At the close of the 2016 campaign, Donald Trump began telling voters at every appearance that “the system is rigged.” It was a clever message, not only because it could be applied to multiple situations — the political system, the economic system, almost any system you like — but because it resonated with what people felt about their own lives. If you’re not wealthy or powerful, it can feel like the people who are have hoarded all the benefits of society — and have carefully constructed the system to guarantee that it continues. People believed Trump when he said the system is rigged because in so many ways, it’s true.
Unfortunately for them, they also believed him (or 46 percent of them did, anyway) when he said he’d change it. And today we have two terrific examples of what a scam he was pulling.
The first is the White House’s announcement that the new health and human services secretary, replacing the disgraced and departed Tom Price, will be Alex Azar. A conservative lawyer (he clerked for the late Supreme Court Justice Antonin Scalia and worked on the Whitewater investigation) and former George W. Bush administration official, Azar’s most important qualification is that he was president of Lilly USA, a pharmaceutical company. And yet, President Trump had the gall to tweet this today:
Lower drug prices? That’s Trump’s way of saying to his voters, “Wanna see how dumb I think you are?
Hiring a pharmaceutical executive to bring down drug prices is like hiring a coal lobbyist to oversee environmental protection or hiring a Wall Street insider to police Wall Street. Of course, Trump did those things too.
During the campaign, Trump repeatedly said he wanted Medicare to be able to negotiate drug prices, something liberals have long advocated. Under current law, Medicare has to pay whatever the pharmaceutical companies charge for drugs, and there is nothing that terrifies the companies more than the prospect of those negotiations. We in the United States spend more on drugs than anywhere else in the world, because drug companies don’t face the regulations here that they do elsewhere. Those high prices in America are the foundation of the industry’s spectacular profits.
Even if he hadn’t appointed Azar, Trump had no intention of keeping his promise on price negotiation. You can see it in an extraordinary sequence of events that happened in January, which displayed Trump’s own ignorance and his willingness to lie (and have others lie for him) on this issue. First he held a news conference at which he said the drug companies were “getting away with murder” and he would change things: “We’re going to start bidding and we’re going to save billions of dollars over a period of time.”
Then a few weeks later, he had a meeting with drug company executives, and following the pattern in which he takes the position of the last person who spoke to him, he said he was strongly opposed to anything that would harm innovation in the industry. “That includes price fixing by the biggest dog in the market — Medicare — which is what’s happening,” he said — even though that is not what’s happening, which is the whole point. Then a few days after that, when Sean Spicer was asked whether Trump still favored Medicare negotiating drug prices, he said, “He’s for it, yes. Absolutely.” Which he isn’t.
Drug prices are just one part of a larger picture: If you’re wondering why we in the United States pay more for our health care than any other country in the world, the most important answer is prices. We pay more for services, we pay more for devices, we pay more for procedures, we pay more for everything. And our physicians get paid more than in any comparable country.
To Trump’s first secretary of health and human services, that state of affairs wasn’t a problem at all. Tom Price was an orthopedist, and orthopedists are the most lavishly compensated of all medical specialists. Their pay averages $489,000 a year, and you can bet that they find the idea of cutting medical costs to be a direct threat to that bounty. Just as pharmaceutical company executives think that bringing down drug prices is the last thing we’d want to do, doctors (particularly specialists) tend to recoil in horror at the prospect of reducing their compensation.
Why am I raising the issue of physicians and how much they’re paid? Because of this report in the New York Times today, which details how the administration is reversing a broad Obama initiative to move away from a fee-for-service system. In it, doctors and hospitals make more money if they do more procedures and run more tests, and make more money when people get readmitted to the hospital. The previous administration wanted to move toward one in which they have incentives to keep patients healthier, but Trump is undoing that:
The administration has proposed canceling or shrinking Medicare initiatives that required doctors to accept lump sums for cardiac care and joint replacements, two of Medicare’s biggest cost drivers. More than 1,100 hospitals were scheduled to take part in the cardiac initiative starting in January, and 800 have been participating in the joint replacement program.And while Congress passed a bipartisan law in 2015 creating a new payment framework that is supposed to reward doctors for value over volume, Mr. Trump’s Department of Health and Human Services has exempted more doctors from a provision that created merit pay by giving them bonuses or penalties depending on the quality of their work. …Research has shown that the traditional model of paying doctors, known as “fee for service,” often results in unnecessary or inappropriate care. The federal government has been slowly moving away from it since 1983, when Medicare changed some of its payments to hospitals.But the changes now pushed by H.H.S. are a renunciation of the Obama administration in particular.
Even though everyone claims that they want to see medical costs come down, if you actually do that, some people are going to lose out — like doctors, hospitals and pharmaceutical companies. If you’re serious about tackling the problem, you have to acknowledge that. But if you’re not serious about it, you can take policy steps that will keep health spending rising, while simultaneously telling voters that you’re going to unrig the system for them.
But it only works if they’re dumb enough to believe it. And that’s what Trump and his administration are counting on.