Missiles and drones, not health insurance

An accounting for the Trump regime's misplaced priorities, and comments on other stories in the news.

The Pentagon is asking the White House for an additional $200 billion to fight the president’s ill-conceived war in the Middle East.

While it’s unclear from the initial news reports whether this is a one-year or multi-year appropriation, the size of the request suggests this war is going to drag on a lot longer and involve far more manpower and firepower than President Trump and Secretary of Defense Pete Hegseth have let on. The now 2 1/2-week-old war of choice has already left 13 soldiers dead and more than 140 wounded. It has already cost over $12 billion, according to reported estimates.

Let’s put that cost and this latest request in perspective. The $12 billion already spent is enough to have extended the Affordable Care Act subsidies for close to six months.

Instead, over two million or 9% of people in ACA health insurance plans last year dropped them for this year (the first without the expanded subsidies) because they couldn’t afford the huge increase in their premiums, according to a new survey released today by KFF, a health care think tank. That’s nearly a 10% increase in the ranks of the uninsured, which alone will bring the uninsured rate close to 10%.

And many more will drop coverage in the years ahead, given ACA marketplace purchasers’ concerns about their ability to pay the new, higher rates without subsidies.

The $200 billion the Pentagon is requesting is sufficient to extend the ACA subsidies for over five years. Where did I get that estimate? The failure to extend the subsidies helped pay for the $7.7 trillion in tax cuts for the wealthy and large corporations in last year’s One Big Ugly Bill (OBUB). It reduced health care spending by about $350 billion over ten years, an average of $35 billion a year. $200 billion ÷ $35 billion = 5.7 years.

The same math applies to the alleged Medicaid “savings” in the OBUB. Imposing work requirements (a lexicographic subterfuge for erecting bureaucratic barriers that will make it difficult for qualified Medicaid beneficiaries to re-certify their eligibility) will cut an estimated $326 billion from the program over the next decade, according to the Congressional Budget Office. Cuts to the federal share of aid to state Medicaid programs will “save” the federal government another $300 to $400 billion. The two together add up to at least $65 billion a year ripped from Medicaid.

To sum up: Cuts in ACA subsidies and Medicaid in the OBUB will average over $100 billion a year over the next decade. At the rate the Trump regime is spending on the war against Iran, the Pentagon will eat that up in two years.

This accounting doesn’t take into consideration the long-term costs of U.S. involvement in overseas quagmires of its own making. The Iraq War, which began in 2002, cost close to $1 trillion in direct military spending. The long-term cost of caring for the wounded, veterans’ special health care needs, and related spending has been estimated to cost an additional $2 to $3 trillion.

Those of us old enough to remember the Vietnam War will recall the “guns and butter” debate that accompanied President Lyndon B. Johnson’s slow descent into that quagmire. LBJ’s advisers assured him the U.S. could do both.

Wrong. Inflation began escalating by the late 1960s, throwing the country into a recession by December 1969. During the decade after regular combat began in 1965, prices rose by a total of 176%, twice the rate of inflation during the previous decade. The biggest increases were triggered by soaring oil prices due to an Arab oil embargo after the 1973 Middle East war.

President George W. Bush tried his hand at guns and butter in 2003 when, to bolster his reelection chances amid widening opposition to the Iraq War, he pushed through an unfunded Medicare drug benefit and pushed further deregulation of the financial sector. By the end of his term in office, the resulting housing bubble and sub-prime lending crisis led to the worst economic downturn since the Great Depression.

While looking up some of the specifics of that history, I stumbled across the origination of the phrase “guns and butter.” It wasn’t a 1960s coinage. It was popularized during the 1930s by German Reich Marshall Hermann Goering, who defended Germany’s huge military build-up by saying, "Guns will make us powerful. Butter will only make us fat."

It was Theodor Reik, a Jewish intellectual who fled Nazi Germany, who in 1965 took issue with the idea that history repeats itself. “This is perhaps not quite correct,” he said. “It merely rhymes.”

What does the Trump regime’s escalating military spending amid evisceration of social spending rhyme with? (I invite readers to comment below.)

