 Originally published on Substack. A recent Wall Street Journal investigation into Medicaid’s “ghost networks” exposes a hard truth that policymakers refuse to confront: government is very good at expanding healthcare coverage, but consistently fails at delivering health care. Millions of Americans with taxpayer-subsidized Medicaid receive insurance cards listing dozens of “in-network” doctors. But when they try to book an appointment, they face waits, disconnected phone numbers, inaccurate directories, or specialists who haven’t treated a Medicaid patient in years. This isn’t a fluke. It’s the predictable outcome of a healthcare system built on distorted incentives, rigid price controls, and decades of federal policy that disconnect patients from prices, providers, and responsibility. As Washington debates shifting ACA tax credits, the real crisis lies much deeper. What America needs is a structural shift toward personal responsibility, transparent market prices, and competitive markets—the principles behind the Empower Patients Initiative. A 1940s Tax Policy Still Distorts Healthcare Today America’s employer-based insurance system didn’t emerge because it worked better. It arose as a workaround to World War II wage and price controls and was later cemented by the federal tax code. That temporary fix has grown into one of the largest tax expenditures in the federal budget—roughly $27,000 per family in untaxed compensation. As outlined in the Empower Patients initiative, this exclusion:
Any reform that leaves this exclusion untouched cannot fix healthcare’s incentive problem. Redirecting subsidies—no matter how cleverly designed—still props up a system that treats insurers and government agencies as the primary decision-makers rather than individuals. The real free-market correction is straightforward: end the current tax exclusion and redirect some or all of it into portable, no-limit Health Savings Accounts (HSAs). This would immediately strengthen price discipline, force insurers to compete directly for consumers, and restore patient autonomy. Why Medicaid Fails: Misaligned Incentives and Rationed Access The WSJ findings reinforce what health-policy scholars have long understood: Medicaid’s incentive structure guarantees limited access. Reimbursement rates far below market levels discourage specialist participation.  States rely on insurers’ self-reported provider directories, creating widespread “ghost networks.” Patients wait months or years for specialty care, endure canceled appointments, and navigate directories filled with outdated or inactive providers.  That’s not compassion. That’s rationing by delay.  A more humane approach—central to Empower Patients—is for the federal government to give block grants to states so they can experiment with options like allowing Medicaid enrollees to have HSAs that roll over, paired with access to catastrophic private insurance. This model:
Redirecting ACA Credits Doesn’t Fix the Core Problem Proposals to send ACA subsidies directly to individuals instead of insurers are a marginal improvement—but they leave the core structure intact. They subsidize comprehensive, high-premium plans shaped by federal mandates. They insulate consumers from prices. And they entrench third-party payment systems that drive costs higher. Real reform—consistent with the Empower Patients initiative—requires:
That’s how you shift healthcare from bureaucracy to consumer sovereignty. This Also Helps Solve Washington’s Spending Crisis Healthcare is the dominant driver of America’s long-term fiscal imbalance. Medicaid, Medicare, ACA subsidies, and healthcare tax expenditures account for trillions in unfunded liabilities. Ending the employer exclusion and realigning incentives through HSAs would:
This is one of the rare reforms that addresses both the access crisis and the spending crisis simultaneously. The Path Forward A functional, humane, and economically sustainable healthcare system must rest on three principles:
Coverage is a statistic reported to government agencies. Care is what people actually need. And only a market-driven system—rooted in personal choice, transparent prices, and direct accountability—can reliably deliver it.
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 Originally published on Substack. Lower drug prices sound like compassion. They make for great headlines and even better press conferences. When politicians promise Americans relief at the pharmacy counter, it’s natural to want to believe them. But in healthcare, what feels good in the short run often makes things worse in the long run. And nowhere is that truer than with Washington’s latest push for most-favored-nation (MFN) drug pricing. I’ve spent years studying healthcare markets, drug innovation, and government intervention. The uncomfortable truth is this: MFN pricing doesn’t fix what’s broken in healthcare. It doubles down on it. What the White House Just Did This week, Donald J. Trump announced new MFN pricing agreements with nine major pharmaceutical manufacturers, according to the White House fact sheet.  The companies include Amgen, Bristol Myers Squibb, Gilead Sciences, Merck, Novartis, and Sanofi, among others.
