great deal.
But what I don't understand, butI would be curious about because
(35:28):
the dosage is very. A morbidlyobese individual with diabetes
would be on a different dosethan someone who's just, you
know, needing to lose someweight. And so that you know, I
I've written about, you know,money on drugs by, you know,
using using your brain. And I'mwondering if you could buy one
(35:52):
auto injector that had a largequantity and just microdose it,
you know, for some of these justand and make it last more than a
month, two months, three months.Yeah.
And which is you know, I I thinkthat's probably a better idea
for many people is go go at itslowly. Don't hit it all try to
hit it all quickly. And and thatthat touches on another topic,
(36:16):
which there's a huge market forregular people that are just
thirty pounds overweight, let'ssay. I mean, they're selling it
for 500 for people that arepresumably obese or wealthier or
vain. Why don't they make itwhere, you know, ordinary people
can microdose for, say, 100 amonth?
(36:39):
Yeah. There's a huge marketthere. And maybe that's where
they're going. Maybe this is thefirst step. But but, yeah, I I
think it is a huge development,and that'll create competition
with couple of the others likeMounjaro, for example.
It's a GLP one plus a, I think,PIC. Basically, it has an
(37:01):
additional factor that helpsmetabolize fat and control
insulin sensitivity. And soyou're seeing more and more
competition. So, hopefully, thatwill translate into more
consumer friendly prices andoptions for a wider audience.
But but, yeah, that's that'sthat's funny.
I mean, that's Well it's stillexpensive, but it's affordable
(37:23):
Yeah. To some degree.
AnneMarie Schieber (37:25):
The price will go down enough because what
we do know about losing weightis it's a lifestyle. You have to
make significant changes. It'swork. It's effort. And the idea
that you could take a pill andlose weight effortlessly has
been very attractive to a lot ofpeople.
I was just shocked when I readthat one in eight people have
(37:45):
tried these drugs. And we don'tthey they're fairly new. We
don't know the long termconsequences. I would be afraid
to take the drugs even if I had,like, 20 pounds to lose because
I'd be afraid that unless I if Iwent off the drug, my weight
would explode. And, you know,again, it comes down to changing
your diet, finding more longterm solutions without side
(38:10):
effects.
You know? I don't know what theside effects of these drugs are,
but, you know, you could do alot. And, you know, I wrote
there a couple of years ago, thethe show South Park came out,
and they had a hilarious episodeon these weight loss drugs. And
I wrote about I wrote a review.And, you know, in this review,
(38:32):
in this episode and I'm sureit's online somewhere, but I
would highly encourage you.
It's alright. I gotta, you know,give a caution here because the
language in it is not very nice.But in the beginning, it's about
a character who's obese. And themom is in the doctor's office,
and she says, exercise justdoesn't seem to work for him.
(38:52):
And it's hilarious because itillustrates all the competing
interests compounded bygovernment regulation that make
health care dysfunctional.
My favorite scene in thisepisode was there were some you
know, the kids' friends werewanted to manufacture the drug
in their basement, and they weredrawing buying ingredients from
(39:14):
India to do it. And the sugarindustry was outraged that all
these people now didn't wannaeat sugar. And there's a really
hilarious scene in the episodewhere Captain Crunch stages a
terrorist attack on an Indiandrug ingredient company that's
supplying The US undergroundmarket. Yeah. It it it was a
(39:38):
really good show.
I don't know. Did you have youseen it?
Devon Herrick (39:42):
I I have not. But
AnneMarie Schieber (39:45):
It's it's probably out there. We'll we'll
put the link to the article, andI'm sure you could find it
somewhere. But I I just thoughtthey did a a remarkable job just
showing all the dysfunction inthe health care industry wrapped
around this this drug. Alright.Well, we've chatted about a lot
of stuff.
We've run out of time. Be sureto check out health care news at
(40:06):
the heartland.org website andthe Goodman Institute health
blog for free marketperspectives on the very latest
in health care. In the meantime,stay well, stay safe, and we'll
be back here in a couple ofweeks. Thanks for tuning in.
Hello, everyone, and welcome to the
Heartland Daily Podcast wherethe focus today is on health
care as we do a couple of timeseach month. My name is Ann Marie
Sheber. I'm the managing editorof Health Care News, and joining
me once again is Devin Herrick.He is the health care economist
who posts on the GoodmanInstitute health care blog. Good
(00:21):
to see you again, Devin.
Devon Herrick (00:22):
It's good to be here.
AnneMarie Schieber (00:24):
We we've got a lot to talk about. The
government has shut down, if younoticed. It's been about a week.
