Originally published at The Daily Signal.

​Seventeen House Republicans gave California Democrats a late Christmas present this month when they crossed the aisle to vote for extending enhanced Obamacare premium subsidies for another three years.

Not only did they move these massive handouts one step closer to permanent entitlement status, but they failed to advance reforms that would actually lower health care costs, like closing the Intergovernmental Transfer loophole that has cost taxpayers tens of billions over time.

The Senate should stop this bill in its tracks and—in anticipation of pushback from those who have never seen a government expansion they didn’t like—prepare to argue to the public why propping up a broken system won’t reduce health insurance premiums. As I argued in The Hill, these subsidies just mask the true cost of government distortion.

​Since the Affordable Care Act passed, average family premiums have exploded to more than $25,000 per year. Government subsidies haven’t stopped that rise. They’ve enabled it—by insulating insurers from competitive pricing and reducing any pressure for meaningful reform.

And while Washington debates whether to extend temporary tax credits, states like California are quietly siphoning off billions in federal Medicaid dollars through legalized budget fraud tied to the Intergovernmental Transfer loophole.

It works like this: State-run hospitals or county agencies send funds to the state Medicaid program. The state counts those as its own Medicaid spending, uses them to trigger a higher Federal Medical Assistance Percentage match from the federal government, and then sends most of the money back to the local provider—often with a bonus.

No new services are delivered. No patients are helped. But billions in federal money change hands—and California is the poster child for using this racket to cover its budget gaps it.

The Paragon Institute calls this the “Local Loop.” I call it Medicaid fraud with federal approval.
And it’s not new. The Government Accountability Office warned Congress about these tactics in 2004. Back then, Medicaid was a fraction of its current size. In March 2025, Paragon estimated that improper Medicaid payments totaled $1.1 trillion between 2015 and 2024—double what the federal government officially reports.
​
California leads the pack. Gov. Gavin Newsom just introduced a $348 billion state budget, despite running a $3 billion deficit—again. His administration continues to lean on Medicaid Intergovernmental Transfer schemes to extract more money from Washington instead of enacting real fiscal discipline.
This scam doesn’t just fleece taxpayers. It undermines care.

In California, public ambulance providers that participate in funding transfer schemes are reimbursed more than $1,000 per Medicaid transport. Private ambulance services often receive a quarter of that. The result? Private providers leave the market, rural patients suffer, and public-sector monopolies get even stronger.

The real path forward is not more subsidies, whether via the Affordable Care Act or Medicaid. It’s structural reform.

We should start by shutting down Intergovernmental Transfer abuse—ending circular transfers, enforcing transparency in Medicaid financing, and tying federal dollars to real services delivered to real patients.

Then we need to empower patients directly. In my Empower Patients Initiative with Dr. Deane Waldman, we propose giving Medicaid recipients no-limit Health Savings Accounts, funded through state block grants. These accounts allow individuals to pay providers directly, shop for care, and make health care decisions on their terms.

​Paired with time limits and work incentives for work-capable adults, this model would reduce dependency, lower costs, and improve outcomes. It would also inject long-overdue competition and price transparency into a system that’s been shielded from both.

We shouldn’t spend another dollar on expanding a broken health care system where waste, fraud, and restricted access are the norm.

The Senate has a chance to do something the House didn’t: say no to making pandemic subsidies permanent. Say no to another taxpayer-funded bailout for insurers. And say yes to fixing the corruption and distortion that actually drive- up health care costs.

Let the subsidies expire. End the Medicaid shell games. And finally start empowering patients—not bureaucracies—to take charge of their care.

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:

• hides the actual cost of insurance,
• reduces wage transparency,
• traps workers in employer plans,
• inflates premiums by subsidizing overconsumption, and
• shifts power away from patients and toward employers and insurers.

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.

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:

• empowers low-income families to choose their providers,
• expands access by integrating them into competitive markets,
• encourages preventive care and responsible spending, and
• reduces long-run costs by restoring price signals.

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:

• ending the employer tax exclusion,
• allowing no-limit HSAs to everyone, and
• deregulating provider supply.

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:

• reduce long-run federal tax expenditures,
• lower premiums by increasing price sensitivity,
• reduce reliance on federal subsidies,
• encourage preventive and cost-effective care, and
• naturally slow the growth of federal health spending.

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:

• Universal, portable, no-limit HSAs funded by redirecting tax exclusions directly to individuals
• Block grants to states for Medicaid HSAs with rollover, integrating low-income families into the same competitive marketplace
• A supply-expanding, price-transparent market driven by competition, innovation, and voluntary exchange

​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.

Originally published on Substack. 

