Three Ideas to End the Shutdown

The federal shutdown is now entering its third week with no end in sight. Taxpayers and consumers are paying the price because each week of the shutdown siphons $7 billion out of the economy. Even this figure obscures the true cost of federal dysfunction. Nearly 750,000 workers have been furloughed, resulting in taxpayers having to pay about $400 million per day for agency work that is not being done. While both sides point fingers at each other, there is plenty of blame to go around. Republicans could have avoided this by passing appropriations bills and Democrats could have voted for a clean continuing resolution.

At the center of this stalemate is the continued impasse over the expiration of the Affordable Care Act (aka Obamacare) tax credits that were first passed during the pandemic and extended under the Inflation Reduction Act.

These ACA credits don’t come cheap. Taxpayers currently contribute about $100 billion annually to subsidize Obamacare insurance health exchanges, and that number will rise to about $140 billion in 2034. Given the $37 trillion national debt, Republicans are right to worry about this cost and overall federal healthcare spending. Lawmakers are also right to worry that “ripping the band aid off” and not renewing premium credits will skyrocket insurance premiums. The key is for both parties to agree on reforms that will lower healthcare costs without contributing to the debt. Below, the Taxpayers Protection Alliance suggests a few reforms that would achieve this balance:

1. Push States to Roll Back Certificate of Need Laws

Healthcare is likely the most regulated industry in the U.S., with barriers to entry and standards of care dictated by the federal government and states contributing to roughly $5 trillion in total annual national health expenditures. New entrants in the provider space can treat patients and bolster competition, but existing industry participants use state laws to deter entry.

As the Reason Foundation noted in a 2021 analysis, “State-level [CON] laws require health care providers to receive government approval to construct new facilities, expand existing ones, or offer new medical services. To gain approval, health care providers are often required to demonstrate that there is an unmet need for additional capacity. However, existing providers–who have an interest in limiting competition–may block new entrants and competitors by arguing that there is no additional need.”

Fortunately, the Centers for Medicare and Medicaid Services is addressing how it can work with states to limit these laws and bolster healthcare competition in the process. If lawmakers can push along that effort, healthcare prices would fall as the number of healthcare facilities increases — all without increasing deficits.

2. Bolster Telehealth Availability

Since the COVID-19 pandemic, telemedicine visits have gained mainstream acceptance as a simpler and more convenient alternative to going to the doctor’s office. Unsurprisingly, these virtual visits are significantly less expensive for all parties involved than their conventional counterpart. According to a 2023 study on treatment costs in the Penn Medicine system appearing in The American Journal of Managed Care, telemedicine visits cost approximately 15.6 percent less than in-person visits, even when accounting for increased visit volume resulting from this newfound convenience.

The reasons for these cost savings are many. Doctors require less overhead to simply log into an application and see patients, instead of relying on an army of administrative assistants, nurses, and building-related assistance required for in-person services. Meanwhile, patients don’t have to drive long distances and wait in (germ-ridden) waiting rooms to access care.

While the federal government granted Medicare extended flexibility to reimburse telehealth services, this bolstered coverage recently came to an end. Restoring access would not only save taxpayers through reduced Medicare spending but would also lower private insurance premiums. That’s because when Medicare reimbursements don’t adequately cover services, providers respond by charging private insurers higher prices to compensate. Bolstering telehealth would allow taxpayer dollars to go further, avoiding these cross-subsidization issues.

3. Work with States to Widen Prescribing Authority

When only a few parties (e.g., doctors) are legally allowed to prescribe medicine, these practitioners are predictably able to charge higher prices. These higher prices are in turn passed along to insurers, which raise their premiums in response. It doesn’t have to be this way. Cato Institute scholars Marc Joffe and Jeffrey A. Singer said it best: “let pharmacists prescribe.” States can and should grant pharmacists broad and independent prescribing authority, including for off-label drug use.

As the scholars note, pharmacists often “receive as much classroom and nearly as much clinical instruction as medical doctors” and already have limited prescribing authority across the country. This reform would not only lower healthcare costs by increasing the supply of providers that could treat patients. It would also serve as a needed corrective to recent Food and Drug Administration regulations limiting vaccine access. Even if the FDA decides to limit an approved vaccine’s availability, a pharmacist would still be able to quickly sign off on a patient’s desired vaccination—no other doctor’s visit or protocol needed.

Conclusion

Lawmakers need not choose between going into deeper debt and lowering healthcare costs. Reforms to bolster healthcare access are just what the doctor ordered.