You know, the reason thegovernment has shut down is
because congress cannot agree onthe terms to provide stopgap
funding until November. This iswhen both political parties hold
(00:46):
each other hostage for policygains, I guess.
The policy grab this time,drumbeat, is health care. The
bottom line, the Democrats willnot agree to approve to approve
a funding bill unless theRepublicans agree to continue
subsidizing Obamacare at COVIDnineteen levels. Okay? Huge
(01:11):
increases in subsidies. Thosesubsidies expire at the end of
the year, and Republicans saythat this is a separate issue
and should not be part of acontinuing resolution.
Couple of things. I wannadiscuss this is gonna take up
(01:32):
much of our discussion today.What is going to happen if the
Obamacare subsidies go away? AndI wanna focus our discussion on
what's the best case scenarioand what is the most likely
scenario. Devin, you posted onthis stalemate on October 1.
I wanna read something from thisblog, and then I wanna hear your
(01:55):
your thoughts on this. You wroteObamacare is a bad deal
regardless of who is paying thetab, and taxpayers subsidizing a
bad deal to make it affordabledistorts the market further and
delays needed reform. Thereality is ACA marketplace plans
(02:17):
are beneficial for less than 10%of those who have them. Can you
explain what that means?
Devon Herrick (02:26):
Well, in health care, there is what's known as a
as an eighty twenty rule. Andthat is this about 20% of the
population accounts of theinsured population accounts for
about 80% of spending. And so bythat measure and oh, and then
there was another estimate. Ithink it was from, oh, the
(02:47):
Commonwealth Fund. Thatsomething like 80 to 90% of
Obamacare enrollees do notsurpass their deductible, which
means they might as well bepaying, you know, cash out of
pocket.
The insurance is doing them, youknow, really no good. I mean,
yeah, we can argue you have somelevel of protection. We don't I
(03:08):
mean, I don't want my houseinsurance to pay off with a
hailstorm or a fire. But at thesame time, I mean, my Obamacare
coverage is about double whatall my other insurances put
together. And so what Obamacaretried to do, and this has been
tried before and it always hadthe same result, which is very
(03:31):
high premiums, is Obamacaretried to force 90% of the
population, according tostatistics, to overpay for
health insurance so that the,you know, the less healthy 10%
or or 20% gets a good deal.
And it it's not an effective orefficient way really to to cross
(03:55):
subsidize the sick. It would be,you know, more efficient to have
a more direct subsidy becausethen the people who are
relatively healthy would nothave an incentive to bail out.
So, I mean, it was a bad deal bydesign. It had been tried in
states like New York, NewJersey, I think Washington
(04:17):
State, couple others, maybeConnecticut. I don't remember
exactly.
And it the results were known.It's like, yeah. It provides
coverage where you can buy inwithout having to be risk rated,
but it's also causes highpremiums. Right. At the time, we
already had a high risk pool,and the only complaint about the
(04:39):
high risk pool was, well, it hashigh premiums.
Okay. Obamacare is worse.
AnneMarie Schieber (04:45):
Right. And what you're saying is in
02/2010, we knew how this wasgonna fall out because other
states have tried similarprograms, and it just the
numbers just didn't add up. Butwe went full force with it and
forced it on the entire country.I wanna talk about a couple
things. First, I wanna ask you,maybe this is a good time to
(05:06):
bring this point up.
But in your blog, I thought youmentioned that this is gonna be
the end to $2,000,000 a yeardrugs. Now believe it or not,
they do exist. Right? These arefor rare illnesses and orphan
illnesses, and that's a wholedifferent discussion because
that is a real problem, andwe've gotta figure out a way to
(05:26):
help those people. But the waythis goes right now is nobody
sees any bill.
They don't pay anythingdirectly. So when you say we've
got a drug and it's gonna costyou a million, 2 doll millions a
year and somebody else is gonnapay for it, what are you gonna
say? You're gonna say, yeah.I'll go for it. You know?
I don't care if it doesn't work.I don't care if maybe even I get
harmed by it because I havereally no financial stake in
(05:50):
this to really evaluate. Tellyou wanna talk a little bit more
about that?
Devon Herrick (05:55):
Yeah. The one of the other costly regulations
that was imposed on, you know,by Obamacare is it banned all
annual caps and lifetime caps onbenefits. Before 02/2010, you
know, you could pick and choose,you know, what coverage or how
much coverage do you want. Ifyou want low deductibles with
(06:19):
$5,000,000 coverage, well, youcould get that through Blue
Cross. It was not cheap.