Now in other news …

Dem Senators working on health plan sans Sanders

A dozens Democratic Senators led by Ron Wyden of Oregon are laying down principles for a massive health care reform bill they hope to introduce next year, Stat reported this morning. Though the group includes several Medicare for All advocates, the initial iteration sounds more like incrementalism on steroids than a bold effort at comprehensive reform.

The focus will be on reining in the insurance industry by standardizing the offerings in private-sector plans (“make it simple”); increasing the amount that has to be spent on health care, not on profits, marketing and administration (raising the medical loss ratio for the wonks in my audience); and “giving all Americans access to Medicare-type choices for health,” which sounds like they want to create a public option at the federal or state level to compete with private insurers in the employer-provided and individual markets.

The other senators in the group include Mark Warner (Va.), Jon Ossoff and Raphael Warnock (Ga.), Lisa Blunt Rochester (Del.), Tammy Baldwin (Wis.), Sheldon Whitehouse (R.I.), Jeffrey Merkley (Ore.), Elissa Slotkin (Mich.), Elizabeth Warren (Mass.), Tina Smith (Minn.), and Peter Welch (Vt.).

Notably missing from the group: Sen. Bernie Sanders of Vermont, whose advocacy for a single-payer, Medicare for all will have at least one more adherent in the Senate next year. Illinois Lt. Gov. Juliana Stratton, who on Tuesday won the Democratic primary to replace retiring Sen. Richard Durbin, made strong support for M4A a centerpiece in her campaign. Her election in November election is not in doubt in deep blue Illinois.

From the “Can You Ever Trust a Billionaire?” Dept.

Shark Tank personality and serial entrepreneur Mark Cuban, who launched his Cost Plus Drugs platform in 2022, is now praising his competitor, TrumpRx, which has been roundly criticized in the health care press for its few offerings and meager (and sometimes non-existent) savings. “Reality is, it’s saving patients money on IVF and a few other drugs. A lot of money,” he wrote on the social media platform X.

The TrumpRx website currently lists only 54 drugs (there are more than 10,000 FDA-approved medicines). Many are already generic or their manufacturers have created patient assistance programs to help with patients’ out-of-pocket expenses (thus continuing to stick a huge bill on private insurers and Medicare). I wrote my critique of TrumpRx on the eve of his state of the union address.

NBC News yesterday asked Geoffrey Joyce, director of health policy at the University of Southern California Schaeffer Center for Health Policy & Economics, to weigh in. He came to a similar conclusion.

About half the drugs on the site already have generics that are often much cheaper and available through other discount sites, he said. “In its current form, it’s of limited use to uninsured consumers. If they got rid of all the ones that had generic equivalents, you’re looking at a site with 22 drugs. And it’s basically a roundup of the usual suspects. It’s some IVF, some GLP-1s. It’s not a broad scope.”

Cuban went on to praise the CMS staff working on standing up TrumpRx. Is he angling to get the contract?

Cost Plus Drugs is now a leading player in the mail order discount pharmacy business, offering over 2,500 medications in its catalog. It sells mostly generic drugs at the cost of acquisition plus a 15% markup, a $5 pharmacy service fee, and $5.25 for shipping.

But recent news reports indicate the company, which is privately held, has seen its revenue level off at slightly over $100 million a year. That’s a rounding error compared to the more than $400 billion in annual retail sales racked up by the pharmaceutical and biotechnology industries.

The reality is that low-cost generic drugs already account for 90% of all prescriptions. Insured patients have very low or no co-pays when they choose generics. They have no incentive to go outside their insurance to buy drugs because they would have to pay the full, generic-plus price. Even if it is lower than what pharmacy benefit managers are charging their insurers, it would still cost the patient more.

Patients’ real problem is with branded drugs. It’s hard to imagine the industry giving up its monopoly pricing power for drugs still on patent, except perhaps in a few high profile situations like the GLP-1s, the popular weight-loss drugs sold by Novo Nordisk and Eli Lilly, and IVF treatments.

In both cases, many insurers refuse to include the costly medicines in their plans. TrumpRx sends desperate customers directly to cooperating manufacturers with coupons that provide some discount from the list price.