​Another week, another blockbuster story showing why America keeps paying more for “coverage” while getting less actual healthcare. The Wall Street Journal just dropped a devastating investigation into Medicaid’s provider “networks” — and it’s exactly the kind of systemic failure you’d expect when government tries to centrally manage a $900 billion program through giant insurers who get paid whether patients receive care or not.

The headline says it all: Medicaid insurers promise lots of doctors. Good luck seeing one.

This isn’t a glitch. It’s the inevitable result of a government-run system built on incentives that reward paperwork, not healing.

Let’s walk through what’s happening — and why it’s yet another reminder that coverage ≠ care.

​A System That Pretends to Work, Until You Actually Need It

The Journal found something stunning but not surprising: More than one-third of doctors listed in Medicaid networks never saw a single Medicaid patient last year. In psychiatry and other key specialties, almost half saw zero. That’s not a network. That’s a ghost town with a phone directory.

And behind every one of those ghosts is a real family left waiting, pleading, or driving 90 miles for care that should be accessible in their community.

A few examples that hit hard:

• A mother in Illinois desperately searching for a child psychiatrist after her son repeatedly ran away — placed on a 12–18 month waitlist despite dozens of “in-network” options.
• A man in Texas told by every rheumatologist in his plan that they aren’t accepting Medicaid patients. His fallback advice? “Don’t get sick.”
• A baby in East Texas with a rare neurological disorder — forced to travel to Dallas, only to miss the appointment when Medicaid’s ride-share system failed.

This is not a safety net. It’s a web of bureaucratic illusions.

Why This Happens: Bad Incentives, Bad Data, Big Gatekeepers
​
Here’s the uncomfortable truth: Medicaid pays providers far less than private insurance.

That means many specialists have to choose between treating a patient at a loss or keeping their doors open. So they do the rational thing under a distorted system: They limit Medicaid slots, or stop taking Medicaid altogether.

Meanwhile:

• Insurers get paid by the state whether patients are seen or not.
• States rely on insurer-reported networks rather than outcomes.
• Directories are filled with misidentified, out-of-state, retired, or long-gone doctors.
• Federal rules focus on maintaining “adequate networks,” not on actual access.

​That’s how you end up with South Carolina counties supposedly full of neurologists who live in Florida, or Texas networks that list nurse practitioners as psychiatrists.

Central planning strikes again!

Coverage Isn’t Care — and It Never Has Been

Medicaid enrollment has exploded in the last decade. Costs have surged. Insurer revenues have soared into the tens of billions.

But none of that magically increases the number of specialists. None of it shrinks waitlists. None of it fixes workforce shortages created by regulations, licensing bottlenecks, scope-of-practice restrictions, and reimbursement ceilings so low that many clinics simply cannot survive.

The result?

A massive program where patients technically have coverage, but practically have access to… nothing. And politicians still pat themselves on the back for “expanding” it.

The Human Cost: Delays, Desperation, and Declining Health

We’re not talking about mild inconveniences. These failures hit the most vulnerable:

• Kids with autism who need psychiatric care now, not in 18 months.
• Patients with fungal meningitis seen by primary-care doctors because specialists are booked until 2027.
• Families forced to choose between a 2-hour drive or no care at all.

When government coverage crowds out private coverage and overwhelms clinics, the people who should benefit most end up at the back of the line. And the tragedy is predictable — because Medicaid is designed to expand enrollment, not solve underlying supply shortages.

We Need a Healthcare System Built on Voluntary Exchange, Not Bureaucratic Promises

If you take one insight from the Journal’s reporting, let it be this: A system based on inaccurate networks, bureaucratic contracts, and centrally dictated prices can’t possibly deliver timely, high-quality care.

People need choices. Doctors need flexibility. Patients need direct access. Markets need freedom to innovate, compete, and meet demand.

We don’t need more “coverage.” We need more care — delivered through a system where providers are rewarded for serving patients, not gaming directories. The big insurers play the government’s game because the money is too good. Families play by the rules and still lose. It’s time to flip the incentives.

The Path Forward

Real reform starts with simple principles:

• Pay directly for care, not intermediaries.
• Remove the regulatory bottlenecks that restrict supply.
• Empower patients with portable dollars in no-limit HSAs and transparent market prices.
• Encourage innovative delivery models outside bureaucratic control.

Healthcare flourishes when people exchange value freely — not when states procure care like they’re buying office supplies. The Journal exposed the façade. Now policymakers need the courage to build something real.
​
Don’t miss the WSJ article where you can find the charts above and more stories:

Medicaid Insurers Promise Lots of Doctors—Good Luck Seeing One: https://www.wsj.com/health/healthcare/medicaid-insurers-doctor-networks-appointments-72f9c11f

More soon. Stay well — and let’s keep fighting for a system that actually lets people prosper.