It was rather expensive. Thatwas a premium plan. Well, when
they were devising Obamacare,people thought, oh, you know,
the Democrats primarily thought,oh, it's horrible that some
people rent very, very fewpeople, max out their benefits.
(06:39):
So they banned any kind oflimits. Well, when you ban a
limit, you essentially, a, youincrease the price because the
risk has gone up, but you createan incentive for those that sell
treatments, you know, like,mainly drug companies and
hospitals and the like.
Well, the sky becomes the limitbecause there's automatically a
market. So you have no nothingto hold prices in check when you
(07:04):
basically give a blank check tothose that are providing care.
AnneMarie Schieber (07:11):
I'll tell you what. I think this is going
to be the beginning of the endof Obamacare. You know, we tried
to do this in 2017 and it fellshort. A couple of votes were
added again. If the politicalwill is there and that's a big
if, you know, if members ofcongress can resist the strong
arming of big hospitals and biginsurance.
(07:35):
Let let's talk about how thiscan this could be a war of
attrition that Obamacare isgoing to find a natural death.
Andy, I I've I've got a lot totalk about. So are you able to
pop up that graph? Because Iwanna go over some of these
points and then hear yourthoughts on them, Devin. You
know, the first one is premiumswould certainly so let's say the
(07:59):
subsidies do not go through.
Premiums would certainly go up.Right? Healthy people would go
without insurance. They wouldsay, I'm not bothering with
this. I'm not paying $17,000 ayear for a plan I'm never gonna
use.
And, you know, they could signon to alternatives, like short
term plans, which Trump now istrying to unleash. They were
(08:23):
restricted under the Bidenadministration, but now Trump
says he's not going to enforcethose rules and perhaps there
will be a, know, a number ofcompanies offering those short
term plans for longer period oftimes. They could also go to
health care ministries, whichare a lot cheaper than Obamacare
plans. The other thing aboutpeople is that they would be
(08:48):
more vigilant about theirhealth. They will I don't know.
Do we have that graphic? Oh,great. See, life will go on.
Alright? This is what's gonnahappen.
People are going to figure out away around Obamacare. They would
be more vigilant about theirhealth. They would scrutinize
treatment recommendations foreffectiveness and safety.
(09:10):
Everything has a risk andsometimes overtreatment or
incorrect treatment creates evenmore problems. There will be
pressure on lawmakers to openthe gate on indemnity style
health insurance plans.
Right now, these plans areoffered as supplemental plans,
not primary care or not primaryplans. Imagine picking up a
(09:33):
health insurance policy in yourtwenties with a cap on the
benefit amount over a particularperiod, let's say, twenty or
thirty years, similar to, like,how a term insurance policy
would work. And you say, I'mgonna buy this plan, and you
have an incentive not to get outof it because you're gonna have
to be rewritten. So you have astrong incentive to pay that
(09:53):
premium every year for theentire term of that plan. And
the insurance company will notlose money because you know they
know you're going to pay, andyou're probably gonna be more
vigilant about your health, andthey won't have to pay out this
big chunk of change.
I think hospitals and nonprofitorganizations will provide
(10:14):
charity care like they did inthe past before Obamacare. You
know, they get tax benefitsbecause of their nonprofit
status. I think it's somecommunities. I know this goes on
in my community. They don't payproperty tax, and that competes
with other people, who are maybetrying to do an independent
route of health care becausethey gotta pay the property tax,
(10:37):
and it also dries up real estateprices.
In my backyard, there thehospital construction and
expansion is unbelievable.They've created a city since
probably in the last ten years.You go down and every new
construction building is part ofa hospital. I mean, are we that
sick? It's just stunning.
Like, where is this money comingfrom? We wouldn't see
(11:00):
multimillion dollar packages forCEOs. Some of them are paid
$1,010,000,000 dollars a year.And what are they rewarded for?
They're figuring out the bestway to squeeze more money out of
taxpayers.
Right? Pretty much. Yeah. Withno subsidies, the ACA
marketplace yeah. What what'llhappen is with no subsidies, the
(11:24):
ACA marketplace will fall apart.
No one's gonna buy these plansif they're too expensive and
insurance companies are wannaget are gonna wanna get out of
it because they're not gonna bestuck with, you know, the the
20% because they just couldn'tmake it work. I mean, we can
rest assure that and and we canalso rest assure that there will
be no backdoor funding forillegal immigrant health care,
(11:48):
abortion, trans procedures.These are three three things
that people have a lot of moralobjection to, and they are paid
for under Obamacare. Thediscussions I've heard about
Obamacare subsidies is that'sthe big thing right now going on
because that's what's fundingthese these programs, legal
(12:09):
health care, legal immigranthealth care, abortion pills, and
the trans procedures becausethese plans, the Obamacare plans
have to cover these things. And,you know, we know with the three
forty b program, a lot of thosedrugs coming in involving trans
procedures and abortion, they'reall coming through Obamacare
(12:31):
plans.
