Savage: With healthcare costs soaring, Michigan needs better solutions

Healthcare spending is expected to rise at a rate outpacing inflation next year, a seasonal announcement that Michigan residents have sadly become accustomed to. In reaction—like clockwork—Democrats are misguidedly pushing to dump even more taxpayer money into the system, a short sighted strategy that will only pressure prices to rise further.

Since Obamacare opened the floodgates in 2014, healthcare spending has soared more than 60 percent. Even Sen. Bernie Sanders—a self-described Democratic Socialist—acknowledges that Obamacare is not working.

Rather than shutting down the government to achieve a temporary fix, as Sen. Chuck Schumer is so enthusiastically executing, policymakers need to get serious about pursuing a long-term cure to healthcare inflation. In addition to refraining from supercharging government subsidies, fostering pricing transparency and more patient choice should be a priority.

Republicans in Congress have already gotten the ball rolling by passing President Trump’s reconciliation package earlier this year. Among smart tax provisions, the new law gives Americans more flexibility on how to spend their Health Savings Accounts (HSAs). More specifically, changes allow Michigan residents to spend up to $150 a month from their HSAs toward something called direct primary care.

It’s an alternative to traditional insurance-funded, hospital-based medical care that operates more like a Netflix subscription or gym membership. For a modest monthly fee, patients can access an à la carte menu of essential healthcare services—all without the headaches, bloated costs, and delays associated with bureaucracy and middlemen.

With clear prices and low-cost physicals, sick visits, diagnostic tests, and more, direct primary care has already expanded affordable care options to hundreds of thousands of Americans. In addition to more affordable prices, as a direct primary care physician myself, I have witnessed firsthand how patients benefit when doctors can focus on care rather than paperwork.

But Congress should not be satisfied with this progress; more work remains.

For instance, Congress can rein in other federal healthcare schemes that contribute to rising costs. The 340B Drug Pricing Program is a prime example. The program was initially drawn up as a government price control to cap the price of prescription drugs in low-income communities. This radical departure from market influences aside, the program has since morphed into a major revenue engine for large hospital networks. Rather than passing down financial savings that come from government-mandated discounts to patients, one report from Magnolia Market Access finds that one-third of 340B savings are directed to hospital financial portfolios.

Another report from the Job Creators Network reveals even more troubling news. Hospitals that are participating in the federal program are concurrently stashing billions of dollars outside the U.S.—in places ranging from the Caribbean to Eastern Europe. In fact, some of those institutions are right here in Michigan, with four participating hospitals holding over three billion dollars in such accounts.

Given the opportunity to profit, it’s not surprising that the number of participating hospitals has increased 60-fold since the program’s inception. Just in the last 12 years, the program has ballooned from $6.6 billion to $44 billion. And that bloat is propping up high healthcare and prescription drug prices across the board.

The Department of Health and Human Services is already moving on the issue by deploying a pilot program that intends to at least somewhat address program abuse. But there is only so much the executive branch can do alone without the help of Congress.

As healthcare costs in Michigan are set to climb yet again, Washington needs to stop going back to the same old well of spend-now-ask-questions-later gimmicks and stop gaps. Our healthcare system does not need more government subsidies. Instead, it needs bold reforms that prioritize patients over institutions.

It’s high time for Michigan’s elected leaders in Washington to get back to work.

Chad Savage, M.D., is a policy fellow at the Docs 4 Patient Care Foundation, the founder of YourChoice Direct Care in Brighton, and a partner of the Job Creators Network Foundation.