DOGE can accomplish two triumphs with one bold act. Musk and his team can balance the U.S. budget and simultaneously fix health care. Defund the wasteful, unnecessary, illegitimate, and yet ever-expanding federal healthcare regulatory apparatus.
Healthcare is distinctly different from health (or medical) care. Healthcare as one word is a massive regulatory, economic system with tens of millions of employees (mostly bureaucrats) that cost American taxpayers $4.9 trillion in 2024. That amount is more than the entire GDP of Japan.
Health care, two words, is the work product, the personal service, of a professional care provider that she or he exchanges for financial compensation. People have no more right to health care than they have a right to a lawyer’s time or an accountant’s calculations. In contrast to many millions involved in healthcare, health...care involves (or should involve) just two: patient and provider.
By its very name, DOGE is tasked with improving dollar efficiency of the federal government. In healthcare, dollar efficiency would mean spending that produces care in any form for patients. Money that is spent on anything other than patient care services or goods is inefficient spending, whether fraud, corruption, or overhead.
It is estimated that at least half of all U.S. healthcare spending is inefficient—it produces no medical care. These monies pay for BURRDEN: Bureaucracy, Unnecessary Rules and Regulations, Directives, Enforcement, and Noncompliance activities. As last year, the U.S. expended $4.9 trillion on its “healthcare” system, $2.45 trillion, was spent inefficiently and therefore is potentially subject to cutting by the DOGE. Musk and his team could theoretically cut U.S. spending by an amount equal to the entire GDP of Italy.
According to the final 2023 federal budget, the U.S. expended a total of $6.2 trillion. Washington collected $4.5 trillion in revenues that year leaving a deficit of $1.7 trillion. Such deficit spending had ballooned the national debt to $34 trillion in 2023. For perspective, $34 trillion was 124% of U.S. GDP and one third of the combined GDP of all nations on planet earth. (Current U.S. national debt has risen to more than $36 trillion.)
If DOGE were to defund 69% ($1.7tr÷$2.45tr) of federal healthcare BURRDEN, there would be three positive results: U.S. would have a balanced budget, healthcare spending would become efficient, and Americans would have accessible, affordable care.
Medicaid shows one easy way for DOGE to reduce inappropriate, wasteful, “cut-able” federal regulatory spending in healthcare. Simply follow the law! Section 1801 of the 1965 act that created Medicaid is titled, “Prohibition against any federal interference.” Congress strictly prohibited the federal bureaucracy from having any authority over design or operation, i.e., regulation, of individual state programs. Yet, gradually over six decades, the “swamp” has taken control where it should have none and expanded a program intended for less than 2% of the population to provide no-charge-to-enrollee* to more than 23% of the entire country. (*There may be no charge to Medicaid enrollees, but taxpayers shelled out $618 billion for Medicaid last year.)
DOGE can and should simply follow the law. Defund all federal Medicaid mandates for enrollment, benefits, payments, etc. Hundreds of billions would be saved.
To save even more taxpayer dollars, offer block grants to the states. The current federal-state matching program, called FMAP (Federal Medical Assistance Percentage), provides a strong incentive for states to over-spend. For every one dollar a state budgets for Medicaid, Washington gives the state anywhere from one matching dollar to more than three dollars for the poorest states such as New Mexico and Mississippi. Thus, the more a state spends, the more taxpayer dollars Washington sends to that state. A block grant would eliminate states’ incentive to over-spend.
Apply the same cost-cutting ax to all federal healthcare BURRDEN and watch what happens. By cancelling the tax-advantaged exemption for employer support of health insurance to the employee, 147 million working Americans would receive an average pay increase of $23,968 that they could put into to-be-created, unlimited CSAs (Care Spending Accounts). Then defund all the costly BURRDEN of HSAs, MSAs, and FSAs, the three current and highly restrictive types of medical savings accounts.
With well-funded CSAs, Americans could shop for both medical care and health insurance. Sellers of medical goods and services, including insurance policies, would have to compete for patients’ dollars rather than fight for low-bid contracts with third-parties. The result would be reduced prices and improved service. Spending for medically vulnerable Americans would return to state control, where care could be tailored to each state’s unique needs and limited resources instead of suffering under the current federal one-size-fits-all approach.
Two birds, one stone. The stone is defunding the federal healthcare regulatory apparatus. The birds are a balanced budget and health (medical) care that people need when they need it at prices they can afford.
Sounds simple? It is. Sounds easy? As political plutonium, it is anything but...
Deane Waldman, M.D., MBA is Professor Emeritus of Pediatrics, Pathology, and Decision Science; former Director of Center for Healthcare Policy at Texas Public Policy Foundation; former Director of New Mexico Health Insurance Exchange; and author of 12 books, including multi-award winning, Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine. Follow him on X.com @DrDeaneW or contact via www.deanewaldman.com.
Image: Free image, Pixabay license.