What Would Actually Fix It

American Healthcare, Part II

I wrote an essay about healthcare that resulted in some great conversations. The first essay diagnosed the problem. This essay is about the cause and the cure.

The problem is not that America has too much capitalism in healthcare. The problem is that we destroyed the price system, buried patients and doctors under third-party payment, and then created an administrative empire to manage the chaos.

From Confusion to Clarity

By Clayton Wood

The first essay made a simple argument. The chart does not lie. Family health insurance premiums went from $5,809 in 1999 to $26,993 in 2025. That is not inflation. That is extraction. If premiums had simply tracked the general cost of living, a family plan today would cost around $11,000. It costs $27,000. The extra $16,000 per family per year is going somewhere. It is not going to your doctor. It is going to the clipboard class.

Now comes the harder part. What do we actually do?

Milton Friedman Had Some Great Answers

One of the more gratifying responses to the first essay came from a reader who surfaced a piece by Milton Friedman published in 2001 titled “How to Cure Health Care.” Friedman, the Nobel laureate economist and the most important advocate for free markets in the twentieth century, diagnosed the American healthcare system with the same precision he brought to everything else. He was writing more than twenty five years ago. Almost nothing he described has changed, and where it has changed, things have gotten worse.

Friedman’s core argument was simple and devastating. Healthcare in America became expensive for the same reason any service becomes expensive when the person consuming it is not the person paying for it. Nobody spends someone else’s money as wisely or as frugally as they spend their own. The third-party payment system, built first by the wartime accident of employer-provided insurance and then entrenched by Medicare and Medicaid in 1965, severed the natural connection between the patient and the price. When you do not feel the cost, you do not shop. When no one shops, prices have nowhere to go but up.

Friedman traced the employer insurance system to its origin: wartime wage controls imposed by the federal government that prevented companies from competing on salary, so they competed on fringe benefits instead. Health coverage became a tax-exempt differentiator. The IRS eventually caught on, Congress locked in the exemption under industry pressure, and a temporary wartime distortion became permanent policy that now shapes the entire American healthcare market. He estimated that the tax exemption and Medicare and Medicaid together accounted for nearly 60 percent of the total increase in healthcare costs from 1946 forward.

His proposed solution was elegant and market-oriented: strip the tax exemption, end the third-party payment system for routine care, return insurance to its proper function as protection against catastrophe rather than a prepaid healthcare subscription, and expand medical savings accounts so individuals spend their own money on their own care. The Singapore model, built two decades after Friedman’s analysis, is essentially what he described.

I agree with his conclusions. So does the data. The essay that follows is in large part the case Friedman made, updated with twenty more years of evidence that he was right.

Reagan Was Right So Often But Wrong About This

I am a Reagan conservative. His economics transformed this country. His vision of limited government is still the right one. And he signed a law in 1986 that set in motion one of the most expensive and counterproductive healthcare policies in American history.

In 1986, President Ronald Reagan signed the Emergency Medical Treatment and Active Labor Act, known as EMTALA, into law. It came from a real and horrifying problem: hospitals were turning people away from emergency rooms because they could not pay. Ambulances were being rerouted mid-route if a patient’s insurance did not meet a hospital’s standards. Women in active labor were sent to other facilities, even when doing so endangered their lives and their babies.

The impulse behind EMTALA was decent. The execution created a monster.

EMTALA requires Medicare-participating hospitals to screen and treat emergency medical conditions for any patient, regardless of ability to pay, insurance status, national origin, race, or color. Every hospital that takes Medicare money, which is essentially every hospital in America, must comply. The federal government then provided zero dollars to pay for any of it.

As a result, local and state governments began to abdicate responsibility for charity care, shifting this public responsibility to all hospitals. EMTALA became the de facto national healthcare policy for the uninsured.

Here is what that has meant in practice. If you have no insurance, no income, and no intention of paying, you can walk into any emergency room in Knoxville or anywhere else in America, receive care, and the bill gets written off. The hospital absorbs the loss or passes it to paying patients in the form of higher prices. The government mandated the care and left the hospital holding the check.

