By Jay Brock, M.D.
FXBG Advance, Feb. 19, 2025
It looks like President Donald Trump has given the world’s richest man, Elon Musk—who some are already calling co-president—the responsibility for cutting government spending. If Musk were serious, he would start with eliminating the roughly $1 trillion we will waste this year running our very broken health insurance system. It would save the government money, and it would save every taxpayer and consumer money.
We’ll spend around $5 trillion on “healthcare” this year. Of that, roughly $1 trillion is wasted on costs that have nothing to do with healthcare and everything to do with perpetuating a health insurance system that, unlike those in every other advanced nation, has failed to ensure everyone here has affordable healthcare.
Here are some general estimates of what’s wasted: the numbers are approximate to give an idea of the scope of the problem.
- Administrative costs: $600 billion (in 2019 dollars) wasted in billing and other bureaucratic burdens compared to what those costs would be in a single payer system like Canada’s. Inflation has likely significantly increased that amount.
- Excess pharmaceutical costs: $100 billion wasted each year—again, in pre-inflation dollars. (Some healthcare experts think it might be twice that amount.) We pay higher medication prices here than in any other nation.
- So-called Medicare “Advantage” plans excess costs: $100 billion wasted/year, give or take, according to some healthcare experts. These plans are run largely by for-profit mega corporations, companies that have a fiduciary duty to their stockholders to keep profits as high as possible. If this means that as an enrollee you get less healthcare (or none at all, if your insurance claim is denied), so be it. These plans overcharge the federal government—that is, the American taxpayer (you and me)—without producing better clinical outcomes. These overcharges help the company bottom line but detract from enrollee healthcare.
- Total profits for just the major health insurance companies averaged $25 billion/year since Obamacare was passed in 2010: $371 billion so far.
These wasted dollars are extraneous costs that have nothing to do with any actual healthcare and everything to do with growing both more profits and a bigger medical bureaucracy.
How best to save all that money? Switching to a single payer system would eliminate that trillion dollar waste. That money could then be spent on actual healthcare, cover everyone with affordable healthcare, and still save hundreds of billions of consumer and taxpayer dollars a year.
Instead, the Administration seems to be focusing more on reducing fraud and abuse regarding Medicaid recipients who are “able bodied” but not working than on making sure everyone has affordable healthcare. Trump aims to cut Medicaid funding as one way to allow him to give further tax cuts to the very wealthiest Americans.
Medicaid cuts will mean reducing access to healthcare for the very people who voted for him.
Take just one example: cutting Medicaid funding jeopardizes rural hospitals and increases the risk of their disappearing. According to a report in Becker’s Hospital Review this week, 432 rural hospitals around the nation are at risk of closing. The top five states affected all went for Trump in 2024:
- Texas: 47 hospitals at risk
- Kansas: 46 at risk
- Mississippi: 28 at risk
- Oklahoma: 23 at risk
- Georgia: 22 at risk
Arkansas, Mississippi, and Kansas have the highest percentage (approaching or at 50%) of rural hospitals at risk.
Florida, South Carolina, Tennessee, and Missouri are also among those states with the highest percentage of rural hospitals at risk.
Trump won all those states.
Trump’s base is vulnerable to the negative healthcare impacts of reducing healthcare spending to help pay for those tax cuts.
A Hart Research poll last month revealed that about 8/10 Americans opposed healthcare funding cuts in general, including cuts to Medicaid.
You’d never know from last year’s presidential campaign that unaffordable healthcare was a major concern for a huge number of voters: it was second only to inflation as a topic voters wanted discussed during the campaign. With good reason: three-quarters of Americans worry they won’t be able to afford to pay their medical bills if they get sick.
One can make a valid argument that failing to adequately address unaffordable healthcare helped cost the Democrats the election last year: many people may have voted for Trump more out of punishing Democrats than supporting Trump’s agenda. But Trump’s agenda is what we’ve got.
It looks like Trump will pursue his agenda of cutting healthcare funding, thus reducing healthcare access for many Americans, especially affecting his political base. One can only guess how the electorate will react at midterm elections next year—and in the next presidential election in 2028 —if the Trump Administration in its turn bungles this kitchen table issue that is so important to so many Americans.
Additional Sources
- New Evidence Suggests Even Larger Medicare Advantage Overpayments
- Medicare Advantage Overpayment >$100 Billion
