The recently passed One Big Beautiful Bill Act, which makes deep cuts to the Medicaid program, also puts the food assistance that 41 million low-income Americans rely on in jeopardy. Many of the families currently getting food provided by the Supplemental Nutrition Assistance Program (SNAP) stand to lose that support.
SNAP may well disappear for some families as the federal government moves to trim it. “The cuts are massive and extremely cruel when families need more support, not less,” says Signe Anderson, senior director of nutrition advocacy, at the Tennessee Justice Center in Nashville.
Government food assistance was established during the Great Depression, but it wasn’t until 1977 that the program became more accessible when the requirement that recipients had to pay for a portion of their food stamps was ended. Throughout its history, foes of the program have tried to dismantle it and may have succeeded as a result of provisions in the bill President Trump signed on July 4.
The new legislation calls for cutting spending for food stamps by $186 billion through 2034. “Everyone on food stamps will be affected in some way, and many will lose benefits,” Anderson says. “I don’t think the Congress understands the level of necessity in the community for food, health care and mental health treatment, some for the rest of their lives.”
One major change is being made to work requirements that have historically been part of the Medicaid program, which is administered and partially funded by the states. Anderson points out that under the new arrangements, participants may find the task of enrolling and staying enrolled more onerous. “We see a lot of people cut off already because too many life circumstances make it difficult for them to meet work requirements.”
Indeed when you look at the changes to SNAP, the first word that might come to mind is ‘draconian.’
To receive benefits those new to the program, and those already on it who are between 55 and 64 and do not have dependent children or who have children 14 and older, will have to prove they work. Or they will have to volunteer at least 20 hours a week or enroll in training programs. Parents of school-aged children will now be required to work.
Some five million people, including about 800,000 children and about a half million adults who are 65 and older, could lose their food benefits.
The programs the new law targets have been a lifeline for some. Nikole Ralls, a 43-year-old woman in Nashville, who was once a drug addict but now counsels others who need help, says, “I got my life turned around because of Medicaid and SNAP.”
In a recent memo to state agencies administering the SNAP program, Agriculture Secretary Brooke Rollins said she was concerned about what was described as abuse of the waiver system by states, noting that the new approach for the SNAP program would prioritize work, education and volunteering over what the department characterized as “idleness and excessive spending.”
Anderson said, “The public doesn’t understand what hunger looks like and are misinformed about how well-run and streamlined the SNAP program is.”
“Most of the people who can, do work. We have parents working two and three jobs,” Anderson said. For families in this predicament food banks, which have become default grocery stores, may be of little help. They, too, are stretched thin. The Wall Street Journal reported food banks across the country are already straining under rising demand, and some worry there won’t be enough food to meet demand.
Hi, everybody. I’m Elizabeth Wilkins, president and CEO of the Roosevelt Institute, and I am delighted to be here today with some big news and a very special guest. I am thrilled to announce that Nobel Prize–winning economist Paul Krugman will be joining the Roosevelt Institute as a senior fellow. Paul is one of the world’s most cited economists and widely read commentators, and for good reason. His longtime New YorkTimes column and his Substack now prove that he is not just a bold thinker, he is one of the clearest and most dynamic communicators in the field—skills that come in handy when you want to break through the noise of this moment and get people thinking about what the future of our economy and democracy might look like. And, of course, this is what Roosevelt is all about: understanding where we are in the moment and where we need to go.
So, Paul, I’m so excited to talk with you today. I started at Roosevelt in February, so we’re both new kids on the block here, and I will start with a question that I am getting a lot recently: Why your interest in affiliating with Roosevelt, and why now?
Paul Krugman:
Well, now I think because partly having retired from the New York Times, I’m free to pursue other affiliations. The Times is kind of a jealous organization. But now that I’m no longer there, I can do this. Roosevelt has been a tremendous reservoir of progressive thinking and progressive economics. I was heavily reliant on Roosevelt research particularly during the aftermath of the 2008 financial crisis—I’ve been around for a while here. [There’s] still novel stuff going on, and this seemed like a good affiliation to have in these times, to join the ranks of people with Roosevelt affiliations who have been providing really urgent commentary.
Elizabeth:
Thank you for the kind words. We appreciate it. One of the things that made your Times column such a hit for decades was the unique voice that you bring to economics: your ability to break down orthodoxy and cut to the core of what’s happening in plain terms. It almost goes without saying that there is a lot to cut through right now. We’ve seen attacks on government programs and on whole government agencies. And as you have noted and I have noted, the fate of Social Security and our social compact hangs in the balance right now. So, can you talk—with a little bit of your perspective on economic history—about what you think makes this moment unique? And through all this noise, what people should be paying attention to, and why?
Paul:
We are in a moment where we’ve lived, really since the New Deal in—whatever you want to call it—the Keynesian consensus. We’ve lived in a world where, we by no means went to socialism, but we had capitalism with some of the rough edges sanded off. Not as many of the rough edges that I would like, but we have Social Security, we’ve had Medicare since the 60s. We have Medicaid. We have the Affordable Care Act. We have a whole bunch of social insurance programs. We have government efforts to at least somewhat regulate the excesses and harms of markets. And now we are at a moment where there’s a real possibility that we may really lose that. We’re talking about possible retrogression, and the possibility of moving forward after this current moment has passed. But we really are at a point where the certainties of the underlying continuity of a fairly decent social compact is at risk. And so this is really new.
Elizabeth:
I really like that phrase, this “capitalism with the rough edges sanded off.” And what I’m hearing you say is basically the idea of the social compact is that, yes, we have capitalism, but we also have a commitment to providing a measure of security for people, and that’s the deal we have struck. You write a ton about the New Deal and FDR [Franklin D. Roosevelt]. Can you just expand a little bit about how to think about that trade-off, how long that consensus has held, and if there are any other moments in our economic history where there have been similar threats to that compact that we can learn from?
Paul:
I like to think about—it’s 1933, and the world economy has collapsed. There are a lot of reasonable people [who] have concluded that capitalism is irredeemable and can’t be saved, and that on the other hand, you have a lot of forces of repression out there. And along comes several countries—with the US in some ways leading the New Deal order, which says, no, we’re not actually going to go socialist. We’re not going to seize the commanding heights of production, but we are going to try to make sure that extreme hardship is vanished, as far as we can manage. We’re going to try to make sure that workers feel that they are a part of, and that they have rights and claims to, the system. There was very much this moment when we reached a kind of—I don’t know if it’s a compromise or a synthesis—but the idea of a basic standard of decency, the Four Freedoms. While at the same time saying that it’s not evil to make profits. It’s not evil to be personally ambitious. But we are going to try to make it so that everyone shares in the gains from economic activity.