The predictable result is exactly what you would expect from any system where someone else pays the bill. Between 1990 and 2009, the number of ER visits per 1,000 population increased by 18 percent as patients flocked to emergency rooms as sites of guaranteed care. Free clinics exist in Knoxville and in every major city in America. Many people who could use them do not, because EMTALA guarantees access to a far more expensive alternative with no consequence.

Up to 60 percent of all emergency department visits remain non-urgent and potentially unnecessary. Privately insured patients alone show up 18 million times per year in hospital emergency departments for visits that are not necessary, adding $32 billion a year to national healthcare costs. That is just the insured patients. It does not count the uninsured visits being absorbed at hospitals across the country. The ER in Knoxville is full of sore throats and ankle sprains because a law designed to prevent a woman in labor from being turned away became an all-hours no-questions primary care guarantee. Meanwhile someone having a heart attack waits.

According to an American Medical Association study, emergency physicians annually incur on average $138,300 of EMTALA-related bad debt. That cost does not vanish. It gets distributed across every paying patient in the system.

Reagan’s intent was to prevent cruelty. The outcome was to destroy price signals in emergency medicine, convert the ER into a de facto universal health guarantee, and hand hospitals an unfunded mandate that has contributed to the cost spiral every American is now living with. One bad policy leads to another. That is the sentence Milton Friedman wrote about employer-based insurance and it applies here with equal force.

What Obama Promised and What the Data Says

The Obama administration built the entire political case for the Affordable Care Act on a moral claim: people without insurance were dying, and a civilized nation could not permit that. It was a powerful argument. It was also built on a foundation that largely ignored EMTALA and the enormous amount of uncompensated care delivered every day at every hospital in America to citizens and non-citizens alike.

Ben Rhodes, Obama’s communications architect, admitted in the New Yorker that the president knew his promise that people could keep their plans was not true when he made it. I know this personally. I was buying my own individual plan at the time. My ministry was too small to offer one. It was not perfect, but it was manageable. After the ACA took effect, I paid more than twice as much for a plan that covered half as much. Millions of people in the individual market lived through the same thing.

But the most damning verdict on the ACA is not political. It is statistical.

United States life expectancy peaked at 78.9 years in 2014, the year the ACA’s major coverage provisions fully took effect. The 2014 to 2017 drop in United States life expectancy was the longest sustained decline since 1915 to 1918, when figures were impacted by World War I and an influenza pandemic.

Since 2010, US life expectancy growth has stagnated. From 1900 until 2010, US life expectancy at birth steadily improved at an average rate of 2.8 years per decade. That improvement stopped precisely when the ACA was being debated and implemented.

In 2024, life expectancy at birth in the US reached 79.0 years, its highest-ever level, but it remains 3.7 years below the comparable country average of 82.7 years.

We were told the uninsured were dying because they lacked coverage. We passed a sweeping law that raised premiums, destroyed the individual market, and produced worse health outcomes relative to peer nations than we had before. The promised miracle did not arrive. The Affordable Care Act aimed to reduce emergency room utilization by increasing access to primary care through expanded health insurance. Medicaid-reimbursed ER visits increased after the Medicaid expansions in 2014, and the overall volume of ER visits did not decrease.

More coverage. More ER visits. Stagnant life expectancy. Higher premiums. That is the legacy of the ACA in four sentences.

HIPAA: The Compliance Theater That Did Not Protect Anyone

While we are being honest about well-intentioned laws that produced terrible outcomes, let us talk about the Health Insurance Portability and Accountability Act of 1996.

HIPAA was sold as the law that would protect your medical privacy. Congress passed it. The administrative apparatus bloomed. The paperwork multiplied. And your medical privacy was not protected.

When HIPAA was implemented, the Department of Health and Human Services estimated it would initially cost healthcare systems approximately $113 million with subsequent maintenance costs of $14.5 million per year. The actual costs of HIPAA compliance are estimated at closer to $8.3 billion a year, with each physician on average spending $35,000 annually for health information technology upkeep.