So, you know, if these thingsfall apart, that industry those
industries would probably haveto compete, you know, on their
merits, and they could probablyalso fall apart as well. What
what is your thinking, Devin?
Devon Herrick (12:44):
Well, I just lost my camera for some reason. I
have to.
AnneMarie Schieber (12:49):
We can hear your voice.
Devon Herrick (12:51):
Oh, okay. Yeah. Sure. Sure. You won't see my
face.
But
AnneMarie Schieber (12:54):
Alright. Well, I'll tell you what. While
you're talking, I wanna pop upsomething. Well, let me just
tell you what I we'll talk aboutwhat I think is going to happen,
what we think is gonna happen.Maybe we can pop up yeah.
There's a lot to discuss. Iwanna pop up this a couple of
Devon Herrick (13:17):
Let's fix the camera first, then we'll then
we'll go back. This is gettingconfusing.
AnneMarie Schieber (13:22):
Alright. Should we That's okay. A choice
here in the recording? Can youedit it?
Devon Herrick (13:26):
Yes. Let me do that now.
AnneMarie Schieber (13:30):
So, Devin, what's your thinking on this?
Devon Herrick (13:34):
Well, if we step back to just oh, I think 2019,
there were only about 12,000,000people enrolled in the
marketplace plan. And the reasonis because it was a bad value.
The only people who thoughtmarketplace plans were a good
value were those that weregetting big heavy subsidies. The
middle class and everyone else,it was just a bad deal. And so
(13:58):
what Democrats are really tryingto do now is is they saw a
doubling of of the number ofpeople to roughly 24, 25,000,000
with a marketplace plan, andthey don't wanna give that up no
matter what the cost even if thecost is outrageous, about
$380,000,000,000 over ten years.
(14:19):
But I I think you're correct if,really, all you have to do to
reform the market is just allowthe market to offer products
that consumers want. Forexample, if you were to allow me
to buy a plan that had maybe amillion dollar cap or even a
(14:40):
$500,000 cap, that would be morethan sufficient for probably 98%
of the population, and it wouldbe much cheaper to subsidize
those 2% that were extremelyunhealthy or or, you know,
needing a lot of care. And sothere's all kinds of market
innovations that would occur ifyou would just allow the market
(15:04):
to offer plans. It might belimited benefit plans. It might
be, you know, short term plans,indemnity plans.
It's just it's just hard toexplain how convoluted, how
inflationary, and how poorlyconceived and designed the
Obamacare market plans are. AndI I think that, I mean, it would
(15:29):
it would be really muchhealthier for the marketplace to
find what people are willing topay for.
AnneMarie Schieber (15:36):
Yeah. Andy, maybe this would be a good time
to pull up that meme. This wasthis I thought was pretty funny,
if you can do it now. This wasin the committee to unleash
prosperity. They had a funnymeme about Obamacare when it was
started.
So it's named after presidentObama. He was the one behind it.
(16:00):
Do we do we have that meme thatwe can pop up? Alright. Maybe
we'll come back to it later.
Let's talk about what we thinkis really gonna happen. Here
here's my thinking. I thinkRepublicans are going to agree
to a temporary extension ofsubsidies just to get them past
the midterms. And they might seta limit on the subsidies to
(16:24):
insurance, to insurers. I thinkthey might demand more
flexibility for states to set upreinsurance markets for their
residents.
That's what's existed. Those arefor people with significant
disabilities, and that's whatexisted before Obamacare. So
they were great programs. Theyin my state, they were known as
(16:44):
the insurer of last resort, andpeople got really good care. It
was a small percentage of peoplethat really had significant
health care needs.
But what it did was it put thosepeople in a separate pool and
found a separate fundingmechanism for them. And then it
protected it kept people in theinsurance market, and that's how
(17:06):
insurance works. You get somepeople to support it at various
points in time. And sometimesyou'll be the big user,
sometimes you won't. But overtime, it stretches out and it
makes it feasible for insurancecompanies.
It's really risk protection, andwe don't do that. We've we've
turned it into a payment plan. Ithink maybe what we might be
(17:30):
able to do also, the Republicansmight try to squeeze and get
some more movement on HSAs. Youknow, we got a little bit of
movement under the one bigbeautiful bill. We expanded it
to, I think, 10,000,000 people.
