In this episode, Jenny Beth Martin sits down with Dr. Brian Blase, President of the Paragon Health Institute, for a deep dive into Obamacare’s structural failures, skyrocketing costs, and the explosion of subsidy fraud in recent years. Dr. Blase explains why premiums and deductibles continue to rise, how “phantom enrollees” cost taxpayers an estimated $35 billion, and how COVID-era subsidy expansions created powerful incentives for abuse within the health insurance exchanges. He also exposes longstanding problems inside Medicaid—including financing rules that reward overspending, enable money-laundering schemes, and harm the vulnerable populations the program was meant to serve. This episode lays out a clear, actionable roadmap for healthcare reform and explains why fixing these programs is essential to protecting taxpayers, restoring choice, and securing America’s fiscal future.
In this episode, Jenny Beth Martin is joined by Dr. Brian Blase, President of the Paragon Health Institute, to uncover the truth behind Obamacare’s broken promises, soaring premiums, and the massive fraud now occurring inside the health insurance exchanges and Medicaid.
Dr. Blase explains:
From skyrocketing premiums and hidden subsidy costs to rampant program abuse, Dr. Blase breaks down how America’s healthcare system reached this crisis point—and what real, market-driven solutions look like.
Key topics include:
Obamacare subsidy fraud, Medicaid expansion, Medicaid financing schemes, phantom enrollees, taxpayer waste, healthcare reform, health insurance market distortion, federal spending, COVID-era subsidies, Paragon Health Institute research. https://paragoninstitute.org/
Guest:
Dr. Brian Blase, President of Paragon Health Institute | X: @brian_blase | paragoninstitute.org
Host:
Jenny Beth Martin, Honorary Chairman, Tea Party Patriots Action | X: @jennybethm | www.teapartypatriots.org
Narrator (00:14):
Welcome to the Jenny Beth Show.
Jenny Beth Martin (00:18):
Welcome to the Jenny Beth Show, brought to you by Tea Pretty Patriots action. I'm Jenny Beth Martin. Today we're tackling one of the biggest government failures in history, which is harming American families in defrauding taxpayers, the disaster known as Obamacare, the explosion of COVID era subsidy fraud, and the worsening crisis inside our Medicaid system. My guest today is Dr. Brian Blaze, president of the Paragon Health Institute. He's been exposing the truth about Obamacare's inherent failures, Medicaid's broken financing formula, and the billions of fraud stemming from the pandemic Obamacare subsidies from the Wall Street Journal to testifying before the United States Senate to the Paragon Institute's latest research. Dr. Blaze has been leading the charge for real constitutional market driven reform. Brian, welcome to the show.
Dr. Brian Blase (01:08):
Thanks so much for having me.
Jenny Beth Martin (01:09):
So before we get into the Obamacare fraud failures reform and all of that, let's take a moment for you to explain your background and how you became such an expert in dealing with Obamacare and healthcare policy more broadly.
Dr. Brian Blase (01:28):
Yeah, so thanks. My first job at the Heritage Foundation, I started that the month before Obamacare became law. So when it passed, they assigned me key aspects to become an expert in particularly the fiscal impacts of Obamacare, the subsidies for health insurance on the exchanges and the Medicaid expansion. And I became an expert in really those key parts. And then my career took me to the House of Representatives where I led the oversight committee's work, doing oversight and investigations related to Obamacare and government health programs, to the Senate Republican Policy Committee where I worked on what Republican reform ideas would be to a variety of free market policy organizations and to the White House. So from 2017 to 2019, I was at the National Economic Council. When trying to deal with Obamacare's problems was a central focus of the administration and the Congress. And when Congress largely failed in its legislative exercise, I really led a lot of the regulatory and administrative efforts that the Trump administration undertook to provide relief to families and small businesses that have been harmed by the law. And I've just continued to follow it, study it closely, how it has not worked as the authors of the law told us and hoped it would work to present day where last week I testified in front of the Senate Finance Committee on problems with the law, really core structural failings and options for what Congress could do to reform the broken status quo.
Jenny Beth Martin (03:22):
Okay, so let's talk about what did you see in that testimony? Let's first start with the big picture, what's broken and what it should be doing, not how to make it do that, but what was promised with Obamacare and more broadly just what would good healthcare policy be and then we can talk about more on reforms and other things that are broken a lot.