The government was off by a factor of roughly 600. That gap is not a rounding error. It is the distance between what lawmakers promise and what the administrative class actually builds.

Every time you have been to a doctor’s office in the last thirty years, you have been handed a stack of forms. You have filled out the same health history you filled out the last time you were in that office, and the time before that. You have signed HIPAA acknowledgment forms that nobody reads and that exist not to protect you but to protect the institution from liability. You have watched nurses re-enter the same information you just wrote down by hand into a computer system that does not communicate with the computer system at the hospital across town. You have been sick, or frightened, or in pain, and the first thing America’s healthcare system has done is make you fill out paperwork.

Every minute of that experience is the administrative class justifying its own existence.

And for what? Despite HIPAA’s intent to protect patient data, breaches have exposed hundreds of millions of records annually. Hacking incidents accounted for 79.7 percent of breaches in 2023, with a 278 percent rise in ransomware attacks since 2018. Breaches involving third-party vendors increased 337 percent since 2018. In March 2026 alone, 66 healthcare data breaches were reported to federal regulators, with more than 8.7 million individuals having their personal health information exposed or stolen.

The paperwork did not stop the hackers. It never was going to. HIPAA was designed for a world where the threat was a nurse gossiping in the break room, not Russian ransomware gangs hitting hospital networks. The law created compliance bureaucracy that consumed billions annually and left the actual security threat almost entirely unaddressed.

Meanwhile, the privacy it was supposed to protect was already being circumvented from a different direction entirely. Not all health records are protected by HIPAA. If you provide health information to an employer, a bank, or an auto insurance company, the health records maintained by those organizations are not protected. HIPAA covers only health plans, healthcare clearinghouses, and healthcare providers conducting electronic transactions.

Your grocery store knows you buy insulin test strips. Your search history knows you looked up symptoms of hypertension at 2 a.m. Your phone knows you spend forty-five minutes at the cardiologist twice a year. Your credit card knows you fill a prescription for Metformin every thirty days. None of that is covered by HIPAA. All of it is available to commercial data aggregators who can construct a more accurate picture of your health than your doctor has. The law built an eight-billion-dollar compliance fortress around your hospital records and left the side door wide open.

Here is the alternative that technology has already made possible and that the administrative class has no interest in building: a universal, cloud-based health record that belongs to you, that you control, that you can authorize any provider to access with a single digital signature, and that eliminates the need to ever fill out a health history form again. Your medical records should travel with you the way your music and movies do. You should walk into any clinic or emergency room in America, authorize access with your phone, and have the physician treating you see your complete history in thirty seconds.

Instead, we have fax machines. We have paper forms. We have systems that do not talk to each other because the vendors who built them have financial incentives to keep them siloed. We have eight billion dollars a year in compliance costs and 8.7 million records breached in a single month.

Who benefits from the current arrangement? The compliance officers. The HIPAA consultants. The software vendors selling interoperability solutions to a problem they helped create. The insurance companies whose prior authorization machinery depends on incomplete information arriving slowly enough that patients give up.

The patient sitting in the waiting room filling out the same form for the fourth time benefits from none of it.

Prior Authorization: The Denial Machine

On the subject of insurance company paperwork designed to exhaust you into submission, let us be specific about what prior authorization actually is and what it is actually for.

Prior authorization is the process by which your insurance company requires your doctor to ask permission before treating you. Your physician, who spent a decade in training and sees you in person, must obtain approval from a reviewer employed by a company whose financial interest is in paying as little as possible for your care.

On average, physicians complete 43 prior authorizations per week, dedicating over 16 hours to the process. Private insurers often impose the most aggressive and opaque barriers. Their financial incentives are clear: collect as many premiums, copays, and deductibles as possible while restricting access to care regardless of necessity. The underlying assumption is that if physicians or patients want a service badly enough, they will spend their time fighting for it.