We might be able to do that for$20,000,000, and maybe we expand
HSAs to cover all the plans inObamacare. Right now, the bronze
(17:55):
plan, I think, is the only oneor the catastrophic plans. Some
of those plans do not allowpeople to have HSAs.
Devon Herrick (18:03):
Mhmm.
AnneMarie Schieber (18:03):
And then, it would be also really great,
and I don't know that this wouldever happen, is to give that
subsidy directly to the enrolleein the form of a tax credit so
that they could use it in thefollowing tax year. And I know
that's a long stretch, but whatand and the insurance companies
will go ballistic over itbecause they think they'll never
(18:25):
get their money from theenrollee. But right now, you
know, people are applying forthese subsidies and basically
working through agents who teachthem how to game it. And they
predict what their income isgoing to be. And then they the
subsidies are given onsomebody's, you know,
(18:46):
declaration of what their incomeis going to be.
And then I don't know howvigilant they are in making sure
that they lived up to that. Soit's possible somebody makes
$500,000 a year and gets asubsidy to pay for Obamacare.
We've got a lot of sloppiness,and I know they tried to, you
know, take care of that in thesome of the provisions in the
(19:07):
one big beautiful bill. Whatwhat do you think is gonna
happen? Are we gonna keep thegovernment shut down?
I mean, November, the clock isticking. That's like a month and
a half away.
Devon Herrick (19:17):
Well, yeah, I I think you raised an important
point, that is this is a goodopportunity to negotiate reforms
to Obamacare, rather than justrubber stamp. Okay. We'll spend
$380,000,000,000 over ten years.You know, we'll get we'll that
maybe the Republicans will saywe will extend some of the
(19:38):
subsidies in return for somemarketplace reforms that will
make Obamacare, you know, morestable. And I think that that
would be the the most logicalcompromise, I guess.
And, you know, how how that'llwork? Well, I don't know. Maybe
they'll extend the subsidies,but not to families of four
(19:59):
earning a $128,000 a yearbecause, you know, that's that's
well well in the middle class Imean, upper middle class. Maybe
they will have them taper off.You know, there's a variety of
things, but we're out of time.
It's the only problem. So maybethey can do a stop gap measure
for a couple months while theytry to agree on some some
(20:22):
reforms that will help themarket. And I I think, you know,
I I I think we're going to talkabout some of those in a minute
that have been suggestedincluding
AnneMarie Schieber (20:32):
I wanna point this out. Ovik Roy, who is
well known in the free marketspace for health care, wrote an
op ed in the Washington Post. Iwonder if we could pull that up.
This came out last week, October1. This would be the Washington
Post op ed.
We have that there. There we go.Is that it? Yep. I think that's
(20:58):
it.
Yeah. That's it. So what he saidbasically is that a bipartisan
compromise could end thegovernment shutdown. So maybe
Republicans might be smart toget some really good reforms in
Obamacare. Use this opportunity.
(21:18):
And what he's recommending is,you know, he points out to
extend the subsidies would costtaxpayers $350,000,000,000 over
the next decade. That isamazingly unbelievable. He said
there will be people who willreally be out if the subsidies
were to expire, and that isgonna cause a political problem
even to some people who arekinda neutral, even Republicans.
(21:43):
You know? There's a bigpolitical concern here that the
balance of power could shift incongress if this thing becomes
out of goes out of control.
He proposes a one to two yearextension, includes a premium
reduction to young people, andthen he wants to put aside
(22:03):
$10,000,000,000 for areinsurance fund for those
people with significant illnessand disabilities that we talked
about. Now I don't know. I don'tthink the Dems wanna give too
much control back to the states.I think they wanna make this
idea that the whole thing has toapply for the whole country.
Devon Herrick (22:21):
Mhmm.
AnneMarie Schieber (22:22):
And that's how they you know, that's the
part of their party mantra.Lower premiums for young people
may come at the expense also ofpre Medicare folks. Their
premiums could go up. So, like,if we made the premiums cheaper
for younger people to keep themin Obamacare, somebody's
premiums are gonna go up, and somaybe they might drop it. I
don't know.
(22:43):
Do do you
Devon Herrick (22:43):
think this is the my worry.
AnneMarie Schieber (22:44):
Really that the Republicans could take
advantage of?