Dr. Brian Blase (03:48):
Yeah, so Obamacare had two main coverage expansions. One was a Medicaid expansion, and the second was sort of all these new federal regulations on health insurance that increased the price of insurance and then necessitated subsidies to make that coverage more affordable. And if you remember, the Obamacare individual mandate that compelled people to buy the product and if they failed to do so issued a tax penalty. What I'm talking about and what Congress is interested right now are these insurance regulations and the system of subsidies, the Obamacare significantly increased the price of health insurance in the individual market. So this is where people go to purchase plans who don't get coverage through the employer and don't get coverage through a government program. So it significantly increased prices, premiums, and deductibles, and it made the coverage worse. In many respects, fewer doctors and hospitals accept this type of coverage and it needed to have these subsidies to allow people to be able to afford the coverage that the regulations made more expensive.
(05:10):
By 2020, 60% fewer people were in this market than was projected when the law passed. So it was really anemic, not the robust private health insurance market that President Obama promised would be created with the enactment of Obamacare in 2021 during COVID, president Biden signed legislation to significantly increase the subsidies, and those subsidies were then extended again in 2022, but are set to expire in 2025. So the central issue in Washington right now, the key reason the Democrats shut down the federal government in October and half of November was because they want to continue these enhanced subsidies. So that is I, and I'll get into the problems with that in a second, but I testified and recommended that Congress permit these enhanced subsidies to expire after 2025. There created enormous problems and to actually institute market oriented reforms that expand consumer choice and would reduce government healthcare spending.
Jenny Beth Martin (06:38):
Okay. I know the answer to this, but I'm going to let you explain the answer better than I can. There were subsidies originally in Obamacare that passed back in 20 20 10, and then what happened in 2021 and 2022. And what we're looking at dealing with that is about to expire are not the ones that were originally promised. So those who were the least able to afford afforded and needed those subsidies according to how Obamacare passed, they still would be getting it even if what passed in 2021 and 2022 expired, correct?
Dr. Brian Blase (07:19):
That's right. So the Obamacare took effect in 2014 and subsidies were very generous. They were available to people generally with income below four times the federal poverty line. For the typical enrollee, the taxpayer subsidy covered about 68% of the premium in 2014. Now crucially, the way the subsidies are designed, they limit the amount that an enrollee has to pay for a plan. So regardless of what the premium is, the enrollee has to pay a set amount. Anything above that amount is paid by the taxpayer. This is a very inflationary subsidy design. The entire premium increase is borne by the taxpayer, not the enrollee. And that gives insurers significant pricing power because they can increase premiums knowing that the customer, the enrollee, is not bearing any of the burden from the premium increase. So premiums escalated from 2014 to 2020. In 2014, like I mentioned, the taxpayer was paying about 68% of the premium.
(08:39):
By 2020, the taxpayer was paying about 80% of the premium these COVID credits. What they did is replace a portion of the enrollee share with the taxpayer share. So again, for this typical enrollee, the past five years, they've only been paying about 7% of the premium. The taxpayer's been paying 93%. Next year, the COVID credits, the add-ons expire. But we go back to the original Obamacare subsidy structure and a typical enrollee will go back to having 80% of their premium covered by the federal taxpayer. The market has become over subsidized. 85% of all the premium revenue that insurers are collecting in this market are federal subsidies.
(09:38):
If the enhanced subsidies expire, it's still going to be a market where 75% of insurers premiums are coming directly from the US Treasury. And I want to make this point very clear, these are subsidies that the treasury pays every month that go directly to health insurance companies. So they do reduce the amount that an enrollee has to pay for their premium, but the subsidies go directly to health insurance companies. So health insurance companies now, their primary client, they're not serving the enrollees, they're not designing products at the enrollees value. Their primary client is the federal government, which is why they have engaged in unprecedented lobbying over the past six months because this is their primary revenue stream. And rather than offering and improving product value, they just seek to get more federal money from Congress.
Jenny Beth Martin (10:44):
That really distorts the entire health insurance market, doesn't it? When there aren't multiple customers, it's one primary customer, the federal government and the people who are supposed to be the customers, those who are receiving the health insurance, they're not even shopping, they're really not even shopping for products. They're just getting, they may be able to select from a few different options, but they're not going out and pricing and comparing a bunch of different companies.
Dr. Brian Blase (11:17):
And I mean, what we need to have a better healthcare system is a better incentives. And incentives often come from how we pay for healthcare. And we pay for the vast majority of our healthcare through health insurance. And Obamacare has a one size fits all structure. It's got all of these requirements on what the insurance has to offer, it's got requirements on the pricing, and it effectively outlaws alternatives and even some places where there are alternatives. If the government is sending so much subsidization towards the government's preferred market, which is for Democrats, the Obamacare market, you just don't have innovation on the financing side. And you have insurers that don't need to design products that people value because most people are paying just a fraction of the cost of these programs. So you get the proliferation of low quality health insurance coverage that ultimately has not made Americans any healthier. I mean, you look at life expectancy. We want health policy that is not making us poor, ideally making us healthier. And the first three years that Obamacare's key provisions took effect, American life expectancy declined.