And that really held. I mean, there was the moment when the Reagan administration came in, which represented, in many ways, a turn away from that New Deal consensus. But not to the extent that we have now. In moments of economic stress, people tend to say, well, maybe this thing doesn’t work anymore. The 1970s with stagflation, the aftermath of the 2008 financial crisis. That has basically been the case during attempts to turn away from the basic structure (which in the US context have always been a turn to the right, but in principle, you could imagine a turn to the left, but that hasn’t ever really happened in this country). And until right now, it has always seemed that the public wouldn’t stand for it. When push came to shove, when George W. Bush tried to privatize Social Security, it was a sort of resounding, “no, you don’t. We love Social Security.” But the possibility that we will have either explicitly or de facto undermining of those institutions seems much higher right now just because we live in such—well, we’re not gonna talk about the politics particularly, but there’s a possibility that we’ll lose it, that it will go away. And the one thing that I would say is that there’s this political action by itself, but there’s also the importance of getting the facts clear, getting the way the world works clear. No, there are not 10 million dead people receiving Social Security benefits. No, tax cuts and deregulation are not the only way to achieve economic growth. These are really critical things. Facts matter, analysis matters.
Elizabeth:
I’m just gonna pick up on that last thing you said about facts matter, analysis matters, and maybe go a little bit toward your true economist side. It’s not just Social Security we’re talking about. As you know and just mentioned, we’re in the middle of a tax and budget fight where we are very much looking at a situation where tax cuts for the wealthy might be traded for cuts to the programs that are specifically for our most vulnerable, like Medicaid and SNAP. This obviously has both political economy and democratic implications. It also has economic implications. Can you talk a little bit about this idea of what it means—this kind of wealth transfer, frankly, from the poorest to the richest, both in terms of hard facts, economics, and growth? And in terms of the social compacts that we’ve been talking about.
Paul:
It’s become increasingly clear that taking care of the most vulnerable members of society—it’s something you should do. It’s a moral obligation. But it’s also good economics, especially by the way of children. If you ask, a dollar spent on ensuring adequate health care and nutrition for children clearly pays off with multiple dollars of economic performance, because those children grow up to be more productive adults.
One way to say this is that conservative economic doctrine is all about punishing, it’s all about incentives: Poverty should be painful and wealth should be glorious. And what that all misses is the importance of just plain resources. That if low-income families cannot devote the resources to their children that you need to make those children fully productive adults—some will manage despite that, but just plain making sure that everybody in the country has the resources to make the most of themselves and their children is an enormously practical thing. It’s not just soft-hearted liberal talk, though I am a soft-hearted liberal, but it’s also just what you need to do if you want to make the most of your country’s potential.
Elizabeth:
I’m going to take another policy area, one actually that you know a lot about. It’s the area of focus that won you your Nobel Prize. You, in recent months, have been saying that one of the biggest risks of the Trump administration’s economic agenda is their chaotic tariff policy. We are currently recording the day after Liberation Day. And last year you predicted that the cronyism of those tariffs might be the biggest story in the long run, in addition to the chaos. So can you walk us through those risks, the chaos and the cronyism, and to what degree you’re seeing that play out for American workers and consumers? And, you know, why—I mean, there’s a lot of reasons why—but why are these tariffs different than the years that we’ve seen them in the past?
Paul:
There’s a standard economics case against tariffs, which is that it basically leads your economy to turn away from the things it’s really good at and start doing the things that it’s not especially good at. So for example, in New York, there’s lots of memories of the garment industry, but we really don’t wanna bring the garment industry back. Those were pretty bad jobs, and it happens to be stuff that can be done—where they can do it reasonably well—in Bangladesh, which desperately needs that industry, and we should be doing the things that we’re really good at instead. So that’s the classic case. What we’re discovering is that the rise of this hostility toward trade has additional costs. And the most immediate one is just plain that we don’t know what it’s gonna be.
As you said, we’re recording this the day after Liberation Day, which—nobody knows. I have to say that the actual tariff announcement shocked a lot of people, because it was both much bigger and much more arbitrary than people expected. I wouldn’t have been really shocked if there was a 15 percent across-the-board tariff, because that had been foreshadowed. But instead, there’s different tariffs for every country and this wasn’t really on anybody’s playbook. And nobody knows whether it [will] persist.
Think of yourself as being a business person trying to make decisions. You’re going to make an investment in your business—or are you? I mean, should you be spending money and making commitments on the basis that, okay, we’re gonna have 20 percent tariffs on all goods from Europe, or should you make it on the proposition that, “look, that’s crazy, those won’t last”? And both of those are defensible propositions. Anything you do, if you invest on the assumption that the tariffs are here to stay, then you’ll have made a terrible decision if they don’t. And so there’s a lot of paralysis that comes from the chaos. I’ve always been skeptical of people who invoke uncertainty as a reason that policy is holding the economy back, but because it’s often used as an argument against progressive policies: Oh, you know, your universal health care goals, that creates uncertainty. But in this case, this really is a major harmful issue.
We have not yet seen the cronyism, but it’s clearly potential. The whole root of—the reason why trade is where the dramatic stuff is happening [is because] US law creates a lot of discretion for the executive branch in tariff setting. Tariffs were only supposed to be applied as remedies for specific kinds of shocks or specific kinds of threats, but the decision about whether those conditions apply lies with the executive branch. So a president who wants to can do whatever they want on trade. And in the past, that’s always been held back by concern about: How will other countries react? What about the system? We built this global trading system. So it’s always been assumed that the president would have a wider view.
But if you take that away, then it’s not just arbitrary in terms of what are the overall levels of tariffs, it’s who gets a tariff break. And in fact, every time we do impose tariffs, there tend to be some exemptions. There are good reasons why sometimes you might want to exempt somebody from a tariff. But if it’s all arbitrary, the exemption might come because you go golfing with the president. And so that creates a lot of problematic incentives. We actually saw that in 2017, 2018, when the US was putting on tariffs—which looked trivial compared to what’s now on the plate—but it was very clear that industries and companies that were politically tied to the administration in power were much more likely to get exemptions than those that weren’t. So we actually saw this. We live in amazing times, and I mean that in the worst way. But everything that happened in the first go-around of what we called the trade war, it was really nothing—it was a skirmish compared with what’s happening now. But now, the possibilities are huge.