Devon Herrick (22:49):
I mean, I it'd be interesting to see what the
actuaries say about because asas you said, they currently
require a a one to three rateban. In other words, that 22
year old that is not likely tosee a doctor for any reason
would pay only or I would payonly three times more than that
22 year old. And there's been alot of discussion that maybe
(23:12):
that should be five to one.Yeah. Yeah.
Would that raise my premiums?You know, I'd wanna see the
numbers. So it's it's you know,I'd rather see a little bit of
risk you know, rating for riskthan just arbitrarily creating
bands you shove people into. Buthe also mentions as you we've
kinda touched on direct fundingfor preexisting conditions. I
(23:38):
mean, like, kinda like a highrisk pool, like you said.
Yeah. And before we get there,I'd wanna I'd probably wanna
allow or reduce the ban onlifetime or annual caps because
that would just be a blank checkto from the government. You
know, it's a subsidy is fromtaxpayers, and that would also
be from taxpayers. We need tolook for what would make it more
(24:01):
efficient. It's currently notefficient because people are
over you know, 80% of thepopulation who wants who enrolls
is overcharged so that, youknow, 10, maybe 15%, you know,
get a better deal.
Right. You know, that's notstable because people like me
say, you know, what are the oddsthat I'm going to need, you
(24:23):
know, more than $20,000 with thecare, which is which is the
threshold I would have to paybefore I would get any kind of
coverage? So Yeah. You know, I'mlooking at what is my risk? What
is my expected cost?
The odds of having more than$20,000 is less than one percent
probably.
AnneMarie Schieber (24:40):
Yeah. I mean, somebody with significant
disabilities may not have thelifespan that a healthy person
would have. Right? So you're notgonna be paying they're not
gonna be covered in a planthat's going to take them to age
100. That may not be realistic.
And so they may not you know,those limits may not be all that
(25:01):
devastating to them, But I seewhat you're saying that I, you
know, I will tell you I've hadpersonal experience with this
with a very sick loved one. AndI will tell you straight face,
we spent more time in thefinancial aid office where they
mined the insurance policy thanwe did before a doctor. And what
they would do is they'd max outthe policy. They'd see what how
(25:24):
much they could bill to get awaywith. And my loved one here was
like $4,000,000 before he died.
And I I just thought it wasstunning. And I think that's why
these hospitals, they look atthis stuff and they mine the
plans. And when there is nolimit, they will go for the sky.
And that's what we're dealingwith right now. I wanna pull up
(25:47):
a couple of things here.
We'll leave this we could talkabout this for hours, but there
is an interesting editorial inthe Washington Post. Now
remember, I don't know if wecould pull that up. The
publisher of the Washington Postis Jeff Bezos, the founder of
Amazon, a pretty successfulcompany. So, you know, Jeff
(26:10):
Bezos knows what he's doing.This was on October 5.
Do we have that, Andy? Can wepull up that editorial? Alright.
So I wanna pull up this op ed oractually an editorial in the
Washington Post. The publisheris Jeff Bezos, the founder of
Amazon, a pretty successfulcompany.
He knows what he's talkingabout. This was on October 5,
(26:33):
and this line in in theeditorial said this. The real
problem is that Obamacare wasnever actually affordable. This
is how entitlement programswork. Once you habituate people
to some generous governmenthandout, they grow dependent on
it, and it becomes politicallyperilous, if not impossible to
(26:55):
fully claw it back.
Now they're basically saying astatement of fact. They're not
recommending that we do claw itback. So I guess there's that in
there. The other thing I wannapull up, I so I thought that was
kinda significant coming out ofthe Washington Post. Mhmm.
The other thing is a reallyfunny meme that was, in the
(27:15):
committee to unleash prosperityblog post. That's the one there
we go. Okay. We told them healthcare was free. Here's Obama
laughing.
I thought that was pretty funny.You know, it's 15 out. Obamacare
(27:39):
went into effect 02/2014. Ittook us a couple of years to
kind of figure out how thisthing was gonna play out. It's
now eleven years, and we we knowfull well that this thing is not
working.
So time to end it. And I I Idon't know. I guess we will see.
Alright. Let's move on to ournext topic, which is kind of
(28:01):
related to Obamacare because,like I mentioned earlier, I have
seen an explosion of hospitalconstruction and expansion in my
little neck of the woods.
And I keep wondering, mygoodness, are we getting sicker?
Where are these sick peoplecoming from? This was a great
(28:21):
little article by the the,American Association, the
Association of AmericanPhysicians and Surgeons. If we
can go down, scroll down to thegraphic that they have here, it
shows look at this map. Okay.
