Playing 'What If?' at Thanksgiving dinner

As families gather to celebrate Thanksgiving, many worry about the impossibly high cost of health insurance. Let's play a game of What If? (It will be fun, I promise.)

What if healthcare dollars currently going to insurance companies were paid instead to the consumers themselves? Would good things result, or bad? This "what if" exercise was prompted by President Trump's offhand suggestion to give ACA subsidies "directly to the people...[instead of]...BIG, BAD insurance companies"? (Republicans are currently considering this idea but only for the ACA.)

Specifically, what if all the money called employer-sponsored health benefits that presently goes to insurance companies were paid instead directly to employees? What might happen?

According to Kaiser Family Foundation, "Annual premiums for employer-sponsored family health coverage [paid to insurance companies] reached $25,572 this year [2024]." Approximately 165 million Americans receive such an employer-sponsored health benefit. Paying each employee the average premium that currently is going to insurance would put $4,219,380,000,000 in the hands of U.S. consumers.

The $25,572 payment to insurers is actually wages earned by the employee but not given to the employee. This is a holdover from a wage freeze accommodation enacted during World War II that was never repealed, even though all other wartime wage and price freezes were reversed.

Besides correcting the obvious injustice of denying employees their full wages, numerous other positive impacts would result. To play out the optimal scenario, Congress would have to create a new no-limit HSA in which to put the additional wages. Current medical savings accounts have limits well below $25,000. To project subsequent events, assume Americans could put the $25,572 in such an HSA and use the funds tax-free to pay for medical expenses.

Overnight, there would be a huge marketplace of consumers — half the nation — with $4 trillion to spend on health care. They could shop for both care and insurance. Sellers of the same would have to compete with each other for consumer dollars rather than large numbers of contracted patients as they do now. Prices for both care and insurance would plummet due to inter-seller competition.

Insurers would have to offer policies that consumers want instead of federally mandated policies. Most thoughtful individuals would purchase various forms of high deductible, "catastrophic" insurance and pay from the HSA for routine care, even in-hospital procedures. Procedures like hernia repair, cataract surgery, and childbirth have charges in a direct-pay (not insurance-based) environment well within the available funds in the new HSA. While insurance company bottom lines would likely suffer, these companies would quickly adapt as they are used to aggressive competition. Not so the doctors.

Physicians are socialized in school and post-graduate training to eschew both competition and advertising. (Contrast to lawyers, especially in personal injury.) Practicing medicine in a competitive free market with more than 165 million potential patients who have money would initially be distressing and possibly overwhelming. Those who adapt and who publish affordable prices with understandable outcomes, and who offer rapid service would quickly find their waiting rooms and their pocketbooks over-flowing.

Hospitals would have to publish lists of competitive prices that consumers, not insurance, would pay, replacing the current phantom price lists that are full charges, not the actual payments to providers which are much lower. Hospitals and other facilities would have to publish outcomes data in formats that people could understand or risk having empty operating rooms.

A large number of federal and state healthcare bureaucrats would find themselves out of work. While this would be unfortunate for them, tax-payers would suddenly be off the hook for much of the cost of healthcare BURRDEN — bureaucracy, unnecessary rules and regulations, directives, enforcement and noncompliance activities. Last year the cost of BURRDEN was more than $2 trillion. Consider what not spending that amount would do to the federal budget and the national debt.

Medicaid/CHIP with 77.7 million enrollees should return to its original design: 50 programs run solely by the states, with unrestricted block grants from Washington. The federal one-size-fits-all approach to Medicaid has never worked and was in fact prohibited in the Medicaid law, Section 1801.

What if healthcare dollars were given directly to We the People? That would be an awesome Thanksgiving gift!

"Dr. Deane" Waldman, MD, MBA, is professor emeritus of pediatrics, pathology, and decision science; and former director of the New Mexico Health Insurance Exchange. His latest book, Empower – Two Doctors' Cure for Healthcare, was co-authored with Vance Ginn, PhD (Economics). Follow Dr. Deane on X @DrDeaneW or visit www.empowerpatients.info.

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