Under these deals:
As Politico reports, the Trump Administration highlights dramatic examples of price cuts on drugs for diabetes, cancer, HIV, asthma, and multiple sclerosis. On the surface, this looks like a win. But surface-level wins can be deceptive. MFN Is a Government Fix to a Government-Created Problem MFN pricing starts from a false premise: that high drug prices are caused by market failure. They aren’t. U.S. drug prices are high because government policy has distorted the healthcare market for decades—from the employer tax exclusion that disconnects patients from prices, to third-party payer dominance, to opaque rebates and mandates. The Congressional Budget Office has documented how these distortions drive spending without improving care (CBO analysis). MFN doesn’t fix any of this. Instead, it imports foreign government price controls and enforces them through federal power. That may reduce prices on certain drugs today, but it creates costs that show up years later—when the drugs that never got developed simply don’t exist. The Costs MFN Doesn’t Advertise 1. MFN Weakens Innovation Incentives Drug development is slow, risky, and expensive. It takes 10–15 years and often $2.5 billion or more to bring a single drug to market, according to the Tufts Center for the Study of Drug Development and Pew Trusts. Roughly 90% of compounds fail. When government suppresses prices, expected returns fall—and so does investment. Research finds that a 50% price cut could reduce new drug development by about 30% over time. That doesn’t hurt companies first. It hurts patients waiting for cures. 2. MFN Locks America Into Foreign Rationing Systems Other countries pay less for drugs because they ration care, delay access, and impose hard price caps. Studies show patients in Europe often wait months or years longer for new therapies than Americans (FDA vs. EMA approval comparisons). MFN ties U.S. prices—and innovation—to those systems. That’s not competition. That’s international price-setting by proxy. 3. MFN Expands Federal Control Over the Drug Market Once Washington sets benchmark prices, politics inevitably follows: Which countries count? Which drugs qualify? Which discounts are sufficient? MFN shifts decision-making away from patients and innovators and toward federal agencies—creating a de facto national price-setting regime that crowds out competition. 4. MFN Distracts From Real Reform Price controls are politically easy. Structural reform is hard. MFN allows Washington to claim victory without addressing the real problems it created: distorted incentives, weak price signals, regulatory delays, and a broken payment system. What Actually Lowers Drug Prices If the goal is lower prices without sacrificing future cures, the solution is simple and well-understood in economics: Increase supply. Increase competition. Increase innovation. That’s the foundation of the Empower Patients framework and the work I’ve done with Americans for Tax Reform:
Prices fall when abundance rises. That’s true in housing, energy, food—and healthcare. Short-Term Relief vs. Long-Term Prosperity MFN pricing appeals to frustration. It offers visible, immediate relief while hiding long-term damage. But healthcare doesn’t improve by copying foreign price controls or centralizing decisions in Washington. It improves when patients control their care, innovators are free to innovate, and markets are allowed to work. If we want affordable drugs today and cures tomorrow, the answer is clear: Less government. More markets. Empower patients. Let people prosper. A Final Note I write this newsletter because healthcare debates too often trade economics for emotion—and because the cost of getting this wrong is measured in lives. If you found this analysis valuable, I hope you’ll subscribe if you haven’t already. And if you’re a paid subscriber, thank you. Your support allows me to keep digging into issues like MFN pricing, biotech innovation, China’s industrial strategy, and the real reforms that can actually lower costs and improve care. Check out my policy guide on healthcare with more insights and my latest co-authored book Empower Patients: Two Doctors’ Cure for Healthcare.  Originally published at The Spectator.
President Donald Trump has reopened the healthcare debate with a mix of ideas that do not align. He has pledged to “terminate” Obamacare, then signaled openness to extending ACA subsidies, then endorsed personal freedom accounts that would send money directly to individuals. These proposals represent very different diagnoses of what is wrong with American health care. No serious reform effort can point in contradictory directions. But this problem extends far beyond Trump. Republicans have offered inconsistent signals, with some now willing to extend ACA subsidies again despite a decade of arguing – correctly – that these subsidies inflate premiums and entrench insurer dominance. Others want to preserve zero premium plans that simply shift costs onto taxpayers. Free-market analysts have warned that subsidy “compromises” are simply Obamacare under a new name. Yet Democrats offer no better path. Their answer to rising premiums and shrinking networks is the same solution they apply to every public-policy problem: more government. When their policies increase costs, they respond with even larger subsidies. When regulation distorts markets, they impose more regulation. And when the system falters under its own weight, they insist the only answer is to socialize even more of it. That approach has produced a decade of escalating prices and fewer choices, and expanding the model would only magnify the failures. Trump’s strongest idea is his call to direct funds to individuals instead of insurers. Washington has spent decades funneling billions into insurance companies, insulating them from risk and pushing the financial burden onto families. Giving consumers control over those dollars would force insurers to compete for business and bring price discipline into a system that has lacked it for half a century. From an economic standpoint, incentive alignment is essential. Markets work when consumers – not administrators – drive demand and determine value. But this idea cannot coexist with expanding subsidies. Increasing the size and scope of federal subsidies reinforces the very system that blocks market forces. You cannot fix a failing entitlement by enlarging it. Nor can you create competition when the government continues to dictate coverage rules, distort risk pools, and protect the largest incumbents. Republicans and Democrats alike fall into this government-knows-best trap when they mistake subsidies for reform. Americans now bear roughly $2 trillion in annual healthcare regulatory and transaction costs by governments, an economic burden that inflates