(28:41):
So this is the industry thatexisted in 1990. And you can see
1990, most of the country, thebiggest driver for the economy
in states was measuring. Lookwhat it is. This is 02/2013.
Okay?
So imagine what it's like today.I bet the whole thing is blue.
(29:01):
But look at all the blue states,and that's health care. Are we
sicker? I mean, my goodness.
I know that we have babyboomers, and they're getting
older and maybe that's whatwe're seeing. But my goodness,
you know, technology alsoimproves. So we shouldn't see
this level of, you know, healthcare spending in our economy. It
(29:24):
just doesn't make sense. Wedon't see other countries
spending money like this onhealth care.
What do you think, Devin?
Devon Herrick (29:30):
Yeah. Nearly $1 and 5. 20 nearly 20 percent of
the economy is now health care.And, I mean, do you really it's
it's hard to explain in in termsthat people can fathom that, you
know, one fifth of our entirenational income goes for
(29:51):
hospitals and drug companies anddoctors. Because the average
person, the average worker,let's say, is probably yeah.
They're paying for insurance,but they're not going to the
doctor ever every week. They'renot going to the doctor ever
once a month. They're probablygoing maybe every other month.
Some some of that will be wellvisits. So but, yeah, it is I I
(30:13):
looked at this graph before westarted, and I thought, you
know, good lord.
That's the I mean, health careis the is the biggest industry
in many states. And and, likeyou said, it's in my
neighborhood. Every hospital hasa construction crane. Yeah. And
they're adding on and adding on,and new hospitals are going up.
(30:36):
You know, I'm in a growing area,so that makes a little bit of
sense. But, I mean, where's thismoney coming from? Well, you
know, I can tell you where it'scoming from. It's coming from
about half from the federalgovernment or federal and state
government, and the other halfis coming from our wages mostly
or our take home pay. And it'sand for the average well, you
(30:57):
know, one thing I always go backto, for the average worker, if
they really understood thatabout $2,526,000 dollars of
their wages is being, you know,diverted for health care that
they may not be using much of orthey demand control of that
money.
And that would be better becausecross subsidies don't work.
(31:21):
They're never efficient, butbecause it breaks the feedback
loop between consumers andproducers. You know, you go to
your local Kroger, and they knowyou're price sensitive. They
know you might want a premiumbrand, but you're still price
sensitive. In health care, we'vebroken that link by
intentionally creating crosssubsidies, and this blue atlas
(31:45):
is the result.
AnneMarie Schieber (31:47):
Yeah. I mean, what we have is a churning
economy. We're not producingthings. We're taking capital
from one sector and moving it toin another to another. That's
what a service economy does.
You know? And here's the thing.We're spending all this money on
health care. We have a shortageof doctors and medical
(32:07):
professionals. Most of thismoney is going to administration
and middlemen, and they are notproducing anything really except
taking the money from one handand passing it over to another.
A churning economy, and that'swhat we're seeing in health care
today. That's why we have sixpeople because that money is not
(32:28):
going into health care. It'sgoing into all the regulation
compliance, construction,administrators. I mean, my
goodness. And that's whathappens because you're right.
Half that money comes from thegovernment. CEOs are rewarded
for figuring out the best waysto get that money. Hospital
(32:49):
CEOs, insurance companies havehave figured out the best way to
get their premium premiums paidby the government. You know,
they don't have to go chasingafter consumers to pay their
premiums. They just get themoney directly from the
government.
So I don't know. I thought thatwas a very good graphic, and
maybe I'd love to see what itlooks like today. Let's move on
(33:13):
to our final topic. This cameout this week. Costco is going
to sell Ozempic and Wacobi.
These are the fat reductiondrugs. And I think this is a
really good development becauseright now, this is direct pay.
(33:34):
So Mhmm. They're gonna sell itfor $500, which means that
perhaps insurance companies anddrug plans will say, no. We're
not gonna pay for this.
You can pay for it. $500 a monthis affordable if you value it.
And, you know, these drugs,people don't forget. One in
eight people have used thesedrugs in our country. Insurance
(33:58):
companies up until this pointloved it because, you know, they
it was driving people toinsurance plants or whatever.
But if this coverage drops,imagine what would happen.
People would have to evaluatethe drug on its merits. This
drug has to be taken for alifetime. That's a lot of money.
It's $6,000 a year for alifetime.
(34:21):
And, you know, we how much wasit selling for before we had,
reports that compound pharmacieswere making semaglutides for,
like, $200 a month. That was alittle more reasonable. But the
price to insurers was, like,950, a thousand dollars, a
little over a thousand dollars amonth. You know, a couple of
(34:47):
other things, $500 a month couldreally get you you know, you
could spend a lot of money. $500a month, you could join the
nicest health care club in thecountry, go to a nice gym, even
hire a personal trainer by get abetter diet.