Jenny Beth Martin (12:48):
So none of the promises from Obamacare were, they didn't pan out, did they? You can't keep your doctor, you may not have been able to keep your doctor. It certainly isn't more affordable and the health outcomes are not better than they were before.
Dr. Brian Blase (13:08):
Yeah, I mean, the PolitiFact named President Obama's promise that if you like your plan, you can keep it as the lie of the year in 2013. So people lost plans, they lost doctors. He said that family premiums would come down $2,500. And perhaps the one that is the most infuriating for me is he said he wouldn't sign legislation that added a dime to the federal deficit. Well, Obamacare has exploded federal deficits and debt. A lot of the provisions that were supposed to raise revenue and reduced costs, they've been repealed or ineffective, and they have juiced a lot of these fiscally irresponsible spending programs, particularly with these enhanced subsidies. And now Democrats don't even feel the need to offset any of the cost of expanding these subsidies. Like expanding these subsidies to make that permanent would be more than 400 billion over the next decade. And they have offered no reforms to go along with just more subsidies directly to health insurance companies. And they would just put that 400 billion directly onto the Uncle Sam's credit card.
Jenny Beth Martin (14:28):
It's just astonishing how much it costs, the problems that it has caused. And you found another problem. You found this problem with what is called phantom enrollees. What is that?
Dr. Brian Blase (14:44):
That's right. So the enhanced subsidies made coverage free or fully taxpayer paid for individuals that claim a certain income. And so what we did is we compared nationwide individuals that claim that income and qualify for a fully subsidized plans with the number of people that actually have that income that would be eligible for an a c plan. And we found nationally 6.4 million people enrolled in that fully subsidized coverage who aren't eligible. So that's the first data point. We have 6.4 million people in this category that aren't eligible now. There's been a lot of, actually some really good reporting that has described some of the fraud schemes that have taken place. What happened with these fully subsidized plans is that they created incentives for really unscrupulous brokers and agents to advertise free plans and promote things like cash or gift cards to get people to call a number.
(15:57):
So people would see these advertisements on Facebook, social media, they'd see signs on the road when they were driving, they would call the number, they would ask for cash or the gift card, and they would get told that the first step was enrolling in health insurance. They would give their name and birthdate, they could get signed up for a health insurance plan. Bloomberg did a very lengthy expose on this in June called the Healthcare Hustlers of South Florida, and they described one particular network that created large enrollment schemes, and one of their customer service agents said half the people that we were enrolling in health insurance had no idea they were signing up. Now, if you are enrolling a lot of people who have no idea that they are signing up for health insurance, you might expect that a lot of these enrollees don't use their health plan.
(16:58):
In August, CMS released data of the number of enrollees that didn't use their health plan at all, and they released that data from 2019 to 2024. What the data show is that in 2021, less than 4 million people didn't use their a CA plan a single time by 2024 that had grown to almost 12 million people. So 12 million people enrolled in a plan in 2024 for some period of time that didn't see the doctor, that didn't have a prescription filled, that didn't have a lab test. Now that's very unusual for health insurance. Typically in private health insurance, 85% of people will file at least one claim a year, and we were looking at 40% of these fully subsidized enrollees that didn't make a single claim. So a subset, probably a large subset of these enrollees are what were referred to as phantom enrollees. These are people who are enrolled, but they're not really in the market.
(18:09):
They don't know that they have the coverage or they have another type of plan, and they're not making any claim on this. We estimate that in 2024, the federal government sent 35 billion to health insurance companies on behalf of people that didn't use their plan a single time. So the insurance companies make money off of this because they get the payment from the monthly payment from the treasury, regardless of whether the individual enrolls and they uses any healthcare. And the brokers and agents, they get a check commission every month that a person is enrolled, regardless of whether they use the plan at all.
Jenny Beth Martin (18:55):
They get a check every month
Dr. Brian Blase (18:59):
The way that the treasury sends the insurance company the subsidy, and again, the subsidy covers the entire premium, and then the insurance company has a contract with the agents or brokers for every month that person's enrolled, they will then get a commission.
Jenny Beth Martin (19:20):
That's just crazy. And when you were talking about this, I've seen those kind of signs along roads and at busy intersections around the entire country. In my travels, it'll say something about Obamacare and call and get some kind of free stuff going on here. Now, I think it's important to explain, I think we all can imagine that we know at least somebody who maybe didn't use health insurance for a year, they just had a really good year and they didn't get sick. So what you're saying is in 2024, less than 4 million people didn't use it, and maybe that's about the 15% who maybe legitimately just never were going to file a claim in that year, especially since Obamacare is forcing young healthy people to be on it who may not really get sick in a year. But the fact that it went from 4 million to 12 million, that is three times as many people, the numbers don't even seem believable.