Originally published on Kansas Policy Institute. 

Governor Laura Kelly’s Healthcare Access for Working Kansans (HAWK) Act was sold as a “middle-of-the-road” plan to expand Medicaid to 150,000 more Kansans when it was introduced during the 2025 legislative session. But there’s nothing moderate about growing a failing federal program that already leaves millions of patients nationwide waiting in line for care. Expanding bureaucracy isn’t compassion — it’s doubling down on what’s broken.

As I explained recently in my column at the American Institute for Economic Research’s The Daily Economy, America’s healthcare crisis isn’t a market failure — it’s a government failure. The U.S. now spends nearly $5 trillion a year on healthcare, almost one-fifth of the entire economy. But half of that spending never reaches a doctor or a patient. It disappears into what Dr. Deane Waldman and I call BURRDEN: Bureaucratic, Unaccountable, Rigid, Regulated, Distorted, Expensive, and Needless costs.

Our research finds that as much as $2.5 trillion in annual waste is spent on paperwork, compliance, and red tape — not on care. Those dollars don’t heal anyone; they feed bureaucracies. Expanding Medicaid in Kansas would only make this worse by adding more layers of administration without improving access to doctors.

The Myth of “Coverage”

Governor Kelly argues that expansion will “protect rural hospitals” and “ensure affordable care” by bringing billions of federal dollars to Kansas. But coverage does not equal access. Nationwide, more than 80 million Americans are enrolled in Medicaid, yet many can’t find a doctor who will take them. Reimbursement rates are so low that fewer physicians accept new Medicaid patients — especially in rural areas. Those who do are overwhelmed, leading to long waits.

This is what we call death by queue: a Medicaid card promises care, but patients wait months for appointments while their conditions worsen, or even result in death. Adding 150,000 Kansans to this system won’t shorten the lines; it will lengthen them.

Kelly also claims expansion will “create 23,000 new jobs.” But history shows most of those jobs will be bureaucratic — not medical. The Bureau of Labor Statistics projects that medical administrators will grow 23 percent over the next decade, compared to just 3 percent for physicians. America is producing more paper-pushers than healers. That’s not a sign of success — it’s the symptom of a broken system.

Medicaid Expansion Crowds Out Care

Kansas already spends more than 20 percent of its state budget on Medicaid, diverting resources from priorities like education, infrastructure, and tax relief. The HAWK Act would deepen that dependency, tying Kansas more tightly to Washington’s mandates and debt.

Supporters claim the program will be “free” to Kansans because of federal matching funds. But those funds come with strings attached — and they won’t last. When the federal share drops, Kansas taxpayers will be left footing the bill for a larger, slower, and less effective bureaucracy.

Worse, expanding Medicaid doesn’t just harm state finances. It harms innovation. By imposing government-controlled prices and rules, Washington discourages investment in new treatments and technologies. A study from the National Bureau of Economic Research shows that price caps can slash early-stage drug R&D by up to 60 percent — meaning fewer cures and longer waits for patients.

A Better Path: Empower Patients

​There’s a better way forward — one that restores access, affordability, and accountability without expanding bureaucracy. The Empower Patients Initiative, which I co-authored with Dr. Waldman, lays out reforms that could transform Kansas’s healthcare system by freeing it from federal micromanagement:

• No-Limit Health Savings Accounts (HSAs): Let Kansans save and spend their own healthcare dollars tax-free, without arbitrary caps. 
• Medicaid Block Grants: Give Kansas the flexibility to tailor its own system — integrating Direct Primary Care networks and local clinics that better serve rural areas. 
• Direct Patient-Doctor Relationships: Cut out middlemen like insurance companies and government billing schemes so doctors answer to patients, not bureaucrats. 
• Transparency in Pricing: Encourage hospitals to post real prices upfront, as successful private models like the Surgery Center of Oklahoma already do. 

If we cut BURRDEN in half, $1.2 trillion could be redirected nationally from bureaucracy to patients and providers. That would reduce family costs, raise take-home pay, and expand access to care — all without growing government or debt.

The Moral Case for Kansas

This debate isn’t abstract. It’s about Kansans forced to choose between prescriptions and groceries, about rural families losing access to care, and about doctors burning out while administrators multiply. The moral case is simple: stop rationing by bureaucracy and give patients the dignity of choice.

Healthcare should not be a government favor distributed by politicians. It should be a service exchanged freely between people: doctors and patients. Expanding Medicaid won’t fix Kansas’s healthcare system — it will expand its problems. If lawmakers truly want to expand care, they should empower patients, not bureaucrats.

Originally posted at The Center Square. 

