Rip-off healthcare is ripe for the Trump treatment

There are two big items he could press which might garner support from a wide cross-section of the 116^th United States Congress and form the basis of a Trump 2020 re-election bid.    

The first – the break-up of Big Tech – is already the subject of much debate among conservative Americans as well as left-wingers upset at what has become of the once-adored tech industry they regarded as their own. From Steve Bannon, the President’s former right-hand man, to Elizabeth Warren, the left-wing Democrats’ darling, the cry goes out: “Break up Facebook! And Google! And the other tech companies whose market dominance feels to so many capitalists like a proper case for anti-trust action.”

Such a move feels like it would be a good fit for Trump – but it would take enormous political acumen and focus. And the Supreme Court would make the ultimate call as they did with Big Oil. So maybe not.   

But there’s another populist cause that could be more fruitful and have much more impact on the lives of ordinary Americans. It’s less eye-catching than breaking up Big Tech but to tackle this problem would be audacious and, again, could find support from both sides of the Congressional aisle. There are rumblings he’s going to have a stab at a package of reform in a speech this month. But some think it might be a better idea to just tear that up and go for something really radical.

To act in this area would be a case of Trump delivering on something he already promised. During his presidential campaign of 2016, he claimed: “They are getting away with murder!”  He was not – on this occasion – referring to Mexicans or Muslims or even the Clintons. He was referring to the bosses of the pharmaceutical companies and their ability to gouge money out of America’s chaotic and wasteful healthcare system. As Trump put it: “Pharma has a lot of lobbies, a lot of lobbyists, a lot of power. And there’s very little bidding on drugs.”

Another prominent politician said days later that Trump was “exactly right”. That politician was the Democratic presidential hopeful Bernie Sanders.    

In fact, dealing with the pricing of drugs and medical devices could be political rocket fuel for Trump. America’s real problem with healthcare is not the unfairness that so obsesses foreign commentators; no, the real problem is the opacity of the system and the waste and suffering that causes.

Almost nothing about US healthcare is transparent. It is an utterly broken market in the control of the drug companies, the hospital companies, the insurance companies and the doctors themselves.

I know this broken market well. In 2009, in Washington DC, my little boy, Sam, was diagnosed with Type 1 diabetes – an incurable and potentially fatal condition. Amid all the personal chaos and confusion of our family coming to terms with this, the US healthcare system sprang into life. First, there was a hospital stay. Then, insulin was prescribed (he has to inject it whenever he eats), and eventually an insulin pump provided along with a bewildering array of test-kits and monitoring devices.

So who paid for all this? And how fair were the prices?

This was never clear – precisely because of that opacity. I paid quite a bit up-front myself. I remember, in those dazed first days after Sam came out of hospital, trips to the pharmacist that left me hundreds of dollars poorer. Then it got pricier still, but was taken out of my hands. The pump salesmen (yep, they exist) competed with each other to sell us their device. But this time we didn’t pay: the insurance company paid. Only, they didn’t pay either. My company (the BBC) had bought an insurance policy for all its staff. So the BBC paid. Only, they didn’t pay either.  

Insurance costs are tax deductible for companies so, in the end, you guessed it: the taxpayer paid! And bigly: the Brookings Institution Tax Policy Center says the combined tax deductions for employees and employers add up to a whopping $260 billion annually. It’s the single largest tax expenditure of the federal government.   

The point is that this system encourages – essentially, it demands – an utterly dysfunctional allocation of resources. It is in nobody’s interests to keep costs down. It is in nobody’s interests to keep treatments proportionate and sensibly applied.   

The results are poisonous. Yes, there are sudden outrageous increases in drug prices – the recent controversy over the EpiPen was an example – but there’s also the problem of an entire system that bleeds Americans dry over the long-term. And for which insurers carry much of the blame.

The headlines focus on the costs borne by individuals, such as the hikes in insurance premiums that users of Obamacare are suffering right now. But most Americans are insured through their employers. According to the Kaiser Family Foundation, employer costs for family health coverage went from $4,200 in 1999 to $12,600 in 2015.

This increase, way above inflation, drove employers to seek more in subsidy from the government but it also kept wages down as they struggled to cope with higher insurance policy costs. It was, in other words, one of the key drivers of the middle-class wage stagnation that has so obsessed America and so hurt the life chances of a generation.  

And the insurers are doing pretty well out of it all. The one that paid Sam’s healthcare costs, was Aetna. Their stock value has gone up by well over 400% in the past ten years.   

Trump could attack this. He could demand transparency and regulate so that everyone knew at every stage of the process who was paying and how much. It would start an explosive nationwide debate. It would put the drug companies and the insurers in the dock, which is where many believe they belong. It could radically reduce costs.   

The downside? Well, politically, there are those lobbyists that Trump himself referred to and who are already tooling up for battle. They would argue that Big Pharma pays big tax and does big business in America. Does Trump want that to carry on?   

Again my personal story is relevant. Sam’s insulin pump was provided by a small and massively successful company called Insulet. It rose from nothing to become a multi-billion dollar outfit. It did that on the back of the ability to charge what it would regard as a decent whack to those Americans who chose the product. Without that whack: no R&D, no Insulet, no pump.     

This is probably why Donald Trump has held back so far. But the day is fast approaching when someone in the White House (or someone on Fox News) mentions that campaign speech in which Trump eviscerated Big Pharma and wonders aloud: “Why don’t we do this?”  

It would be disruptive; it would discombobulate, it would confuse friends and enemies alike. It would be pure Trump. And it might be a good idea too.      

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