Dr. Brian Blase (20:29):
It went from 4 million to 12 million people, and in terms of percentage, it went from less than 20% to almost 40%. So a doubling in the percentage of all enrollees that didn't use their health plan a single time.
Jenny Beth Martin (20:50):
So what are the consequences of this? How much money are we talking about in terms of fraud because of the, and this is all because you think this is all happening because of the Obama era subsidies. Is that correct? Or Most of it is.
Dr. Brian Blase (21:08):
So there was fraud that predated on the expanded subsidies, but the expanded subsidies, turbocharged, the fraud and the Biden administration had a administrative strategy that was maximizing enrollment at any cost. So they skewed a lot of what proper program integrity should look like. So I think the fuel for the fraud fire was the expanded subsidies that made the coverage fully taxpayer subsidized. So almost half of enrollees in the market now pay nothing. And because of, I think what is very flawed policy on automatic re-enrollment, we take people that don't do anything for Obamacare plans. There's an annual open enrollment period. We're actually in the annual open enrollment period now. So you look at the options, you select coverage, but last year, 45% of enrollees didn't do that. They didn't select anything. And instead of being dis-enrolled and having to come back and show that they want the plans, they were just automatically re-enrolled from a previous year. So I think this combination of the zero premium plans and the automatic re-enrollment, there's just no incentive for the enrollee to even know what's going on because they're not paying anything.
Jenny Beth Martin (22:52):
So it almost seems like roads or something, you just use it and it doesn't even seem like a cost anything and you're able to use it for free. Well, at least in the south, I know there are a lot more toll roads up north, but why did the Biden administration want to maximize the number of people that were enrolled this way?
Dr. Brian Blase (23:14):
They thought that it was politically advantageous for them to show a high number of people enrolled in the Obamacare market and it would just to build support for the law. And I think there is really an ideological view that health insurance coverage is by far the most important health policy objective for many on the left. So ensuring that rules are followed and that only eligible people are enrolled in coverage, that is just not very important for them. And even when we released the improper enrollment data, the improper enrollment numbers we produced, we didn't get a lot of pushback from the left. I think it's because they just don't care as much about improper enrollment. But when we released the phantom enrollment aspect of that and that a lot of these people weren't using any healthcare that got them agitated because that was sort of an attack on their understanding of the way this program was working because they think the program is giving people coverage and people are then using the coverage and keeping themselves healthy out of the emergency room. But it is a shot to the worldview if 40% of enrollees didn't use the health plan a single time, because what that is an acknowledgement of either it's the fraud or people just don't value this plan at all, and they have decided not to use it a single time.
Jenny Beth Martin (25:03):
Brian, did the Biden administration allow or even encourage subsidy fraud because those inflated numbers make Obamacare appear more successful?
Dr. Brian Blase (25:15):
I mean, I think that what they did was extremely negligent because they would've seen these numbers coming in and they started hearing stories from people complaining that their plans were switched out from under them, and they just were extremely slow to act. Eventually it became a political problem. News outlets were reporting on it, and we had done our initial data analysis in June of 2024. They did take action to suspend brokers, but they did it in a very haphazard way, and it wasn't what they did violated proper legal processes. So unfortunately, a lot of those brokers that were suspended, they had to be reinstated because the Biden administration did such a poor job of implementing the enforcement actions. So they really were, I mean, I have called them what they did, borders on criminally negligent in their oversight of the exchanges and how much fraud they allowed to permeate the program over the last couple of years.
Jenny Beth Martin (26:31):
It seems like it was criminally negligent when you were just saying that you think there's an ideological difference, that those on the left think that healthcare policy is best addressed with health insurance. They're not focusing on outcomes. They're not. It just seems so wrong to me because they're just looking at numbers of people who have insurance. And I've always said since the beginning of pretty Patriots and the TEA pretty movement fighting this government takeover of healthcare health insurance doesn't equal healthcare. The healthcare is just, you can tell whether you've got good healthcare or not by whether you live or not, whether your health outcomes are better and based on the personal and private relationship a patient has with a doctor, but they're not focused on that at all on the left, are they? That's not how the lens are looking through. It seems to me.
Dr. Brian Blase (27:31):
I think health insurance does not equal healthcare, which does not equal health and eye. I think it's a very poor motivating principle to say the number one thing we're going to be concerned about is whether people have a health insurance card in their wallet. One, what does that health insurance card buy? Is the health insurance card worth anything? And a lot of these plans, they don't cover the best doctors and hospitals in areas, so it's not a very good health insurance card. But there's also just other ways to finance healthcare. Why do we need to have one? Why does the government think that it needs to come in and say, we know what the one way is that everybody should finance their healthcare in the us? It leads to a lot of bad problems, and insurance is a very inefficient way to cover a lot of healthcare expenses.