There’s a whole field of economic research on what the field calls rent-seeking. Economies where the way to succeed in business is not to be good at business, but to be good at cultivating political connections. And much of that actually was about tariffs and import quotas, but typically in developing countries. So there was a large concern that in places like Brazil or India, they were actually sacrificing a lot of potential gainful economic activity because businesses were focused instead on currying political favor. Well, could that happen here? Yes, it could. Very much down the road. I mean, I have to say that the speed and scale of the stuff that’s going on makes me think that we may have a global trade war and massive disruption before we even get around to the cronyism. But it’s down there, it’s in there. It’s in the mix.
Elizabeth:
We have seen, before yesterday, a real stop-start, put-on put-off, someone complains and we delay for a month. So I think we’ll really have to see, post-yesterday, where this goes. And this is a helpful roadmap for what to look for.
Paul:
And we should bear in mind also that the rest of the world has agency too. And part of the issue here is that the chaotic nature of the rollout is—again, the rest of the world has agency. And if you want to avoid getting into a lot of tit-for-tat, you probably want to at least explain what you’re doing and not be offending other countries unnecessarily. But, of course, we are doing that. I mean, to make Canada turn anti-American really takes—I didn’t think that—that wasn’t on my dance card for my career.
Elizabeth:
Roosevelt has argued for a long time for the strategic and targeted use of tariffs alongside industrial policy. And also, of course, alongside a strong sense of what rules and regulations you have to use to control unproductive uses of corporate and market power in that context, to make sure that the incentive structure that you’re creating actually targets the gains that you’re trying to make. But we’ve also argued for a way to transition into those things that takes account of some of the concerns that you’ve raised in terms of creating a stable business environment for investment, creating predictability, explaining things to mitigate the risk of fallout. And we’ve heard members of the administration say, “hey, yes.” [They] admit that this is going to be a little bit painful for a while, but it’ll be beneficial in the end.
You started to say this, but can you just pick apart for us when we hear someone say, “there might be a little bit of turmoil for a while,” what are the real costs of what that kind of turmoil might be for businesses, workers, consumers?
Paul:
I actually don’t buy—I mean, yes, there’s short-term pain, but it’s not short-term pain in exchange for a long-run gain, by any economic model I can think of applying. It’s actually short-term pain in return for probably even bigger long-term pain. The story about how this gets better is really not there.
I’m not a purist free trader. I’m not a laissez-faire guy. I mean, there’s a kind of idealized version of the post–New Deal consensus, which is, leave economic activity up to the markets, and then we’ll have a social safety net. But that has never been enough. We always need some additional stuff. We always need some industrial policy. And I think we need it more than we have actually had. But the reality is that you still want to have a lot of [trade]. International trade has, for the most part, been a plus for the US economy. There were distributional issues, but even there, it’s probably been a net-plus for the great majority of workers. And you’d want to mitigate the parts that aren’t. So the idea that shutting it down is going to produce a better outcome 5, 10 years down the pike, there’s really no clear argument to that effect. What is true is that we have this additional overlay, which is that nobody knows what the world is gonna look like next year. And so this is a tremendous inhibiting force.
Normally, when people say that, well, protectionism causes recessions, my answer has been no. There are lots of reasons not to like protectionism, but there’s no story about how it causes recessions. But protectionism where nobody knows what it’s gonna be, where nobody knows what the tariff rates are gonna be next year, that could cause a recession. So we may have the first real tariff-induced recession that I’m aware of in history, like, now.
Elizabeth:
That will give us something to keep an eye on over the next year and more.
I’m gonna change topics a little bit. We started, a little bit, to talk about power in the economy. Who has it? Who doesn’t? It’s something that you’ve explored. In your book Conscience of a Liberal, you wrote something that I really like: “The New Deal did more than create a middle-class society. It also brought America closer to its democratic ideals by giving working Americans real political power and ending the dominant position of the wealthy elite.”
Particularly in the environment we’re in today, what do you think policymakers should be thinking about in terms of what we can do to bring that New Deal power lens both to this moment and to a moment where we would have the ability to set the rules to put our country on a better course?
Paul:
There are two ends to that. One is just giving ordinary working- or middle-class people effective vehicles to exert political influence. And of course, we have the vote. (There may be that there’s no “of course” about that, but in principle, at least we have votes.) But I don’t think we really realized how much a strong union movement contributed toward making democracy work better. You can say, well, why isn’t the individual right to vote enough? And the answer is, look, there’s collective action problems. Politics is completely pervasive of things that would be good if everybody did them, but maybe [there’s] no individual incentives. So organizing politically is always hard, and unions are a big force in that—or were. And to some extent, still are, but much less than they used to be. And that’s really important. We are a less democratic country in practice because we don’t have workers organized. That’s one end of it, and there may be other ways, although I have to admit that I’m not all that creative. I think the success of unions in really making America more American in the postwar generation is something that we have never managed to find other routes to do.
Then on the other hand, there’s the question of the influence of malefactors of great wealth. The influence of vast wealth. And you don’t have to get too much into current events to say, well, we can really see that. I have to say, going back now, it looks like the plutocrats of the Gilded Age, by contemporary standards, were remarkable in their restraint and discretion. They didn’t try to buy influence as openly as the plutocrats today do. So now there are things you can do. It’s funny that our great grandfathers were much more open than we are in saying that one of the purposes of progressive taxation is to actually limit extreme wealth. And not simply because it’s more money to serve the common people, but because extreme wealth distorts democracy. Woodrow Wilson was much more willing to say things that would be regarded as extremely radical leftism now.
So really to reclaim who we are as a nation, [who we] are supposed to be, we need to work on both those ends. We need to try to empower basically working Americans, ordinary workers to have a role. And maybe there are other things besides unions, but that’s the obvious route.
And then you also need to try both with rules about money and politics, but also perhaps, if we can eventually, [through] constraining policy that limits the accumulation of enormous fortunes. That also limits that distortion because we really are in a situation now where it’s—all of the warnings about, as FDR would have said, the powers of organized money seem far more acute now than they ever did in the past.
