After promising but failing to deliver a healthcare plan in his first term, President Trump has finally announced his plan to lower healthcare prices as part of his new “affordability” campaign. The old adage about the elephant laboring mightily and delivering a mouse applies here. The proposal does not solve anything, but it does show how threadbare the Republican schemes to reform healthcare are.
Let’s start with Trump’s idea of sending lump sums to Americans to place in “health savings accounts,” which are tax-favored vehicles to save for healthcare expenses. This old Republican hobby horse has gotten some traction from employers in conjunction with high-deductible health plans. But it mainly benefits higher-income people who can afford to put this money aside, and it has never been shown to reduce health spending. We don’t know how much money Trump would give to the individual consumer. But it is certainly no substitute for extending the Obamacare subsidies that have enabled millions of people to obtain insurance, nor will it prevent the doubling of premiums for 22 million people.
The insurance companies are not about to reduce their rates, as Trump has demanded (although not in his new plan). Even if they were forced to lower prices, the underlying costs of healthcare would continue to surge. In 2024, for example, national health spending spiked by 7.2% to $5.3 trillion—the second year in a row of cost growth over 7%. So the insurers would be forced to raise prices again to avoid bankruptcy.
Trump’s call for hospitals and payers to post their negotiated prices is also unlikely to lower costs. In 2019, the Department of Health and Human Services issued a regulation requiring them to do this for “shoppable” services; the rules went into effect in 2021 for hospitals and in 2022 for insurers. But, as of July 2023, only 36% of hospitals were in full compliance with the transparency regulations. Even if more of them posted their prices, it’s unclear how much attention consumers would pay to this information, which is hard to understand and may not matter when someone is sick.
Trump also favors cracking down on pharmacy benefit managers (PBMs), which engage in several shady practices that benefit them but not the public. A bipartisan bill is already before Congress to curb PBM malfeasance, so Trump is following on this one, too.
Trump’s greatest impact on healthcare costs so far has come through negotiating drug prices. But here, too, there’s less than meets the eye. The biggest savings for Medicare last year came from a Biden-era law that allows the government to negotiate drug prices on a small number of expensive medications. Trump wants to go further by having Congress codify his “most-favored-nation” approach, which aims to cut U.S drug prices to the lowest level paid by any other developed nation.
In response to Trump’s May 25 executive order announcing the MFN initiative, and a later threat to impose tariffs on drugs, the big pharma firms have agreed to give price breaks to Medicaid, which already receives deep discounts on drugs, and to offer some discounted medications to the uninsured on a government website. An analysis of Pfizer’s deal with the Administration estimates that the arrangement would have cost it only about 1% of its revenue in 2024. If Trump were really serious about lowering drug prices, he’d ask Congress to let his Administration negotiate all drug costs on behalf of all consumers and employers, as some advanced countries do.
Of course, he isn’t serious about healthcare and is offering this plan only to assuage the public’s demand for affordability. Unfortunately, these stale, warmed-over ideas won’t make healthcare more affordable. Neither the President nor Congressional Republicans have any plan that could do that.
The proposals from Democratic leaders are not much better. The current Democratic bills would retain the enhanced insurance subsidies for three more years with no changes in Obamacare. More broadly, the mainstream Democratic position has been to build on the Affordable Care Act, rather than replace it. On the far left, Medicare for All bills have been reintroduced every year for the past decade without any chance of passage.
What’s needed is a clear vision of how to build a new healthcare system that can provide universal, affordable access to comprehensive, high-quality healthcare. We must look beyond Medicare for All and the Affordable Care Act for this solution. It will have to be designed to keep the major industry players onboard, because Congress will not pass a reform bill if healthcare providers, insurers, and pharmaceutical companies oppose it. Employers and consumers must also believe that this plan will benefit them and can rescue our failing healthcare system.
I have constructed such a model, which I believe can put us on the road to better healthcare for all at a price we can afford. My book, which will be published by the American Association for Physician Leadership, is due out in the spring.
Physician-Led Healthcare Reform 