prices long before care reaches the patient. Regulation reduces competition, deters new entrants, and forces providers into costly compliance exercises that displace actual care. No reform effort will succeed until this regulatory weight is dramatically reduced. Real reform requires structural change rooted in basic economics. Americans need broad, flexible personal accounts they manage directly. Policymakers must address the 70-year-old employer-sponsored insurance tax exclusion, which I analyze with Dr. Deane Waldman in our Empower Patients work. This tax distortion hides the true cost of care, prevents families from choosing the plans they want, and undermines competition across the system. A genuine market cannot function on top of a tax regime designed in the 1940s. Reform must also expand access to direct primary care, telehealth, and interstate competition while rolling back federal and state mandates that limit options and inflate premiums. These changes would open the door to innovation, lower prices, and restore patient-doctor relationships. Neither party will achieve this outcome by preserving the architecture of Obamacare or doubling down on government control. Democrats promise more subsidies and more centralization. Republicans risk drifting into the same trap by entertaining policies that reinforce federal dominance. Both approaches will lead to higher costs, fewer choices, and deeper dysfunction. Trump’s instinct to expand patient control is a valuable starting point. His support for expanding subsidies moves in the opposite direction. The same is true for Democrats who insist that the answer to every failure is to give government even more power. If America wants a functioning healthcare system, it must choose a path grounded in ownership, transparency, and competition supported by regulatory restraint. This is the only framework capable of lowering costs and increasing access without bankrupting taxpayers. Anything less guarantees more of the same.  Originally published on Substack. Washington has a predictable reflex: when a temporary policy fails, keep it alive long enough to become permanent. That’s exactly what’s happening as several Republican lawmakers push to extend the COVID-era enhanced ACA subsidies—subsidies that were never intended to survive this long. As Isabelle Morales makes brutally clear in her ATR commentary, “Spineless Obamacare ‘Compromise’ Plans Must Be Rejected”, the political class is again mistaking subsidy expansion for reform. And this time, it’s not just Democrats driving the mistake. A few Republicans are now carrying the water. The lawmakers Isabelle names are not fringe players:
Different packaging—same policy failure. Every proposal expands Obamacare, increases dependency, and entrenches federal control. Not one addresses the structural causes of high costs. Not one empowers patients. Not one bends the cost curve in the right direction. They extend the dysfunction while pretending to fix it. Healthcare Was Broken Long Before the ACA—But Washington Keeps Making It Worse Isabelle is right to highlight the latest capitulations. But the deeper truth matters even more: Obamacare didn’t break American healthcare. Government broke it long before—and both parties helped. The original distortion is the employer-sponsored insurance tax exclusion, which encourages employers—not workers—to choose health plans because the benefit is tax-free for businesses but taxable for individuals. This single policy ensures:
Then came decades of mandates, regulations, and price controls. By 2010, healthcare was already a top-down maze. The ACA didn’t unwind any of that. It cemented it. And COVID-era subsidies didn’t solve affordability problems; they masked them. Now that they’re expiring—exactly as Democrats designed—Washington is scrambling to keep the illusion going. Isabelle’s numbers make the danger obvious:
This is not compassionate policymaking. It’s policy avoidance. Free-Market Provide the Real Fix While some lawmakers are bending to political pressure, the free-market movement has already outlined the alternative. Brian Blase at the Paragon Health Institute has shown conclusively that ACA subsidies inflate premiums and reduce insurer accountability. Paul Winfree at EPIC has documented how federal entitlements crowd out innovation and entrench bureaucracy. And Dr. Deane Waldman and I have developed the clearest structural reform available today: 👉 Empower Patients: A Plan to Fix Healthcare Our premise is simple: Healthcare works only when patients—not employers, insurers, or Washington—control the dollars. Empower Patients would:
Nothing in the subsidy-extension proposals does any of this. They merely preserve the incentives that broke the system. The Real Problem Isn’t Obamacare—It’s Policymakers Who Keep Rescuing It Isabelle calls these proposals “spineless,” and she’s right. But the deeper point is this: Every extension—no matter who introduces it—makes healthcare more expensive, less transparent, and more dependent on Washington. Some lawmakers are trying to look pragmatic. Others fear being blamed for premium hikes. Others simply want to avoid the tough structural choices. But governance built on fear is not reform. It’s how bad systems survive. Healthcare will not get better by subsidizing its failures. It will only get better when policymakers choose reforms that trust patients instead of bureaucracies. Closing: Congress Doesn’t Need More Patches. It Needs Courage. This isn’t a Democrat problem or a Republican problem. It’s a Washington problem. The free-market movement—Isabelle, Blase, Winfree, Waldman, and others—has already mapped the way forward. The only question now is whether lawmakers will keep propping up failure or finally choose the harder path of real reform. Patients don’t need more subsidies for a broken system. They need a system where they control their dollars and their healthcare. 👉 If you want more sharp, principled commentary like this, share and subscribe and check out my work to Empower Patients.   Originally published on Substack. Washington has a famous trick: declare something “temporary,” then treat it as permanent the moment anyone depends on it. That’s exactly what happened with the turbocharged Obamacare subsidies created during COVID. These subsidies dramatically expanded eligibility—pulling millions of middle-income Americans into a program never designed for them. Now, according to The Economist, those temporary subsidies finally expire at the end of this month. And unless Congress acts, the Congressional Budget Office says 3.5 million people could lose health insurance coverage over the next few years.  Here’s the twist: Most of these people live in Republican-leaning states. The political panic is predictable. The policy drift is not.