Elizabeth:
You mentioned ideas that once were acceptable to say in polite company that seem more radical now. This is sort of the business of Roosevelt, to think big about how we can solve these questions of the maldistribution of power in the economy and do them at a structural level. And how to make ideas about that part of the common sense. You’ve talked about how that is part of what happened with the New Deal—that New Deal institutions that were at first considered novel and radical, by the Eisenhower presidency had become [a] normal part of American life. How did that happen in your view, that change in the common sense? And what made them so enduring and what lessons can we find for today about how to reorient what seems impossible and what seems a normal part of life?
Paul:
One of the things that strikes me when I look at history, both of economic institutions and of economic ideas, is that lots of things seem radical and scary until people have had a chance to experience them. So there’s the famous Nancy Pelosi quote—often out of context—where she said that for people to really understand the Affordable Care Act, we have to pass it. And it wasn’t like we were going to pull one over on people. It was that, as long as it was merely a theoretical thing, as long as it was something in prospect, it was possible to tell scare stories about death panels and just say, what will this do? But then after a few years, it becomes part of the fabric of life. And then, by the time we actually came fairly close to losing it, people were outraged because even imperfect as it is, Obamacare is a terrifically important safety net for many people.
You see that on a much larger scale [with] the New Deal changes. So if you go back to when FDR did his really stem-winding address in 1936 about the “I welcome their hatred” thing. The thing that was really the flash point—[that] was widely portrayed on one side of the political spectrum as an outrageous step that would destroy the market economy—was actually not Social Security, but unemployment insurance. It was like, “oh my god. You’re gonna actually pay people when they don’t have jobs.” And it turned out that hey, that’s okay. In fact—unemployment insurance was the most important thing that got us through COVID with minimal hardship. And now there are people, there’s always people who want to do away with these safety net programs. But things that can be made to sound ominous and radical when no one has actually experienced them can, after a few years, become part of the landscape.
The New Deal first got us through the Great Depression, then got us through the war. And by the time the war was over, we had become a very different country—and I would say a much better country—in which people accepted that, yeah, we have a kind of public responsibility to limit extreme inequality, to limit extreme hardship.
Elizabeth:
I want to close this out with a note that you struck in your final New York Timescolumn last December. It was a tough one. You wrote, “optimism has been replaced by anger and resentment,” and that “the public no longer has faith that the people running things know what they’re doing, or that we can assume that they’re being honest.”
I think that applies to government. It also applies to a lot of institutions across the board. So here is my question for you: What do you think it will take to rebuild trust in public institutions? And also, on a more personal level, how do you find the hope that we can make it there from here?
Paul:
Well, there’s nothing like actually doing good to build trust. If we can find our way past the current turmoil, I think that there’s an underlying reservoir of optimism still in America. And if we can get our way past this, all of these things that led us to this rather scary moment, then a few years of good governance can actually do wonders. I mean, I’m older than you are, and certainly older than a lot of the people I deal with, but I remember the 1990s. And although there are many imperfections and lots of things, it’s hard to remember just how positive people were feeling about America by the end of that decade. And that was thrown away through a variety of bad decisions. But still, it’s not that distant. It’s not that inconceivable.
And so I would think that the way forward is to get people in power who really do try to use it for good, get good programs, get good policy, get decent people. And there’s a lot of strengths in America. And this atmosphere of distrust and feeling that everyone is out to get you is self-serving. That will go away fairly quickly if it’s demonstrably not true.
Now personally, I’m terrified. I’m not giving up, but you can see a lot of the things that we read about in the history books about how societies go wrong are no longer abstract. We can see those emotions, we can see those forces out there. But the truth is that a better environment is actually—people become more generous, more positive when things are going okay. And we really don’t want to have a situation where [this] zero-sum, “I’ve got mine, I don’t want anybody else to get it” thinking is validated by experience. So, try to make things work is how we go from here.
Elizabeth:
I can tell you one of the things that gives me hope, Paul, is that in a moment where we are watching some institutions capitulate and fold in a way that is really disheartening, we also have some voices that are getting louder, not softer, and I think one of them is yours. So I wanna say how appreciative I know I am personally and how excited I know the [Roosevelt] Institute is generally to have you on as a senior fellow, in part because I really do think you are a voice out there that’s making sense of what’s happening. That’s helping us put into a context that we can understand the flood of news that we are experiencing. And, again, to demonstrate what it looks like to be a consistent voice with good analysis and moral clarity about what’s happening now, and also who we have been in the past and who we could be again. So we really appreciate your work, and we really appreciate you taking the time to chat today.
The murder of UnitedHealthcare CEO Brian Thompson in December 2024 represented a horrific and indefensible act of violence. As a physician and healthcare leader, I initially declined to comment on the killing. I felt that speculating about the shooter’s intent would only sensationalize a terrible act.
Regardless of the circumstances, vigilante violence has no place in a free and just society.
Now, more than a month later, I feel compelled to address one aspect of the story that has been widely misunderstood: the public’s reaction to the news of Thompson’s murder. Specifically, why tens of thousands of individuals “liked” and “laughed” at a post on Facebook announcing the CEO’s death.
What causes someone to ‘like’ murder?
News analysts have attributed the social media response to America’s “simmering anger” and “frustration” with a broken healthcare system, pointing to rising medical costs, insurance red tape and time-consuming prior authorization requirements as justifications.
These are all, indeed, problems and may explain some of public’s reaction. Yet these descriptions grossly understate the lived reality for most of those affected. When I speak with individuals who have lost a child, parent or spouse because of what they perceive as an unresponsive and uncaring system, their pain is raw, intense. What they feel isn’t frustration—it’s agony.
By framing healthcare’s failures in terms of statistical measures and policy snafus, we reduce a deeply personal crisis to an intellectual exercise. And it’s this very detached, cognitive approach that has allowed our nation to disregard the emotional devastation endured by millions of patients and their families.
When journalists, healthcare leaders and policymakers cite eye-popping statistics on healthcare expenditures, highlight exorbitant insurer profits or deride the bloated salaries of executives, they leave out a vital part of the story. They omit the unbearable human suffering behind the numbers. And I fear that until we approach healthcare as a moral crisis—not merely an economic or political puzzle to solve—our nation will never act with the urgency required to relieve people’s profound pain.
