The Trump administration has done what many generations of U.S. politicians have promised but never delivered. Through executive order, he has told agencies to pay no more than the world market price for pharmaceuticals.
This is a dramatic change in existing policy in which taxpayers and consumers pay five to ten times as much, thanks entirely to government interventions. In addition, the EO asks the FDA to certify the safety of drug imports, which will also put downward pressure on prices.
These are huge changes, long advocated but never implemented until now.
They open up other possibilities. We don’t need another huge plan like Obamacare, which only ended up causing medical insurance premiums to soar. We need precision reforms that will grant Americans more choice in how they use medical spending.
Under current law, every employer in a company with more than 50 people is forced to provide medical insurance for their employees. This seriously raises the cost of doing business. Why does this system even exist? It traces to a practice dating from the Second World War. Wage controls prevented business from paying more, so providing health insurance was one way. Later this was codified and mandated.
What if employers were allowed to permit employees to opt out of paying these premiums? Instead employees could choose to take a higher salary or more in wages, and pursue other options for medical provision. They could sign up with private services or choose to do without entirely. That would be a blessing for many workers who would surely select this option.
To make more options available, insurers could be allowed to create new benefits packages outside the predetermined buckets that exist now. The current system has people paying for benefits they will never use, like mental health coverage, for example. Maybe some people would rather pay out-of-pocket for routine medical care and only have insurance for catastrophic coverage.
How much would that cost? It would depend on what actuaries come up with but it could be only $100 or so. If there were a competitive market, people could buy easily and feel comfort that if something went terribly wrong, money would be there. Otherwise they would save and earn interest and dividends.
This would also imply that we need medical savings accounts freely available to all rather than just those who are subscribed to an insurance package. That such restrictions are in place makes no sense. Medical savings accounts should be available for everyone through regular financial services, and invested in the markets when they are not in use.
Such changes would be simple and, one would suppose, relatively uncontroversial. It’s hard to imagine why anyone would oppose them. You could say, oh this is terrible because that would provide far less revenue for the sick to live off the healthy. But therein lies the core point: the privatized system of socialism we have in place now is unfair and unsustainable.
The above choices are simply about prioritizing individual choice.
If we had a rivalrous market for different kinds of benefits packages, surely we could have one that excludes pharmaceuticals. Especially with new lower prices, customers could pay only for what they use. These days, people are eschewing meds altogether for routine care, given what we are discovering about the downsides. Why should people be forced to pay for products they don’t use?
What’s also underused in the current system is the role of actuaries in assessing health risks. With a system geared toward the individual, people who eat right, exercise, and do not abuse substances would get far lower premiums. This in turn would provide a financial incentive to others to shape up and live more healthy lives, providing a fast track to the agenda now proclaimed to be a priority by Trump and his Secretary of HHS.
In order for this to happen, however, the system will need to be changed. In a similar way, more options for providers need to be made available. In most countries, the pharmacist himself can prescribe medications based on walk-in evaluations. This is not allowed in this country due to strict professional divisions. There is no need for this. Pharmacists are well trained and in a great place to evaluate routine medical problems.
Other doctors would like options to leave huge health maintenance organizations, HMOs, and instead open up direct primary care services that accept not only cash payment but also insurance payments. Again these are restricted under current law for no good reason. A liberalization of these rules would go a long way toward providing new options to care providers.
I used AI to ask for executive orders to be generated from some of these ideas. It took only a few seconds and they were quite precise. Trump could easily do this and start the long process of repairing a system that everyone knows is completely unsustainable. But we don’t need a big plan. We just need precision tweaks that could really provide a new way forward for medical provision.
The beauty of the above ideas is that they are unlikely to run into partisan opposition. Quite frankly, it is difficult to imagine the arguments against them, especially given that hardly anyone is willing to defend the current system except perhaps the large insurance companies.
The Trump executive order on drug pricing is long overdue. Notice that it has no critics on the left, and only detractors on the right who wrongly accuse the new policy as an endorsement of price control. That makes no sense. The policy is about allowing the market to work in the process of price discovery.
The point is this. Trump has proven that such precision targeting in reform efforts can work, politically and economically. There is much more work to do. Only the Trump administration, which is apparently unafraid of Big Pharma, is in a position to do it. The above ideas are excellent places to start putting control back into the hands of patients, customers, and providers. Medical care can be a normal business like any other. We desperately need leaders who will help make it so again.