And, you know, I think I don'tknow. What what do you think?
Devon Herrick (35:07):
Oh, I I agree. It is a great great development.
500 or $4.99 a month isdefinitely a a discount. Some of
these drugs have a list priceof, I don't know, like, 1,200,
1,300 a month. So, yeah, that'sthat's a great deal.
But what I don't understand, butI would be curious about because
(35:28):
the dosage is very. A morbidlyobese individual with diabetes
would be on a different dosethan someone who's just, you
know, needing to lose someweight. And so that you know, I
I've written about, you know,money on drugs by, you know,
using using your brain. And I'mwondering if you could buy one
(35:52):
auto injector that had a largequantity and just microdose it,
you know, for some of these justand and make it last more than a
month, two months, three months.Yeah.
And which is you know, I I thinkthat's probably a better idea
for many people is go go at itslowly. Don't hit it all try to
hit it all quickly. And and thatthat touches on another topic,
(36:16):
which there's a huge market forregular people that are just
thirty pounds overweight, let'ssay. I mean, they're selling it
for 500 for people that arepresumably obese or wealthier or
vain. Why don't they make itwhere, you know, ordinary people
can microdose for, say, 100 amonth?
(36:39):
Yeah. There's a huge marketthere. And maybe that's where
they're going. Maybe this is thefirst step. But but, yeah, I I
think it is a huge development,and that'll create competition
with couple of the others likeMounjaro, for example.
It's a GLP one plus a, I think,PIC. Basically, it has an
(37:01):
additional factor that helpsmetabolize fat and control
insulin sensitivity. And soyou're seeing more and more
competition. So, hopefully, thatwill translate into more
consumer friendly prices andoptions for a wider audience.
But but, yeah, that's that'sthat's funny.
I mean, that's Well it's stillexpensive, but it's affordable
(37:23):
Yeah. To some degree.
AnneMarie Schieber (37:25):
The price will go down enough because what
we do know about losing weightis it's a lifestyle. You have to
make significant changes. It'swork. It's effort. And the idea
that you could take a pill andlose weight effortlessly has
been very attractive to a lot ofpeople.
I was just shocked when I readthat one in eight people have
(37:45):
tried these drugs. And we don'tthey they're fairly new. We
don't know the long termconsequences. I would be afraid
to take the drugs even if I had,like, 20 pounds to lose because
I'd be afraid that unless I if Iwent off the drug, my weight
would explode. And, you know,again, it comes down to changing
your diet, finding more longterm solutions without side
(38:10):
effects.
You know? I don't know what theside effects of these drugs are,
but, you know, you could do alot. And, you know, I wrote
there a couple of years ago, thethe show South Park came out,
and they had a hilarious episodeon these weight loss drugs. And
I wrote about I wrote a review.And, you know, in this review,
(38:32):
in this episode and I'm sureit's online somewhere, but I
would highly encourage you.
It's alright. I gotta, you know,give a caution here because the
language in it is not very nice.But in the beginning, it's about
a character who's obese. And themom is in the doctor's office,
and she says, exercise justdoesn't seem to work for him.
(38:52):
And it's hilarious because itillustrates all the competing
interests compounded bygovernment regulation that make
health care dysfunctional.
My favorite scene in thisepisode was there were some you
know, the kids' friends werewanted to manufacture the drug
in their basement, and they weredrawing buying ingredients from
(39:14):
India to do it. And the sugarindustry was outraged that all
these people now didn't wannaeat sugar. And there's a really
hilarious scene in the episodewhere Captain Crunch stages a
terrorist attack on an Indiandrug ingredient company that's
supplying The US undergroundmarket. Yeah. It it it was a
(39:38):
really good show.
I don't know. Did you have youseen it?
Devon Herrick (39:42):
I I have not. But
AnneMarie Schieber (39:45):
It's it's probably out there. We'll we'll
put the link to the article, andI'm sure you could find it
somewhere. But I I just thoughtthey did a a remarkable job just
showing all the dysfunction inthe health care industry wrapped
around this this drug. Alright.Well, we've chatted about a lot
of stuff.
We've run out of time. Be sureto check out health care news at
(40:06):
the heartland.org website andthe Goodman Institute health
blog for free marketperspectives on the very latest
in health care. In the meantime,stay well, stay safe, and we'll
be back here in a couple ofweeks. Thanks for tuning in.
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