Fund patients, not insurance companies: progress report

"Let them shop" would solve high-cost complexity in Medicaid, Medicare, and beyond. Are we making any progress?

First an overview, then updates.

Sally C. Pipes is the president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute, a San Francisco–based think tank founded in 1979.

https://benjaminrush1776.substack.com/p/sally-pipes-trump-has-a-subsidy-alternative

Sally Pipes: "Trump Has a Subsidy Alternative, We Should Take it Seriously"

Direct vouchers for patients—not payouts to insurance companies—is a real path to lowering costs and improving coverage.

Nov 21, 2025

The following is an excerpt from an article by Sally Pipes, Founder & Chair of the Benjamin Rush Institute, published in Newsmax. Click here to read the full article in your browser.

In a social media post earlier this month, President Trump laid out his own alternative to the enhanced Obamacare subsidies that fueled the record-breaking 43-day government shutdown.

Thanks for reading Benjamin Rush Institute! Subscribe for free to receive new posts and support my work.

Type your email...
Subscribe

“I am recommending to Senate Republicans that the Hundreds of Billions of Dollars currently being sent to money sucking Insurance Companies in order to save the bad Healthcare provided by ObamaCare, BE SENT DIRECTLY TO THE PEOPLE SO THAT THEY CAN PURCHASE THEIR OWN, MUCH BETTER, HEALTHCARE, and have money left over.”

Colorful language aside, the idea is worth considering.

Individual Americans deserve more control over how their healthcare dollars are spent. Injecting more consumerism into the health insurance market can help restore efficiency — and sanity — to our healthcare system.

It’s hard to argue with Trump’s basic critique of the generous COVID-19-era Obamacare subsidies. If extended beyond their scheduled expiration at the end of this year, these subsidies will cost taxpayers $350 billion over the next decade, according to the Congressional Budget Office (CBO).

And as the president notes, that money doesn’t go to patients — it goes directly into the pockets of giant insurance companies.

Trump’s proposed solution to this mess is also compelling — at least in principle. If the government is going to spend enormous sums subsidizing health insurance, much better to give those funds to individuals and let them use the money to buy coverage of their choosing — or even pay for care directly.

An army of consumers with control over healthcare dollars is a recipe for healthier competition among insurers — and higher-quality, better-value coverage in the long run.

But why stop at Obamacare?

Why not look at voucherizing other parts of the health insurance system?

Consider Medicare.

The government currently spends over $1 trillion each year on the healthcare entitlement for seniors.

That amounts to nearly $15,000 per Medicare beneficiary.

Yet instead of giving those funds directly to patients — and allowing them to purchase private coverage — the federal government funds a sprawling health insurance bureaucracy that employs thousands of federal workers.

Transitioning the program to a system of vouchers, in which every enrollee is allotted a set amount of money to pay for healthcare each year, could lower costs and improve the quality of coverage for seniors.

Or let’s extend Trump’s idea for the individual market further.

Why not encourage employers to give their employees untaxed dollars to purchase health insurance that suits their unique needs on the individual market, rather than buying a one-size-fits-all plan for everyone in their employee population?

President Trump created a vehicle for voucherizing employer-sponsored coverage — the individual coverage health reimbursement arrangement, or ICHRA — in his first term.

These accounts can give employers more control over their own healthcare costs — and can encourage employees to spend their healthcare dollars more wisely.

The upshot is more competition within the healthcare market — and downward pressure on prices over time.

The Trump administration has yet to build out a legislative vehicle based on the president’s social media post. But Sen. Bill Cassidy, R-La., has already floated one approach.

The Senate HELP Committee chairman has proposed to redirect enhanced subsidy money into individual Flexible Spending Accounts, or FSAs.

Patients would have 15 months to use those funds to purchase health coverage, or else forfeit the money back to the government.

Republicans can do better.

For starters, they should not commit to extending Obamacare’s enhanced subsidies permanently. Second, they must pair any form of federal health insurance voucher with reforms that relax Obamacare’s insurance market regulations.

Or, make lower-cost short-term health plans, which are not subject to those regulations, more widely available.

Indeed, unless the GOP takes steps to deregulate the health insurance market and make a wider array of affordable plan options available to patients, transitioning to direct subsidy payments won’t create a healthy coverage market.

It could even precipitate a “death spiral,” in which patients flee the exchanges, leaving no one but high-cost, high risk patients in the Obamacare risk pools.

Spending less on corporate welfare for insurers, and more helping patients through direct financial assistance, is precisely the right idea — one whose moment may have finally arrived.

Note that her two final recommendations are already in place: the unsustainable, extended ACA subsidies are gone, and short-term plans are more widely available.