A pain beyond reason
In Dante’s Inferno, hell is a place where suffering is eternal and the cries of the damned go unheard. For countless Americans who feel trapped in our healthcare system, that metaphor rings true. Their anguish and pleas for mercy are met with silence.
It is this sense of abandonment and powerlessness, not mere frustration, that fuels both a desperate rage and an anger at a system and its leaders who appear not to care. The response isn’t one of glee—it’s a visceral reaction born of pain and unrelenting remorse.
As a clinician, I’ve seen life-destroying pain in my patients—and even within my own family. When my cousin Alan died in his twenties from a then-incurable cancer, my aunt and uncle were powerless to save him. Their grief was profound, unrelenting and eternal.They never recovered from the loss. But Alan’s death, heartbreaking as it was, stemmed from the limits of science at the time.
What millions of Americans endure today is different. Their loved ones die not because cures don’t exist but because the healthcare system treats them like a number. Bureaucratic inefficiencies, profit-driven delays and systemic indifference produce avoidable tragedies.
To appreciate this depth of pain, imagine standing behind a chain-link fence, watching someone you love being tortured. You scream and plead for help, but no one listens. That is what healthcare feels like for too many Americans. And until all of us acknowledge and feel their pain, little will improve.
Curing America’s indifference
When we focus solely on cold numbers—the millions who’ve lost Medicaid coverage, the hundreds of thousands of avoidable deaths each year, or the life-expectancy gap between the U.S. and other nations—we strip healthcare of its humanity.
But once we stop framing these failures as bureaucratic inefficiencies or frustrations and, instead, focus on the devastation of having to watch a loved one suffer and die needlessly, we are forced to confront a moral imperative. Either we must act with urgency and resolve the problem or admit we simply don’t care.
In the halls of Congress, lawmakers continue to weigh modest reforms to prior authorization requirements and Medicaid spending—baby steps that won’t fix a system in crisis. The truth is that without bold, transformative action, healthcare will remain unaffordable and inaccessible for millions of families whose anguish will grow.
Here are three examples of the scale of transformation required:
Reverse the obesity epidemic with a two-part strategy. Congress will need to tax ultra-processed, sugary foods that drive hundreds of billions of dollars in healthcare costs each year. In parallel, lawmakers should cap the manufacturer-set price of weight-loss medications like Ozempic and Wegovy to be no higher than in peer nations.
Change clinician payments from volume to value. Current fee-for-service payment systems incentivize unnecessary tests, treatments and procedures rather than better health outcomes. Transitioning to pay-for-value would reward healthcare providers, and specifically primary care physicians, who successfully prevent chronic diseases, better manage existing conditions, and reduce complications such as heart attacks, strokes and kidney failure.
Empower patients and save lives with generative AI. Tools like ChatGPT can help reduce the staggering 400,000 annual deaths from misdiagnoses and 250,000 more from preventable medical errors. By integrating AI into healthcare, we can enable at-home care, continuous disease monitoring and personalized treatment, making medical care safer, more accessible and more efficient.
If elected officials, payers and regulators fail to act, they will have chosen to perpetuate the unbearable pain and suffering patients and families endure daily. They need to hear the cries of people. The time for transformative action is now.
Sometimes a health policy story comes along that should be shouted from the rafters — well at least reported by media that cover the subject. Brett Arends’ story for Dow Jones’ MarketWatch is one of those stories.
The revelations about overpayments come from the Medicare Payment Advisory Commission, MedPAC for short, some of whose recommendations over the years have resulted in high rate increases for Advantage plan sellers that helped make it possible for them to offer groceries, bits of dental care, and other goodies seniors have snapped up. The media’s role in revealing and dissecting those overpayments is long overdue.
The last several months news outlets have been paying more attention to the downsides of Medicare Advantage plans.
Arends’ story focused on one thread in the story: MedPAC’s latest report to Congress that revealed something health policy wonks — but not the public — have known for a long time. Medicare Advantage plans are taking advantage of the federal gravy train.
“The private insurers who now run more than half of all Medicare plans are overcharging the taxpayers by a staggering $83 billion a year,” Arends wrote. “They are charging us taxpayers 22% more than it would cost us to provide the same health insurance to seniors directly if we just cut out the private insurance companies as middlemen.”
MedPAC was set up by the Balanced Budget Act of 1997, “back when people in Washington were actually doing their jobs,” Arends points out. The commission’s job is to advise Congress on issues involving Medicare. MedPAC reports discuss the financial situation of the Medicare trust funds, and over the years those reports often revealed that the private health plans have been overpaid. Until recently, there has been little to no pushback from the government or most of the media, in effect leaving the insurance industry a clear path to sell Medicare Advantage plans to more than half of the Medicare market. The media have recently begun to ask why.
Arends calls the Medicare Advantage arrangement “a rip-off, pure and simple,” noting that what sellers of the plan are paid “is more than twice as much as it would cost simply to provide free dental, hearing and vision care to all traditional Medicare beneficiaries, not just those in private ‘Medicare Advantage’ plans.”
I have covered Medicare for decades now and have often asked the experts why there couldn’t be a level playing field that would allow beneficiaries in the traditional program to receive vision and dental benefits. The answer was always, “We can’t afford that.”
Arends debunks that thinking by directly quoting the MedPAC report:
“It reads: ‘We estimate that Medicare spends approximately 22 percent more for MA enrollees than it would spend if those beneficiaries were enrolled in FFS (fee for service or traditional) Medicare, a difference that translates into a projected $83 billion in 2024.’ MedPAC reported that its review of private plan payments suggests that over the 39-year history with private plans, they “have never yielded aggregate savings for the Medicare program. Throughout the history of Medicare managed care, the program (Medicare Advantage) has paid more than it would have paid if beneficiaries had been in FFS (fee for service) Medicare.”
I checked in with Fred Schulte, who now writes for KFF Health News, and who over his career has written many prize-winning stories documenting the shenanigans insurers have used to enhance their reimbursements from Medicare, such as upcoding. That’s the practice of billing Medicare for ailments that are more serious than what patients actually have. “For example, instead of reporting a patient has diabetes, the insurers would say diabetes with neuropathy or eye problems and receive higher reimbursement,” he explained.
“It took a very long time for the government and the Justice Department to understand what was going on here with this coding,” Schulte said. “The codes just kept getting higher and higher, and profits kept going up and up.”