(28:34):
It just has high administrative costs and the bureaucracy that results from having insurance come in between a doctor and a patient. I think health insurance is important. People should have health insurance. But I think health insurance can take many different, there can be many different flavors of it. And Obamacare restricted American's freedom to finance healthcare in the way that works best for them. And in doing so, it reduced the incentive for providers and payers to develop better ways that we can pay for our healthcare in ways that are just more efficient and Obamacare structure. The healthcare industry loves Obamacare. Insurance companies have made massive profits off of Obamacare. The medical industrial complex has been in Washington for months now arguing for more money, going through this Obamacare regulatory and subsidy structure because it is good for them, but it hasn't produced the value and it harms the financial innovation that we need to develop better ways to pay for healthcare.
Jenny Beth Martin (30:06):
So I want to talk about some of the solutions that you see, but before we do that, let me ask you, is there also a problem with Medicaid? And if there is, we should probably dig into that a little bit as well.
Dr. Brian Blase (30:21):
There are major problems with Medicaid and actually Congress in the reconciliation Bill did some important Medicaid reforms. First Medicaid is the joint federal state program that traditionally served lower income categories of more vulnerable Americans. So children, pregnant moms, people with disabilities and seniors. Obamacare significantly expanded Medicaid to cover able-bodied working age adults. I have argued that there are two fundamental problems with Medicaid. The first is a result of Obamacare. Obamacare sends seven. So underpinning Medicaid is a federal reimbursement of state spending. So states spend, and then the federal government sends states money for that spending through the Medicaid program. One of the perversities is that the federal government sends seven times more funding for every state dollar that they spend on an able-bodied working age adult in the Obamacare expansion than for traditional Medicaid rollies. So we have a system that discriminates against the most vulnerable that leads to a lot of waste because it gives states bad incentives like the classify people as eligible under the expansion who aren't because the federal government's going to pay so much more for expansion rollies.
(31:51):
The second big problem is that states have designed financial schemes to maximize federal revenue coming in through the Medicaid program. And those schemes, basically they develop accounting gimmicks that give the appearance of actual expenditures, but are just fiction that have been created on paper. But that fiction drives higher federal spending and big powerful healthcare interests within states have constructed these systems to profit off of the Medicaid program. So several powerful hospital systems within states, and they just get a lot of corporate welfare through the Medicaid program. So Medicaid is a welfare program. It also has lots of corporate welfare involved with it. The one big beautiful bill had two major reforms to Medicaid, one that addressed each of those two problems. The first is it requires able-bodied working age adults to work or engage in community service or job training in order to stay eligible for the Medicaid program.
(33:11):
It's a modest requirement. It's just 80 hours of work a month or activities that they count as work, but that helps to protect the program for the most vulnerable. The second major set of reforms and the ones that I'm proudest of, because Paragon really did a lot of work on what we called addressing Medicaid money laundering, was restricting states the schemes that states can employ to maximize federal funding through Medicaid without actually contributing their own dollars. And that reduce a lot of the corporate welfare that goes to politically powerful providers through the Medicaid program. And I should say another thing, the outcomes in Medicaid have not been great. And one of the things with the expansion, the expansion was supposed to take people out of the emergency room. They were going to get a usual source of care the exact opposite happened. Medicaid expansion has led to a surge of additional demands on emergency rooms for non-emergent care. So that's about the least efficient way to deliver healthcare in the US is to deliver primary care services through the emergency room.
Jenny Beth Martin (34:33):
Would you elaborate a little bit more on the second reform that you're so proud of that stops the Medicaid money laundering? Just say that one more time.
Dr. Brian Blase (34:44):
Yes. So let me describe the main scheme. So the main scheme is something called a provider tax. It's not really a tax, and you'll understand why it's not a tax when I explain how it works. So a hospital system will come to a state and say, we want to be taxed a million dollars. And then what you're going to do is state you're going to then spend that million dollars back on us in Medicaid that's going to obtain additional federal funds, and then you'll share the federal funds with us. So normally, I mean it's the only tax, which is why it's not a tax that the recipient of the tax lobbies the government to assess on them. So a million dollars goes from the hospital to the state. The million goes back from the state to the hospital. The state then invoices the federal government for that million dollars as if it was a real expenditure.
