Empower Patients, Not Bureaucracies

Written Testimony Submitted to the Texas House Select Committee on Health Care Affordability

Chairman Frank and Members of the Committee,

Thank you for examining health care affordability. Texans do not need another hearing to know the system is broken. They feel it in premiums, deductibles, surprise bills, delayed appointments, narrow networks, and employers paying more for coverage while workers take home less.

The North Star should be simple: restore the relationship between patients and doctors through voluntary exchange, transparent value, personal responsibility, and real competition. Every reform should be judged by whether it moves Texas closer to that goal or deeper into today’s government-dominated, third-party payment maze.

Texas and America do not have a fully socialist national health care system like some countries, where the government directly owns or centrally controls nearly everything. But we do have a deeply distorted, mostly socialized system. 

Government programs dominate payment. Federal tax policy pushes people into employer-sponsored insurance. Regulations smother doctors. Third-party payers stand between patients and care. Prices are fake, hidden, or irrelevant to the person receiving the service.

That is not a market. It is managed care through bureaucracies.

The cost is staggering. National health expenditures reached $5.3 trillion in 2024, or $15,474 per person, consuming 18 percent of GDP. Medicare spending hit $1.118 trillion, Medicaid spending reached $931.7 billion, and private health insurance spending climbed to $1.645 trillion. Hospital spending alone reached $1.635 trillion, while physician and clinical services exceeded $1.109 trillion. 
Health spending is projected to grow faster than GDP through 2033, pushing health care toward 20.3 percent of GDP.  

That is not just because America spends too much but also because patients control too little.

In 2025, the average employer-sponsored family premium reached $26,993, up 6 percent in one year, while workers directly contributed $6,850 on average.

The broader 2025 Milliman Medical Index estimates the annual health care cost for a family of four in a typical employer-sponsored plan at $35,119.   

This is a family budget crisis, a wage crisis, and a competitiveness crisis.

The root cause is the third-party payment system. And one of the original policy mistakes behind that system is the federal tax exclusion for employer-sponsored health insurance. 
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Employer-paid premiums are excluded from federal income and payroll taxes, which lowers the after-tax cost of compensation paid as insurance instead of wages and helps explain why most families get coverage through employers rather than owning portable, patient-controlled coverage themselves.  
 
This tax distortion ties insurance to jobs, rewards more expensive coverage, hides true compensation costs, and separates patients from prices.

That mistake should guide the committee’s thinking: do not add more layers to a bad system. Remove the distortions that made the system bad.

The Americans for Tax Reform’s Empower Patients Initiative, my health care policy guide, the Empower Patients website, and the book with Dr. Deane Waldman, Become an Empowered Patient, all point in the same direction: empower patients, restore doctors, and get government out of the way.

Cost Drivers: The BURRDEN Is the DiseaseThe committee’s first charge asks about statutory, regulatory, and administrative burdens, along with fraud, waste, and abuse. That is where reform should begin.

A major JAMA review estimated waste in U.S. health care at $760 billion to $935 billion annually, including administrative complexity, pricing failures, poor care coordination, overtreatment, fraud, and abuse. The issue is what I call BURRDEN: bureaucracy, unnecessary rules and regulations, red tape, directives, enforcement mandates, and noncompliance costs. This total is likely about $2 trillion per year.

Every hour a doctor spends coding, complying, or begging for prior authorization is an hour not spent with a patient. Every dollar spent feeding the administrative machine is a dollar not spent lowering prices or improving care.

Texas should reduce mandates, protect independent physicians, expand safe scope-of-practice flexibility, speed licensing recognition, reduce certificate-like barriers, and make direct patient-doctor contracting easier. Texas already recognizes that direct primary care is not insurance. That principle should be expanded, protected, and treated as a model.

Insurance Design: Coverage Is Not Care

Insurance should protect against major, unexpected expenses. It should not control routine care.

Today’s system turns patients into bystanders. High deductibles alone do not create consumer choice. A family with a large deductible, no clear cash price, and no account they control is not empowered. They are trapped.

Texas should encourage direct primary care, cash-based specialty care, catastrophic insurance, and larger, more flexible Health Savings Accounts. Employers should be free to offer direct care options that provide routine care without routing every interaction through insurers. The goal should not be more “coverage” on paper. The goal should be affordable care when Texans need it.

Medicaid: Block Grant It and Let Texas Lead

Medicaid should help only the most vulnerable Texans, but the current model is fiscally unsustainable and often poor at delivering timely access. It too often forces patients into a government-centered system with limited provider participation and expensive hospital-based care.

Texas should pursue a federal Medicaid block grant with maximum flexibility. Then Texas should build its own model around patient-controlled accounts, direct primary care, charitable care, community clinics, and incentives for responsible use. Medicaid recipients should have health care dollars they can use wisely, not just a government card that too often leaves hospitals as the default option.

A Texas Medicaid model should reward prevention, primary care, price awareness, and patient responsibility. Washington should help fund it and then get out of the way.

Consolidation: Fix the Incentives

The committee is right to examine consolidation. Hospital and provider consolidation can reduce choice, weaken competition, and raise prices. But consolidation is often a symptom of bad policy.

Independent doctors sell to hospitals because compliance costs, payment rules, and contracting burdens make independence harder. Hospitals buy physician practices because facility-based billing can pay more. Insurers, providers, and middlemen consolidate because the rules reward scale over service.

The solution is not to micromanage every transaction from Austin. The solution is to restore competition: remove barriers to entry, protect independent doctors, expand direct care, allow cash-pay alternatives, and stop rewarding large systems simply because they know how to navigate bureaucracy.

The same applies to pharmacy benefit managers. PBMs are not the root problem. They are an invention of the current broken third-party payment system. Texas should punish fraud, deception, and anticompetitive conduct, but scapegoating PBMs will not fix the underlying disease. Fix the money flow, and many middleman problems shrink.

Transparency: Helpful, But Not the North Star

Price transparency is useful only if the price is real.

A hospital charge is not a cash price. A negotiated insurer rate is not necessarily what the patient pays. A posted estimate may exclude facility fees, labs, imaging, anesthesia, or complications. Transparency can help, but transparency inside a distorted payment system can become just another compliance exercise.

The North Star is not merely revealing prices. It is creating a market where prices matter. Patients need real cash prices, money they control, and the freedom to choose another provider.

The Texas Path Forward

Texas should not copy Washington’s broken model. Texas should lead with first principles.

A serious reform agenda should:

1. Expand direct primary care and direct patient care.
2. Reduce mandates that drive up premiums.
3. Seek Medicaid block-grant flexibility.
4. Protect independent doctors from regulatory suffocation.
5. Treat transparency as a tool, not a cure.
6. Push federal reform of the employer-sponsored insurance tax exclusion so workers can own more wages and control more health care dollars.

Health care reform should begin with a moral premise: patients are not billing codes, and doctors are not clerks for insurers or government agencies. They are people engaged in one of the most important relationships in society.

The committee should use this North Star: Does this reform move power from bureaucracies to patients, from third-party payers to doctors, and from government control to voluntary exchange?

If yes, Texas should advance it.

If no, Texas should reject it.

Get the government out of the way where it does not belong. Put patients in control of their health care dollars. Let doctors heal. Let markets work. Let Texans prosper. Glad to help.

Thank you,

Vance Ginn, PhD

President, Ginn Economic Consulting

Related resources include the Empower Patients Initiative, Empower Patients, my health care policy guide, my work at Ginn Economic Consulting, and Become an Empowered Patient in English and Spanish.