Administrative tasks related to insurance take up about two hours of physician time for every one hour spent with patients. Prior authorization specifically consumes about 12 hours of physician and staff time each week. In a lot of cases, patients abandon the treatment or their condition worsens during the time spent waiting for the insurance company to provide authorization.

Providers devote staff time equivalent to more than 100,000 full-time registered nurses annually to prior authorization activities. A recent survey from the American Medical Association found that 95 percent of physicians said prior authorization delays necessary care, and nearly 80 percent reported patients sometimes abandon recommended treatment because of authorization obstacles.

One hundred thousand full-time registered nurse equivalents. Not treating patients, filing paperwork with insurance companies, in a country experiencing a nursing shortage, while patients wait.

Among Medicare Advantage prior authorization denials that were appealed, 81.7 percent saw the initial denial fully or partially overturned.

Read that number carefully. When physicians fight the denial, they win more than four out of five times. That means the original denial was wrong more than four out of five times. The denial is not a medical judgment. It is an attrition strategy. The insurance company knows that if it denies enough claims, enough patients will give up and enough physicians will not have time to appeal. The ones who do fight usually win. But most do not fight, because they are already spending two hours on paperwork for every hour they spend with patients.

This is not an oversight in the system. It is the system working exactly as designed.

What Actually Works Elsewhere

Before we talk about solutions, let’s acknowledge the international data. The United States spent roughly 17 percent of GDP on healthcare in recent years. The OECD average for wealthy nations is around 9 percent. Despite spending far more money than any peer nation, Americans live shorter lives and often face more barriers to care.

The single-payer crowd will tell you the solution is obvious. Canada does it. Britain does it. Just let the government run it. But the countries that actually perform best are not running fully socialized systems. They are running systems built on individual responsibility, price transparency, real competition, and targeted catastrophic coverage. The lesson is not that government should own everything. The lesson is that somebody has to feel the cost.

Switzerland is instructive. Every citizen is required to purchase private health insurance. There is no public single-payer system. There are roughly sixty competing private insurers. The government does not buy your care. It requires you to buy it, subsidizes the poor so they can afford it, and sets minimum coverage standards. Switzerland spent 11.7 percent of GDP on healthcare in 2022, well below America’s figure, while delivering outcomes that rank among the world’s best. Swiss citizens pay real deductibles and real premiums. Average Swiss health insurance premiums will reach about $440 per month in 2026. They feel the cost. They make choices accordingly.

Singapore goes further and does more with less. Singapore’s per capita healthcare spending was $4,250 in 2022, well below the $7,200 average for high-income countries. Life expectancy in Singapore is 83 years. Americans spend nearly three times as much per person and die younger.

The mechanism is simple in principle. The Medisave program is a compulsory savings plan accounting for between 7 and 9.5 percent of a working person’s wages, which is then used to pay for routine care. It is your money, in an account with your name on it. You have every incentive to ask what things cost. When a Singaporean patient goes to the doctor, she is made aware of the prices ahead of time and has a chance to find a provider who will charge a fair amount. In the United States, patients are often completely in the dark concerning prices and have no ability to shop for value.

Above the personal savings layer sits catastrophic insurance covering large hospital bills. Above that sits a government safety net for the genuinely indigent. Personal savings handle routine care. Insurance handles catastrophe. Government handles true indigency. Government subsidies are utilized only to supplement individual savings and ensure that the poor and disabled are not disadvantaged. Singapore spends around 6 percent of GDP on healthcare and produces outcomes that rival Western Europe.

The common thread across every system that works is not the presence of government. It is skin in the game.

The Pharmaceutical Racket: You Pay Twice and Get Nothing Back

Your taxes fund the research. Then you pay again at the pharmacy. And Europe gets the same drug at a fraction of what you paid.

Analysis by Bentley University’s Center for Integration of Science and Industry found that at least half of the total investment required to bring a product to market comes from the United States government. If taxpayers are investing as much as shareholders in bringing drugs to market, the public could expect returns commensurate with those of pharmaceutical companies or their shareholders.