(35:47):
The typical state will get a 70% federal reimbursement. So that accounting gimmick has been able to net the state $700,000 and it takes that $700,000 and spreads it to the healthcare providers that pay the tax or it could use it for any purpose. What the reconciliation bill did is reduce the ability of states to raise revenue through that fraudulent tax scheme. What I think was very creative in what the Republicans in Congress did is that they implemented a proposal from the Obama administration on how to do this and were able to say that they were doing something that President Obama had proposed. So they restricted the provider tax revenue and they also limited the payoffs that states could make to powerful political providers. Republicans in Congress to their significant credit, took on politically powerful hospital systems and told them that they can't have a blank check on the federal Treasury and that these scheme and states because states benefit from these as well. Unfortunately, the way that the Medicaid program is designed has turned states into bad actors where instead of looking to run efficient programs, they just look to create more of these Medicaid money laundering schemes to leverage federal revenue coming into the state. So republicans in Congress to their credit, took on hospital systems and they took on states and they enacted meaningful Medicaid reforms.
Jenny Beth Martin (37:39):
And this is what you have explained. Medicaid's financing formula actually reward states for overspending and penalizes seats that run efficient programs. Is that correct?
Dr. Brian Blase (37:52):
Yeah. I mean, states get more money through Medicaid the more that they spend. So it is just a total perverse incentive. And the best conservative solution for Medicaid is to provide states a fixed amount of money and say, here's the allotment that you have. And it is for lower income, vulnerable Americans access to healthcare, but to eliminate the ability of states to engage in. You can't think that a efficient, well-functioning government should have legalized money has a core component of it, but a core component of the Medicaid program. And remember, Medicaid is our third biggest program. It's a massive program. The federal government is now spending 700 billion a year on Medicaid. And a core way that the program works is through a money laundering apparatus. Effectively
Jenny Beth Martin (39:03):
Only the government could come up with a program that's
Dr. Brian Blase (39:06):
Twisted private sector. It would be illegal. You could not do this type of thing. And the private sector, you would go to jail for financial fraud. The government permits it.
Jenny Beth Martin (39:17):
The government often finds ways to do things that would be illegal for any other person doing it. Brian, after COVID millions, is this correct? Millions of ineligible people stayed on Medicaid. So there were people who weren't eligible for it, which we're just talking about it. Even some who moved out of state or had private health insurance. Was that happening as well? And states are still paying for them?
Dr. Brian Blase (39:45):
Yeah, has a condition of receiving additional money through COVID. The federal government prohibited states from doing eligibility reviews and removing ineligible people from the program. And that was for the duration of the public health emergency. And as you recall, the Biden administration stretched out the COVID public health emergency well past when the emergency had actually ended. So by the spring of 2023, there were close to 20 million people enrolled in Medicaid. So the federal government is paying for these individuals who were not eligible for the program, most of whom had other sources of coverage, many of whom had gotten jobs and had employer coverage. Starting in the spring of 2023, states could begin to do eligibility reviews. And we did see a decline in Medicaid enrollment as you would expect, but unfortunately, Medicaid enrollment still is above the pre pandemic levels by several million people.
Jenny Beth Martin (41:00):
That's a real problem. I hope that as we are seeing some of the reforms that have happened and more that need to happen, that we clean this up. When I was reading this as I'm researching for this episode, I just was thinking that this is like voter rolls. People move out of state and they should get off of the voter rolls and clean it up. And now we've got the same kind of thing happening with Medicaid roles.
Dr. Brian Blase (41:27):
Yeah, so actually CMS earlier this year said that there was a total of 3 million people enrolled on multiple programs. So about half of that was the same person enrolled in multiple state Medicaid programs. And about half of that was somebody enrolled in both a Medicaid plan and an Obamacare exchange plan. And again, for all of these people, the federal government is sending generally health insurance companies checks.
Jenny Beth Martin (42:01):
It's really messed up. Okay. Another thing you have written about why Florida is right to resist Medicaid expansion. Why is that important to do?
Dr. Brian Blase (42:17):
Yeah, so we did a paper almost two years ago on the reasons Florida was right not to expand Medicaid. And
Jenny Beth Martin (42:26):
Yeah, it's a little while ago.
Dr. Brian Blase (42:28):
You want to keep the program focused on who it was meant for the low-income pregnant moms, kids, people with disabilities. The public resources should be focused on a meaningful safety net for those that need them. When you states that expanded Medicaid enrollment and spending went off the charts, and it led to a deterioration in the quality of healthcare for the most vulnerable because there's additional demands on the healthcare sector. So times for getting appointments increased and emergency department use soared. So there's a whole bunch of fiscal reasons why states shouldn't expand Medicaid, but I think the most powerful ones are it's because the program should be preserved for those who it was most needed for low income working age adults, they should be on private health insurance. Their incentive should be get a job that offers health insurance. Why would we discourage that with overly expansive welfare policy?