A year ago, Paul Ginsburg, a senior fellow at the University of Southern California’s Schaffer Center, said, “The current Medicare Advantage structure results in overpayments, markedly higher than previously understood.”
Even Michael Chernow, who heads the Medicare Payment Advisory Commission authorized by Congress in 1997, recently admitted on Twitter that Medicare Advantage “has never saved Medicare money.” But he added, “that doesn’t mean Medicare Advantage isn’t a key pillar of Medicare sustainability. At its best it can provide better care at lower cost.”
Arends’ story doesn’t sound hopeful about the direction of Medicare. He concludes, “Medicare Advantage isn’t making the rest of Medicare better. It is putting the rest of Medicare out of business. And not by being more efficient, but by being less efficient. It is driving up the overall cost of Medicare by 22%. And not by being more efficient but by being less efficient.
The logical outcome is that traditional Medicare ceases to exist and that Medicare dollars pass through the hands of private insurance companies at 122 cents on the dollar.”
Arends’ prediction may well come true, but perhaps not without a fight. David Lipschutz, associate director at the Center for Medicare Advocacy, says a “confluence of factors have come together to make it harder to ignore the problems of Medicare Advantage by the press and policymakers.”
Of late, private equity investors in healthcare services have faced intense criticism that their business practices have compromised patient safety and raised costs for consumers. March 5, the FTC, DOJ and HHS announced the launch of an investigation into the inner workings of PE in healthcare. It comes on the heels of U.S. Senate investigations in their Finance, HELP and Budget Committees to explore legislative levers they might pull to address their growing concerns about affordability, competition and accountability in the industry.
PE funds don’t welcome the spotlight.
Their business model lends to misinformation and disinformation: company takeovers by new owners are rarely treated as good news unless the circumstance under prior ownership was dire. Even then, attention shifts quickly to the fairness of the PE business model playbook: acquire the asset on favorable terms, replace management, reduce operating costs, grow and the sell in 5-7 years at a profit using debt to finance the deal along the way. In exchange, the PE fund’s General Partner gets an annual management fee of 2% plus 20% of the value they create when they sell the company or take it public, and favorable tax treatment (carried interest) on their gain.
Concern about PE in healthcare services comes at a particularly delicate time: hospitals. nursing homes, outpatient care, medical practices, clinics et al) are still feeling the after-effects of the pandemic, proposed reimbursement bumps by Medicare for hospitals and physicians do not offset medical inflation and the Change Healthcare cybersecurity breach February 21 has created cash flow issues for all.
Concern about PE ownership was high already.
Innovations funded through PE-backed organizations have been drowned out by the steady drip of peer reviewed and industry-sponsored studies a causal relationship between PE ownership decreased quality and patient safety and increased prices and worker discontent. Nonetheless, PE-owns 4% of hospitals (among 36% that are investor-owned, 13% of medical practices and 6% of nursing homes today and they’re increasing in all cohorts of health services.
Here are the facts:
Private equity enjoys significant influence in public policy including healthcare. Direct lobbying activity by PE funds in Congress and state legislatures is well-funded and effective, especially by the It is increasingly 20 global fund sponsors that control 46% of assets under management. Cash on hand and fund-raising by PE are strong and healthcare remains an important but non-exclusive target of PE investing.
2023 was a down year for PE, 2024 will be strong: the IPO market and sponsor- to sponsor transactions dipped, and deal values shrank. Even with interest rates remaining high, returns exceeded overall growth in the stock market for deals consummated. At the same time, PE raised $1.2 trillion last year and has $2.6 trillion of dry powder to invest. Healthcare services will be a target as PE deal activity increases in 2024.
In U.S. healthcare, PE investments are significant and increasing. Technology-enabled services that lower unit costs and AI-based solutions that enable standardization and workforce efficiency will garner higher valuations and greater PE interest than traditional services. Valuations will recover from record 2023 lows and dry powder will be deployed for roll-ups despite antitrust concerns and government investigations. Congress will investigate the impact on PE on patient safety, prices and competition and, in tandem with FTC and DOJ issue guidance: compliance will be mandated and financial penalties added. But displacement of PE in health services is unlikely.
Some notable data:
Private equity funds have $2.49 trillion of cash on hand to invest—up 7% from 2022. They raised $1.2 trillion globally in 2023. 26% of its global dry powder is more than 4 years old—undeployed.
Private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn. 40% of the companies waiting to be sold are at least four years old. Last year, the combined value of companies that the industry sold privately or on public markets fell 44% and the value of companies sold to other buyout groups fell 47%.
Private equity investments in almost every sector in healthcare are significant, and until lately, increasing. Last year, deals were down 16.2% (from 940 to 788) cutting across every sector. In some sectors, like physician services, PE deals were tuck-in’s to their previous platform investments increasing from 75 deals in 2012 to 484 deals in 2021.
PE investments in US healthcare exceeded $1 trillion in the last 10 years. Investments in healthcare services i.e. acute, long-term, ambulatory and physician services– have been less profitable to investors than PE investments in technology, devices and therapeutics (based on the ratio of Enterprise Value to EBITDA) but exceed equity-market returns overall.
Peer reviewed studies have shown causal relationships between private equity ownership of hospitals, nursing homes and medical practices with lower operating costs, higher staff turnover, high prices and higher profits.
My take:
Like it or not, private equity investment in healthcare is here to stay. The likelihood of higher taxes paid by employers and individuals to fund the health system is nil. The majority (69%) of the public think it wasteful and inefficient (See Polling below). The majority believe it puts its profits above all else. The majority think it needs major change. That’s not new, but it’s felt more intensely and more widely than ever.
That means accommodation for private capital, including private equity, is not a major concern to voters: the prices they pay matters more than who owns the organization.
Tighter regulation of private equity, including more rights given to the Limited Partners who invest in the PE funds and limitations on public officials who become fund advisors, are likely. Bad actors will be vilified by regulators and elected officials. Media scrutiny of specific PE funds and their GPs will intensify as PE public reporting regulations commence. And investments made by not-for-profit multi-hospital systems and independent hospitals will be critical elements in upcoming Congressional and regulatory policy setting about their community benefit accountability and tax exemptions.