There are many domestic issues of sufficient magnitude to be honestly labelled crises. President Donald Trump has begun to address illegal immigration issues, the woke virus, and even the deep state. But the budget budget deficit and “entitlements” are still considered untouchable.

Health care has been a crisis for more than 60 years, increasingly unaffordable and even harder to get medical care. That is despite federal “fixes” such as Medicare, Medicaid, EMTALA, HIPAA, and ACA to name the more well known of a myriad of health care acts, executive orders, mandates, directives, rules, and regulations.

Washington’s solutions for health care have exacerbated the crisis. Wait times for primary care can now be as long as 132 days. Americans are dying while waiting in line for medical care – death by queue. In 2024, U.S. tax revenue collected was $5 trillion while total health care expenditures were $4.8 trillion, most of it from taxpayers. Average household medical expenses were $32,066.

Washington’s regulatory approach has consistently produced fixes-that-fail-or-backfire (archetype from systems thinking). The third-party payment structure disconnects patients from their money and usurps medical autonomy. Federal regulations divert half of all healthcare spending from paying for care to fund federal BURRDEN: bureaucracy, unnecessary rules and regulations, directives, enforcement, and noncompliance activities.

The lack of free market forces causes shortages, poor quality, slow service, and overspending, just what Americans experience today.

Health care must be fixed, or two things will happen: increasing numbers of Americans will die needlessly, and the U.S. will go broke.

A different approach has been suggested that involves unwinding the federal regulatory apparatus, reconnecting people with their physicians, and regaining control of personal health care spending. This plan, called the Empower Patients Initiative will immediately meet intense resistance from political realists who will shout the following.

• Health care is a right – that makes it a federal responsibility.
• Congress will never, ever go for EPI.
• We couldn’t possibly undo all those regulations.
• People can’t shop for health care like they do for a car.
• Think of all those people thrown out of work.
• Entitlements are the third rail: touching them is political suicide.
• Government health care works in countries like the U.K. and France.  So, we need total federal control, like single payer.

Medical doctors and economists, like us, don’t think like political realists. First, they seek out the etiology of sickness or the root cause of system failure, giving no credence to what is considered politically possible. Then, they “dissolve” the root cause, thereby curing the patient or system.

The root cause of our health care crisis is federal control. The cure is to return control to individuals, called we the patients. The Empower Patients Initiative does that.

EPI is a multi-step, multi-year plan that gradually restores financial control to Americans, reduces federal bureaucracy, saves taxpayers trillions of dollars, and achieves affordable, accessible health care for Americans.

Some of the EPI steps include:

1. Preparation: Campaign to educate and energize the public includes writings, videos and public service announcements. Books for the general audience are released in English and Spanish titled, Empower Patients – Two Doctors’ Cure for Healthcare.
2. Transfer current employer-sponsored contributions from insurance companies – average $23,968 in 2023 – to employee paychecks. Tax-free if placed in no-limit HSA.
3. No-limit HSA: New family medical spending account with no restrictions on health care spending or deposit limits.
4. Medicaid block grants: States know best how to serve their residents; fixed amount given annually by Washington.
5. Medical safety nets: States choose how to provide for the medically vulnerable; one size definitely does not fit all.
6. Deregulate insurance: Allow people to purchase whatever policies they want.
7. Medicare: Transfer funds to senior no-limit HSAs.
8. Radical reduction of unnecessary bureaucracy saves taxpayer dollars.

These actions will transfer financial and thus medical control from third parties – private insurance and the federal government – to individuals and reestablish free market forces. Consumers – we the patients – will be well-funded payers; with a powerful incentive to economize, spending will decline. Sellers – providers, care institutions, and insurance companies – will have to compete for patients’ dollars, driving prices down and greatly improving service.

While resistance to EPI will start with the political class, others will initially be skeptical.

Congress will vigorously oppose EPI as it takes away power and money from their control. It is up to the voters to put people into Congress who will prioritize patients first and adopt the EPI.

The public may initially object as EPI is a big change, and change makes people nervous. Hopefully, the preparation campaign, particularly the “Empower Patients” booklet, will resolve the misconceptions and false facts that plague healthcare.

Medical doctors are likely to resist, at least at first. They are socialized so as not to compete with each other and will be reluctant to advertise or market their services.

However, those who embrace EPI with its free-market principles will quickly experience the advantages: bureaucratic hassle gone, greater income, more time with their patients, and a return to professional satisfaction.

In the fable of the lady and the tiger, the man doesn’t know which door holds what. In health care today, there are two choices: federal control or EPI, but we know which one leads to death (by queue).

EPI may be unknown to many people, but anything is better than dead and broke, which is where health care is currently taking we the patients.