From Patients in Line to Patients in Charge

Originally published on Substack. 

Want proof our healthcare system is upside down? Look no further than Georgia’s Medicaid “Pathways” program.

A watchdog found it spent $54 million on paperwork and bureaucracy last year but only $26 million on actual care. Out of more than 246,000 people eligible, just 6,600 signed up. The system grew; patients didn’t benefit. (AP)

Meanwhile, the AMA reported that U.S. healthcare spending jumped 7.5% in 2023 to nearly $4.9 trillion—$14,570 per person—outpacing GDP growth for the first time since the pandemic. (AMA) Families are paying more, waiting longer, and still getting rationed care.
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That’s not compassion. That’s failure.

Economics 101: Spending ≠ Care

As an economist, the problem is obvious: incentives are broken.

• When someone else pays, prices rise. Employer insurance and government programs shield patients from costs. Economists call this “moral hazard.” Demand goes up, providers charge more, and innovation shifts from improving care to navigating billing codes.
• The tax code hides the true cost. The $300 billion employer tax exclusion reduces wages and ties workers to jobs. You don’t pick the coverage that’s best for your family—HR does. That’s “job lock.”
• Programs reward enrollment, not outcomes. Medicaid costs over $800 billion annually and now covers nearly 1 in 4 Americans. But outcomes are often no better than for the uninsured. Georgia’s fiasco proves it: bureaucracy flourishes, patients languish.
• Regulations choke supply. Certificate-of-need laws, scope-of-practice limits, and FDA delays reduce competition. More dollars chase fewer services. Prices rise, access falls.

Bottom line: America spends nearly one-fifth of GDP on healthcare, but misaligned incentives mean patients wait in line while administrators cash checks.

​Four Reforms to Empower Patients

1. Move the tax benefit to workers.
   Instead of giving employers a giant tax break, give it to workers to put in a no-limit HSA. That means higher wages, portable coverage, and the freedom to choose insurance—or direct care—that actually fits your family.
2. Block grant Medicaid to states.
   Washington’s open-ended funding rewards overspending. Block grants would cap costs, unleash state-level innovation, and encourage tools like Empowerment Accounts—consolidating benefits into a single, flexible account that tapers with work and puts families in control.
3. Slash bureaucracy.
   Nearly 50% of U.S. health spending goes to administration—far above the OECD average. That’s absurd. Cut billing mandates, scope restrictions, and CON laws. Free doctors and nurses to focus on care, not coding.
4. Unleash innovation.
   America’s biotech lead is slipping: China now launches more clinical trials and produces nearly 50% more STEM PhDs. Our edge is dulled by price controls, FDA delays, and subsidies. Patients win when innovators compete. Faster cures, lower costs—that’s how prosperity happens.

What This Means for Families

These reforms aren’t about abstract theory—they mean real improvements for real people:

• Bigger paychecks. Workers keep the tax benefit, not employers.
• Better access. States can tailor programs instead of bowing to D.C. rules.
• Lower costs. Competition drives down prices when patients control dollars.
• More cures. Innovation thrives when government gets out of the way.

Compassion isn’t measured by how many dollars Washington spends. It’s measured by whether families can get a doctor’s appointment without waiting months, afford their prescriptions, and actually live healthier lives.

My Take

Healthcare isn’t broken because of capitalism—it’s broken because government policies warped the market. The system rewards bureaucracy, not patients.

Economics teaches us that incentives matter. Fix the incentives, and you fix the outcomes. By moving the tax benefit to workers, block granting Medicaid, cutting red tape, and unleashing innovation, we can flip the incentives, restore market discipline, and put families back at the center of healthcare.

It’s time to measure success not by how much government spends, but by how well people prosper. It’s time to move from patients in line to patients in charge.

Listen & Learn More:

Empower Patients Initiative: https://www.vanceginn.com/letpeopleprosper/empower-patients-book-and-research

🎙️ Let People Prosper Show for deep dives on healthcare reform.

📖 Alliance for Opportunity: Empowerment Accounts

Final Thought: Healthcare reform isn’t about Washington saving the system. It’s about trusting families, empowering states, and unleashing free markets. That’s how we get from dependency to prosperity.