The public’s major concern about its healthcare industry is affordability. To the extent PE-backed solutions offer lower-cost, higher-value alternatives on a playing field that’s level with respect to equitable access and demand-management, they will be at the table.
To the extent PE-backed solutions cherry-pick the system’s low-hanging fruit at the expense of patient safety and affordability sans any regulatory restriction, they’ll breed public discontent from those they choose to ignore.
So, the reality is this: PE’s focus is generating profits for its GP and their LPs. Doing business in a socially responsible way is a fund’s prerogative. Some do it better than others.
PE is part of healthcare’s solution to its poorly structured, perpetually inadequate and mal-distributed funding. But creating a level playing field through meaningful regulatory reform is necessary first.
PS Among the stickier issues facing hospitals is site-neutral payments. Hospitals oppose the proposal reasoning the overhead structure for their outpatient services (HOPD) include indirect & direct costs for services provided those unable to pay i.e. emergency services. Proponents of the change argue that what’s done is the key, not where it’s done, and uniform pricing is common sense. Leavitt Partners has advanced a compromise: a Unified Ambulatory Payment System for HOPDs, ASCs and physician clinics that would be applied to 66 services starting
Last Monday, two lawsuits were filed that strike at a fundamental challenge facing the U.S. health system:
In the District Court of NJ, a class action lawsuit (ANN LEWANDOWSKI v THE PENSION & BENEFITS COMMITTEE OF JOHNSON AND JOHNSON) was filed against J&J alleging the company had mismanaged health benefits in violation of the Employee Retirement Income Security Act (“ERISA”). As noted in the 74-page filing “This case principally involves mismanagement of prescription-drug benefits. “Over the past several years, defendants breached their fiduciary duties and mismanaged Johnson and Johnson’s prescription-drug benefits program, costing their ERISA plans and their employees millions of dollars in the form of higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance, higher copays, and lower wages or limited wage growth… Defendants’ mismanagement is most evident in (but not limited to) the prices it agreed to pay one of its vendors—its Pharmacy Benefits Manager (“PBM”)—for many generic drugs that are widely available at drastically lower prices.”
The issue is this: what liability risk does a self-insured employer have in providing health benefits to their employees?
Is the structure of the plan, the selection of providers and vendors, and costs and prices experienced by employees subject to litigation? What’s the role of the employer in protecting employees against unnecessary costs?
On the same day, in the District Court of Eastern Wisconsin, an 85-page class action lawsuit was filed against Advocate-Aurora Health (AAH) claiming it “uses its market power to raise prices, limit competition and harm consumers in Wisconsin:
Forces commercial health plans to include all its “overpriced facilities” in-network even when they would prefer to include only some facilities.
Goes to “extreme efforts to drive out innovative insurance products that save commercial health plans and their members money.”
Suppresses competition through “secret and restrictive contract terms that have been the subject of bipartisan criticism.”
Acquires new facilities, which then allows it to raise prices due to reduced competition
… without intervention, the health system will continue to use “anticompetitive contracting and negotiating tactics to raise prices on Wisconsin commercial health plans and their members and use those funds for aggressive acquisitions and executive compensation.”
The issue is this: is a health system’s liable when its consolidation activities result in higher prices for services provided communities and employers in communities where they operate?
Is there a direct causal relationship between a system’s consolidation activities and their prices, and how should alleged harm be measured and remedied?
Two complicated issues for two reputable mega-players in the U.S. health system. Both lawsuits were brought as class actions which guarantees widespread media attention and a protracted legal process. And each contributes directly to the gradual erosion of public trust in the health system since the plaintiffs essentially claim the business practices of J&J and Advocate-Aurora willfully harm the individuals they pledge to serve.
In the November 2023 Keckley Poll, I asked the sample of 817 U.S. adults to assess the health system overall. The results were clear:
69% think the system is fundamentally flawed and in need of major change vs. 7% who think otherwise.
60% believe it puts its profits above patient care vs. 13% who disagree.
74% think price controls are needed vs. 7% who disagree.
83% believe having health insurance that’s ‘affordable and comprehensive’ is essential to financial security vs 3% who disagree.
52% feel confident in their ability to navigate the U.S. system “when I have a problem” vs. 32% who have mixed feelings and 16% who aren’t.
And 76% think politicians avoid dealing with healthcare issues because they’re complex and politically risky vs/ 6% who think they tackle them head-on.
The poll also asked their level of trust and confidence in five major institutions “to develop a plan for the U.S. health system that maximizes what it has done well and corrects its major flaws.”
Clearly, trust and confidence in the health system is low, and expectations about solutions fall primarily on hospitals and doctors. Lawsuits like these widen suspicion that the industry’s dominated first and foremost by Big Businesses focused on their own profitability before all else. And they pose particular problems for sectors in healthcare dominated by not-for-profit and public ownership i.e. hospitals, home care, public health agencies and others.
My take
These lawsuits address two distinct issues: the roles of employers in designing their health benefits for employees including the use of PBMs, and the justification for consolidation of hospital and ancillary services in markets.
But each lawsuit s predicated on a legal theory that prices set by organizations are geared more to corporate profits than public good and justifiable costs.
Pricing is the Achilles of the health system. Pushback against price transparency by some, however justified, has amplified exposure to litigation risk like these two and contributed to the public’s loss of trust in the system.
It is unlikely greater price transparency and business practice disclosures by J&J and Advocate-Aurora could have avoided these lawsuits, but it’s clearly a message that needs consideration in every organization.
Healthcare organizations and their trade groups can no longer defend against lack of transparency by defaulting to the complexity of our supply chains and payment systems. They’re excuses. The realities of generative AI and interoperability assure information driven healthcare that’s publicly accessible and inclusive of prices, costs, outcomes and business practices. In the process, the public’s interest will heighten and lawsuits will increase.
Health care sharing ministries (HCSMs) claim to offer health coverage: members follow a common set of religious or ethical beliefs and make monthly payments to help pay the qualifying medical expenses of other members.
These products often appear comparable to insurance, but they lack the consumer protections and benefit standards that apply to comprehensive coverage. HCSMs are under no obligation to pay members’ claims and often require members to negotiate discounts or seek charity care from health care providers.
Massachusetts and Colorado have begun to fill these gaps, and the data they have obtained are revealing. The Massachusetts marketplace began requiring HCSMs to report key data in 2020; and last year, Colorado became the first state to require comprehensive data from all HCSMs enrolling Colorado residents. The state’s first report provides a detailed look at HCSMs selling memberships in Colorado.