Jenny Beth Martin (43:53):
And another way of saying what you just said is why would we encourage them not to work essentially what it winds up doing so they don't have the benefits and the fulfillment that one gets when they are working and providing for themselves and experiencing the fruits of their own labor. Okay. So we've talked about the problems and are there other problems? I mean, it's Obamacare. We could probably talk about problems for a month and still not cover them all, but are there other big problems you think we should touch on? And then I want to just get to what do you think the solutions are?
Dr. Brian Blase (44:35):
I mean, I guess one big one that's top of mind for me, and we've done some recent work on it, it's the major inequities between whether people get offered coverage through the workplace or whether they're enrolled in an Obamacare exchange plan. This is a real problem with the expanded subsidies like for lower and middle income workers. They get a much bigger government benefit when they don't get offered coverage at work. There is a benefit from getting coverage offered from work. The premiums for an employer plan aren't subject to income or payroll taxes, so you have an increase in net compensation, but the size of the Obamacare subsidies are so much larger than that. What it does, two things. One, it encourages small employers not to offer health insurance. So small employers less than 50 aren't subject to tax penalties if they don't offer health insurance. And we've seen a large drop in the number of small employers not offering health insurance, and that raises costs for the federal government because more people are on the subsidies. It's also just not fair to people that get coverage through the workplace, and it gives them an incentive to seek jobs that don't offer health insurance through the workplace. So it just creates all of these distortions in the tax code that aren't fair. There should not be a massively huge bigger government benefit for people that do not get an offer of coverage through their employer.
Jenny Beth Martin (46:23):
So what are the solutions to these problems? And also I just want to point out that while we're not talking about this today, even with people who are getting health insurance through their employers, their premiums have gone up and they're working and they're the taxpayers who are having to pay for the other stuff we've talked about. So they're kind of being hit at both ends as well.
Dr. Brian Blase (46:45):
Yeah, and some of that premium increase is because of features within Obamacare that have increased consolidation in the market and the merging of hospital systems and hospital systems spying up doctors practices. Those both accelerated with the passage of Obamacare. And the reason is Obamacare added all this complexity. It made it harder for smaller physician practices to remain independent so they sold out and that raises costs and that raises costs system-wide. So as far as solutions, and I'd recommend viewers to look at the testimony I gave before the Senate Finance Committee last week, but the first one and the one that's most central to the current debate is that Congress should allow the COVID era enhanced subsidies to expire. The worst thing is just to pour more taxpayer fuel on top of an inefficient system. It's just going to entrench it and make reform all the more difficult.
(47:50):
The second major reform is Americans need to be free to purchase health insurance that works best for them. So the Trump administration advanced some regulatory reforms here. They opened up something called short-term limited duration health insurance that's not subject to all of the Obamacare costly rules. Congress could codify those or the Trump administration could open those up. There's opportunities for small businesses including permitting small businesses to join together through an association health plan and gain some of the regulatory advantages that large businesses receive. There's actually, within Obamacare, there is a second subsidy program that Congress could fund. It's called the cost sharing reduction program. If Congress were to fund that, it would decrease silver plan premiums, which is the plan that most people in Obamacare purchase by 12%, and it would also reduce the overall subsidization in the market because it would lower the premium subsidies significantly.
(49:02):
The president has put out the general policy direction that we should be directing subsidies away from insurance companies to patients. I think that we should look to do as much of that in the most practical way possible. The federal government is going to spend lots of money subsidizing healthcare for lower income people. I think it is extremely inefficient when those subsidies go directly to health insurance companies. I think there are proposals out there, and Paragon has one that we developed a couple years ago called the HSA option that would transition some of these subsidies away from health insurance companies and give patients the funding in health savings accounts. The last thing that I would mention is broader system reforms. The government has a lot of perverse policies that raise costs throughout the system because unfortunately, commercial payers benchmark a lot of what they do to what Medicare does. The most obvious example is site neutral payments in Medicare currently, Medicare pays much more for the same service delivered in a hospital than is delivered in a physician office. It increases those incentives for consolidation. Medicare should not do that. Medicare should pay the same. We should lower the amount that is paid in hospitals to what is paid at doctor's offices, and if they do that, commercial payers will probably respond in turn and that will one, it'll save Americans a lot of money, but it'll also reduce incentives for consolidation.
Jenny Beth Martin (50:50):
Brian, if we don't fix healthcare, what's going to happen? What will the consequences be?