The GOP spent 14 years arguing Obamacare was failing—and they weren’t wrong. But now the enhanced Obamacare subsidies that masked that failure are vanishing, and Republicans are scrambling for a response that doesn’t exist yet. Meanwhile, the Wall Street Journal warns we are “sprinting toward healthcare gridlock” with no unified strategy, no clarity, and no courage. Washington didn’t design this cliff overnight. It built it over decades. Healthcare Didn’t Break in 2010. It Broke Long Before. One of the most important—and least understood—truths in American healthcare is this: Obamacare didn’t break the system. Government broke it long before Obamacare existed. The original fracture was the employer-sponsored insurance tax exclusion, a WWII-era policy that encourages companies—not workers—to purchase health insurance because it’s tax-free for them but taxable for individuals. That distortion alone ensures:
Then came decades of mandates, regulations, price-setting, and federal micromanagement. By the time Barack Obama took office, healthcare looked less like a market and more like a Soviet supply chain with nicer formatting. Obamacare didn’t fix the dysfunction—it cemented it:
Republicans are now discovering a painful political truth: When you let the government control healthcare, politics controls healthcare. And political incentives always push in one direction: Expand subsidies now, deal with consequences later. Well—later has arrived. The Real Problem Isn’t Expiring Subsidies. It’s the System They Prop Up. Republicans are stuck because they’ve spent a decade critiquing Obamacare without uniting behind an alternative. Now the moment of truth is here, and the subsidy cliff is forcing them to choose between:
Neither is politically stable. Only one is economically responsible. And that option requires courage. There Is a Serious Plan: Empower Patients This is why my work with Dr. Deane Waldman—a nationally respected physician and policy scholar—is so critical right now. Together, we developed Empower Patients, a free-market healthcare reform framework available today. It’s laid out in our ATR policy blueprint: 👉 Empower Patients: A Plan to Fix Healthcare The premise is simple: Healthcare fails because patients don’t control the money. Fix that—and you fix everything else. Here’s what Empower Patients does: 1. Move the employer-sponsored tax benefit directly to workers. Use it to fund a no-limit Health Savings Account (HSA) that patients—not employers—control. 2. Make insurance portable. No more job-locked plans. No more losing coverage when switching employers. 3. Restore competition. When patients shop, providers must earn their business. Prices drop. Quality rises. 4. Simplify federal rules and unleash states. Replace Washington micromanagement with transparent markets and flexible regulation. 5. Support the vulnerable directly. Low-income patients on Medicaid receive targeted assistance through their HSAs—not through bureaucratic rationing. In short: Empower Patients shifts power from government and insurers to the people actually receiving care. It’s bold. It would work. And voters would understand it instantly. The Real Question: Do Republicans Have the Courage? The GOP now faces a test of political character. Extend temporary subsidies? Let them expire? Pretend the cliff doesn’t exist? None of these solve the underlying problem. Only one path does: Give patients control of their healthcare dollars and let markets serve them—not bureaucracies. Republicans don’t lack ideas. They lack conviction. If they want to lead, they must stop chasing poll-tested half-measures and start trusting free people to make choices for themselves. The subsidy cliff isn’t a crisis. It’s a wake-up call. Reality Healthcare didn’t collapse because markets failed. It collapsed because government replaced markets. And this is the perfect moment for Republicans to do something they haven’t done in years: Lead! Empower Patients offers the roadmap. Now all we need is the courage to follow it. 👉 If you want honest, pro-growth analysis—and a future where patients, not politics, decide their healthcare—subscribe and share this newsletter. |
Vance Ginn, Ph.D.
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