They do not get those returns. They get the bill.

In fiscal years 2017 through 2021, the NIH obligated $97 billion for basic research, $28 billion for clinical trials, and $9 billion for biomedical workforce training. That is your money. Not Pfizer’s.

And what does America get for it? In 2022, United States prices across all drugs were nearly 2.78 times as high as prices in comparison countries. United States prices for brand drugs were at least 3.22 times as high, even after adjustments for estimated rebates. For a selected group of brand-name drugs, United States net prices were over four times higher than gross prices paid in Australia and France.

Americans funded the research. The French did not. Their governments simply negotiated. They told pharmaceutical companies: sell here at our price or sell nothing here at all. The companies folded because a discounted sale beats no sale. The difference between what they charge the French and what they charge Americans is pure extraction, made possible by purchased politicians and a Congress that for decades prohibited Medicare from using the same leverage.

The average price of new treatments over the past twenty years that NIH scientists helped invent is $111,000. The price of some of these taxpayer-funded drugs is now over $1.9 million. A reasonable pricing clause inserted into NIH contracts in 1989 was withdrawn six years later after industry pressure.

They lobbied their way out of accountability. Washington let them. Trump’s most-favored-nation executive order attempted to break this arrangement. Courts blocked it. The structure protects itself.

What Would Actually Fix It

I do not raise this problem without believing solutions exist. Here is what would work, starting with what is achievable and building toward what is ideal.

First: Price Transparency Without Exceptions

Every hospital, clinic, and pharmacy posts its actual cash price. Not chargemaster rates. Not insurance-negotiated rates. You cannot have a market without prices. Trump’s 2019 executive order moved toward this. The hospital lobby fought it in court. It should be revived with teeth that bite.

Second: Decouple Health Insurance From Employment

The tax treatment that made employer-provided health insurance the default was a wartime accident. Equalizing the tax treatment of all health expenditures would begin returning choice to the individual and remove the incentive that has made your employer the default administrator of your most personal decisions. Friedman called for this in 2001. It remains the right answer.

Third: Build the Updated Universal Health Record

You should be able to walk into any clinic or ER in America, authorize access with your phone, and have the treating physician see your complete medical history in thirty seconds. You should never fill out another health history form for the rest of your life. HIPAA should be rewritten from the ground up around modern cybersecurity architecture, not 1990s fax machine assumptions, and the compliance burden should be reduced to something proportionate to its actual protective value. The eight billion dollars currently consumed by HIPAA compliance theater should go toward actual security, actual interoperability, and actual patient care.

Fourth: Reform Prior Authorization With Force

The statistic is dispositive: when denials are appealed, insurers lose more than four out of five times. A system with that denial reversal rate is not performing utilization management. It is performing attrition. Congress should require that any denial overturned on appeal trigger automatic review of the insurer’s authorization criteria, mandate same-specialty physician review of all denials, and impose financial penalties for repeated wrongful denials. The 100,000 nurse-equivalent hours currently consumed by prior authorization paperwork should be returned to patient care.

Fifth: Expand Direct Primary Care and Health Sharing

Expand health sharing ministries and direct primary care and stop regulating them to death. Direct primary care physicians charge flat monthly fees and provide comprehensive primary services without touching insurance at all. The physicians who escape the administrative layer are practicing medicine again. We should be building pathways for more of them.

Sixth: Fix EMTALA Without Repealing It

The original intent was sound. But the conversion of the ER into a guaranteed no-cost primary care facility has been destructive to emergency medicine, to hospital finances, and to the patients who actually need emergency care and cannot get it past a waiting room full of non-emergencies. Pair EMTALA with real funding for the free clinics and community health centers that already exist in every major city. Create modest cost-sharing mechanisms for non-emergency ER use that redirect routine cases to appropriate settings. Reserve the emergency room for emergencies.

Seventh: Stop Subsidizing the Disease and Then Paying to Treat It

Address obesity as the upstream cost driver it is and stop subsidizing it with public money at every stage of the supply chain.