Dr. Brian Blase (50:57):
I mean, it is the single biggest part of family budgets and government budgets, and it is not delivering on value. If you just think about it in terms of the government budget for a second, there's only two parts of the federal budget that are growing as a percentage of the economy. Federal healthcare programs and interest payments on the debt and interest payments on the debt are largely a function of unsustainable federal healthcare programs. So they are quite literally, they are bankrupting the country, the trajectory that these programs are on. So we need, in order to have a fiscally secure future and American prosperity and not have massive taxes and inflation and interest rates, we need to get ahold of these programs and get them on sustainable footing and families need that for their budgets as well. I'm enrolled in an Obamacare plan and it's basically the only choice that my family has, and we just got noticed that our premium is going up to $33,000 next year for a plan with a $14,000 deductible that is unaffordable. I mean, there's no way my family is going to, the probability that we spend $47,000 on healthcare next year is really small and families across the country are facing the consequences of this unaffordable structure. And so I get that there's some sympathy to say, okay, well, we're just going to subsidize it. The problem with just subsidizing is that somebody is still paying for it, and it is just leading to higher, higher prices and premiums over time,
Jenny Beth Martin (52:53):
$47,000 for healthcare. That is the furthest, let me just rephrase that. It's $47,000 basically for health insurance and not necessarily even for better quality care. That's the furthest thing from affordable. Most people don't even make that much money in their first job. I mean, maybe they do today. Maybe they're making about 50,000 in their first job. It's just there's nothing left at the end of the month when you're spending that much divided by 12 per month.
Dr. Brian Blase (53:31):
Yeah, it's outrageous. And there's got to be better ways. I mean, my family can't go without health insurance, but there have to be, I should be able to live in a society where I could take that amount of money or much less than that and buy a health product that I value
Jenny Beth Martin (53:56):
And one where you actually can shop around to find the product that you're looking for rather than it be thrust upon you from the Obamacare exchange.
Narrator (54:05):
Yep.
Jenny Beth Martin (54:08):
What message do you have for bureaucrats who are ignoring the fraud, wasting taxpayer dollars and hurting the very people they claim to help?
Dr. Brian Blase (54:16):
Well, I will say that Dr. Oz has been very good on this and really has prioritized getting after the waste fraud abuse in government health programs. He was a leader on making the case for the Medicaid reforms in the reconciliation bill. So I do think CMS is under a change of leadership, and that's really important. I would say the message, it should infuriate people that we have constructed a system where it is so easy to rip off the American taxpayer. I mean, the Somalia fraud in Minnesota over that was revealed last week where they were having their kids diagnosed with autism, getting kickback payments and sending the money back to the Middle East where some of it funded terrorism. I mean, that's because of how poorly designed and managed our federal healthcare programs are, and hardworking Americans that get up and do their job and pay their taxes should be infuriated that we've constructed a system that is so easy for fraudsters and scammers to rip them off.
Jenny Beth Martin (55:49):
Brian, what is the one thing or a list of things that you think Patriots can do to help really push for healthcare reform in America?
Dr. Brian Blase (55:57):
I mean, right now it's to be engaged on the Obamacare subsidy fights. I mean, this is the fight of the moment and it's winnable. So I think to continue to push that, we can't just continue to throw good taxpayer money after bad and to stop the over subsidization of the market and just to, I think, be engaged and to prioritize healthcare reform. I think a lot of conservatives have deprioritized health policy, and there's a discouragement, I think in the aftermath of 2017 and the legislative failure around Obamacare reform. But this is big government. This is the battle in my view, it's the biggest battle of big government because this is how big government just continues to grow bigger and interfere in Americans lives
Jenny Beth Martin (57:12):
Well, and we have a republic if we can keep it. So even though we're frustrated that it didn't get repealed and things haven't worked out the way we want it to when it comes to Obamacare, we still have to be engaged if we want to be able to keep our republic and this system will bankrupt our republic if we don't get it fixed.
Dr. Brian Blase (57:30):
Yeah, we have to reform these programs.
Jenny Beth Martin (57:33):
Brian, thank you so much for your courage, your clarity, and your commitment to restoring sanity to America's healthcare system. I really appreciate you joining me today.
Dr. Brian Blase (57:43):
It was fun. Thanks for having me on.
Jenny Beth Martin (57:45):
Thank you so much, Brian. And I'm Jenny Beth Martin. This is a Jenny Beth Show, and we'll see you next time. If you enjoy today's conversation, go ahead and hit like and subscribe. It really helps us reach more people who care about freedom and the Constitution. You can find this and other episodes@jennybethshow.com, as well as Facebook Rumble, YouTube, Instagram X in your favorite podcast platform.
Narrator (58:10):
The Jenny Beth Show is hosted by Jenny Beth Martin. The Jenny Beth Show is a production of Tea Party Patriots action. For more information, visit tea party patriots.org.