President Donald Trump was on the right track when he suggested Saturday that, at least during the federal government shutdown, money usually sent to Obamacare should go directly to consumers instead, according to at least one expert.
President Trump wrote on Truth Social that Congress should redirect the "hundreds of billions of dollars" being sent to the "money sucking insurance companies" and instead send that money to people's personal health care savings accounts.
That idea is being embraced by US Senator from Texas Ted Cruz and Texas US Representative Dan Crenshaw too, and while Direct Care Alliance's David Balat doesn't exactly agree on this solution, he says the President's assertion is commendable.
The idea is to get dollars "back into the hands of Americans, so that they can then be shoppers," Mr. Balat says, "and when you have more shoppers you're creating more of a market, and so prices conceivably would go down.
"The concept in theory is a good one," he says, "because the involvement of insurance companies takes away all competitive forces."
Are we being gouged by health insurance costs?
"They're absolutely overcharging us, and they're incentivized to gouge us, because in the ACA, the Affordable Care Act ['Obamacare'], there is something called the Medical Loss Ratio. The intention for this may have been a good one, because it says this:
"The insurance companies must spend 80-percent of the premium dollar on clinical care, so they can only keep 20-percent for themselves to pay for administration and profit.
"It seems like a noble thing and it seems like an appropriate thing, but what's happened is, ever since that's been implemented, is that the premiums have increased, because the problem with that model is that it was based on a percentage, so they could only keep 20-percent of the premium dollar."
Okay, "so how do you get more revenue? Because you remember those insurance companies are publicly traded for the most part.
"So how do you improve shareholder wealth on a year-over-year basis? Well, your premium has to go up so your 20-percent means more."
As Balat noted in an article in The Hill last month, when insurance companies aren't able to implement the policies they want, they simply raise premiums.
"And that's why every year -- regardless of medical claims history, your premiums go up."
Because Obamacare is now the status quo, it's fairly easy to sort out who's on the side of insurance companies and work to protect the Affordable Care Act (Democrats, who made extending Obamacare one of the intractable requirements to reach an agreement on reopening the federal government in November), and who's interested in new paths to more efficient and less expensive healthcare (Republicans).