One hundred million American adults are currently living with obesity. Seventy-five percent of them also have at least one obesity-related complication. Republicans on the Joint Economic Committee estimate that obesity will cost the United States between $8.2 trillion and $9.1 trillion in excess medical spending over the next decade, and that the economy will be between $13.5 trillion and $14.7 trillion smaller over that same period because of reductions in labor supply and productivity. That is not a rounding error in the healthcare budget. It is a generational economic catastrophe building in slow motion.

And the government is subsidizing it at every step.

The first payment: between 1995 and 2012, more than $19 billion in tax dollars subsidized four common junk food additives derived from corn and soy, including corn syrup, high-fructose corn syrup, cornstarch, and hydrogenated vegetable oils. The agricultural lobby has arranged for the federal government to make the inputs of processed food artificially cheap while fresh fruits and vegetables receive a tiny fraction of the same support. This is not an accident. It is the Farm Bill, renewed repeatedly with bipartisan support, underwritten by the same lobbying infrastructure that writes the rules everywhere else in this system.

The second payment: SNAP recipients spend more than 20 percent of all SNAP dollars on soda, candy, desserts, and other junk food. That projected junk food expenditure totals $240 billion over the next decade. The soft drink industry alone receives a $4 billion annual subsidy from taxpayers through the combination of corn price supports and SNAP spending on carbonated beverages. American taxpayers are buying Coca-Cola for people on food assistance while simultaneously subsidizing the corn syrup that goes into it.

The third payment: obesity-related healthcare spending now exceeds $385 billion annually, with Medicare and Medicaid shouldering approximately one-quarter of those costs. The taxpayer funds the agricultural subsidy that makes junk food cheap. The taxpayer funds the food assistance program that purchases the junk food. The taxpayer then funds the Medicare and Medicaid bills generated by the metabolic disease that results.

Three payments. One disease. Entirely government-designed from end to end.

Senator Jon Husted of Ohio put it plainly when he joined legislation to remove junk food from SNAP eligibility: “American taxpayers are footing the bill on both ends of a broken system, first by subsidizing the consumption of unhealthy ultra-processed foods, and then again by covering the skyrocketing healthcare costs caused by the chronic diseases those foods contribute to. In effect, we are paying to make ourselves sick, and then paying again to treat the sickness.”

That sentence should be in an ad for a primary opponent for every congressional representative that has voted to renew the Farm Bill without reforming it.

Eighth: Demand a Return on Pharmaceutical Investment

The NIH is not a research charity for European healthcare systems. Most-favored-nation pricing for American patients is the minimal ask. Congress should pursue it and stop pretending that protecting pharmaceutical company margins is a conservative value. The American patient funded the research. The American patient should not pay four times what the French patient pays for the same pill.

Conclusion

None of this is single payer. What it requires is intellectual honesty about the specific ways government has already destroyed the market mechanisms that would otherwise discipline cost, and the willingness to dismantle those interventions rather than pile new ones on top.

The old hospital bill from 1921 shared in the comments of the first essay says it all. Eighteen days. Operating room. Dressings. Medicine. Seventy-six dollars and twenty-five cents. Payable in four weeks of a farm worker’s wages. No clipboard class. No prior authorization. No HIPAA acknowledgment forms. No administrator standing between the patient and the physician.

We do not need to go back to 1921. We need to go back to a system where the person receiving a service knows what it costs, pays something real for it, and has the right to choose a different provider next time. We need prices posted and visible. We need your medical records in your pocket and under your control. We need the ER reserved for the heart attack and not the sore throat. We need the physician in the room with the patient, not at a desk processing paperwork for an insurance company that is going to deny it anyway.

The clipboard class got rich because we let them write the rules.

We can stop letting them.

Speak up and demand better. Your health, and the fiscal health of our Republic is at stake.

From Confusion to Clarity

The great Milton Friedman passed away 20 years ago, but had a great plan to fix our health care system

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