What’s in Colorado’s First Report?
The data show HCSMs have grown to include far more members than previously understood and shed light on risks for consumers who pay monthly fees with an expectation that their membership will cover health care claims.
Greater than expected enrollment. National enrollment for the HCSMs included in the Colorado report is larger than previously recognized: 1.7 million people. In Colorado alone, HCSM enrollment (at least 68,000) is equivalent to 30 percent of marketplace enrollment. Because HCSMs often exclude essential health services and are therefore more attractive to people who are relatively healthy, enrollment of this size, relative to marketplace enrollment, may increase premiums for marketplace plans.
It also means a significant number of people have forgone comprehensive coverage and federal subsidies to buy this alternative arrangement that does not guarantee health care costs will be paid.
One HCSM recently surveyed its members and found 42 percent had incomes under 200 percent of the federal poverty level (about $50,000 annually for a family of three). Individuals and families at this income level would likely be eligible for low- or no-cost coverage in the marketplace or Medicaid.
Broker-driven marketing. Seven HCSMs reported using brokers to market their plans; some said they rely heavily or exclusively on brokers to grow membership. About one-third of all enrollment in these seven HCSMs was attributed to brokers.
Because HCSMs pay substantially higher commissions (15% to 20%) than marketplace insurers (2.6%) typically do, brokers have an incentive to place consumers in these arrangements.
Unpaid claims. Though their members submitted about $362 million in claims during the reporting period, the HCSMs asserted that only one-third of this amount — about $132 million — was eligible for payment. During the same time period, HCSMs brought in about $97 million, resulting in an apparent shortfall of $35 million. The low share of eligible claims is attributable in part to the HCSMs’ strict rules that disallow reimbursement for various types of care.
In addition, HCSMs have broad flexibility to refuse sharing of a claim even if it otherwise meets the rules. For example, HCSMs often require their members to negotiate their own discounts or seek charity care from health care providers before their claims will be eligible for sharing.
Essential care ineligible for sharing. HCSMs reported they exclude from sharing any expenses for certain essential health care, including costs related to preventive care, mental health care, and substance use disorders, and exclude coverage for many preexisting conditions, including asthma, autism, cancer, diabetes, and hypertension. Alternatively, comprehensive insurance must cover essential health benefits and all preexisting conditions.
Getting Uniform Data Is Challenging but Essential
The first-year report shows the challenges of obtaining data from HCSMs that are not subject to any of the standards or oversight that apply to comprehensive health insurance. Regulators determined that several HCSMs marketing memberships in Colorado had failed to report data and getting complete and accurate data from those that did was difficult. A second report, recently released, indicates those challenges continue, making it impossible to draw comparisons between the two years. Still, by requiring HCSMs to use templates and state-defined terms to submit data in a uniform way, Colorado regulators seem to be on the path to a clearer understanding of how HCSMs are working, their financial solvency, and their effect on state residents and the health insurance market. Indeed, data in the second report show the risks to consumers described above persist.
Looking Ahead
Colorado’s annual requirement to share data will help regulators better understand HCSM operations and finances and, with improved compliance to data submission requirements, should allow for comparisons across HCSMs and from year to year. Data can help point regulators to HCSMs that warrant closer scrutiny and identify for policymakers ways to better protect consumers who may lack a clear understanding of the financial risks of HCSM membership.
We caught up recently with a healthcare leader who had spent time in Atlanta in a previous role, and the conversation turned to last year’s closure of Atlanta Medical Center.
One major impact: the closure immediately left the Atlanta metro region, home to over 6M people, with only one Level 1 trauma center (a second Level 1 center opened an hour north of the city in February). “It’s devastating for the community to lose those services,” he shared, “but I also get why the health system made that choice, given how hard the economy has hit hospitals.” When all health systems are feeling the worst margin pressures in more than a decade, most would be reticent to step in and launch a new trauma program, which despite bringing prestige, is often a money-loser.
The conversation got us thinking about whether healthcare needs a new approach to securing essential services needed by the community which aren’t well supported by the payment system.
Our current model largely relies on nonprofit systems to meet the community need as a tenet of that status. But as one CMO shared, “If there’s more than one system in the market, we toss the responsibility back and forth like a hot potato.”
His solution: there needs to be top-down redesign of urgently needed critical services like trauma and behavioral health, as well as highly specialized services like transplant and pediatric subspecialty care, which he considered oversupplied in his market, with multiple subscale programs.
His hope was that health systems could cross competitive lines and collaborate to think about a rational approach to “regional healthcare master planning”, along with a new funding model.
It’s a tall order, he continued, but if health systems can’t find a solution on their own, they leave themselves open to government intervention that might mandate a solution—or further questions of the value communities are receiving from supporting nonprofit status.
David and Bill wrote that we should do this because it would save many lives. Perhaps this is all that needs to be said. We also argued that the U.S. stood to benefit if we could substantially reduce the number of global covid cases. This would reduce U.S. coronavirus exposure and slow the rate of evolution of new coronavirus variants. The economic cost to the U.S. of a more severe pandemic could easily be greater than the cost of making and distributing the vaccine. If so, the global vaccination effort would pay for itself.
There is, however, another moral argument for global vaccination, this one tied to 9/11 and the ensuing global war on terror. Since 9/11, the U.S. has engaged in 20 years of warfare in countries across the world.
At least 801,000 people have been killed by direct war violence in Iraq, Afghanistan, Syria, Yemen, and Pakistan… The U.S. post-9/11 wars have forcibly displaced at least 38 million people in and from Afghanistan, Iraq, Pakistan, Yemen, Somalia, the Philippines, Libya, and Syria. This number exceeds the total displaced by every war since 1900, except World War II.
Of course, much of that violence was committed by al-Qaeda, ISIS, or the Syrian government. Some of the civil wars that have followed 9/11 might have happened anyway. Nevertheless, Americans failed to limit their 9/11 response to the specific individuals who carried out the attacks. This was a principal cause of the ensuing death and displacements.
So now, the U.S. is known not only for baseball and democracy but also for drone strikes and torture. If we led an effort to vaccinate the world, it would be one of the largest humanitarian actions in history. We should do this to set an example and balance the effects of the global war on terror.
HENRY KOTULA 