Marc Ryan: The 2025 Government Shutdown’s Impact On Healthcare

Erik Sunset: welcome back. I’m your host, Erik Sunset of the DocBuddy Journal, and we’re joined. We’re fortunate to be joined once again by Marc Ryan. Marc is the Chief Solutions Officer with Lilac Software, and he is also our go-to for all things happening in Washington. Marc, you’re a font of knowledge.

I know you’re a busy guy. Thanks for spending a little bit of time with our listeners today.

Marc Ryan: Erik, it’s always a pleasure, love doing this. So, uh, just looking forward

to it.

Erik Sunset: Yeah, and I’m seeing it in the screen. I can’t, can’t continue without saying that Marc is not only the CSO of Lilac software and our resident experts on all things happening in Washington. He is also the author of The Healthcare Labyrinth, A book that you can get wherever books are sold.

We

Marc Ryan: Thanks for

the plug,

Erik Sunset: Oh, my pleasure, my pleasure.

And we, uh, we need to timestamp this one. The last time you were on Marc, we were talking about the impacts to healthcare of the big beautiful bill. It is Tuesday, [00:01:00] October 21st. It’s about 10 15. The government still shut down, so who knows for how much longer, but we’re very much in the middle of this government shutdown.

There’s not a whole lot of signs that anything’s gonna change or that the shutdown will end soon.

What are the impacts we’re gonna feel and what’s your prognosis?

Marc Ryan: Well, yeah, Erik, you’re absolutely right. We are in a government shutdown. It, it, it’s pretty lengthy already, right? We’re in our third week here. I, I will always start out by saying, you never know what happens in Washington DC right? So there could be some major meeting that happens that gets everybody on the same page.

You just never know. Right? But if I had to predict. Uh, with that caveat, I think we are likely going to be in for close to the longest or the longest government shutdown in modern times. I just looking at it, [00:02:00] it does not appear that Democrats and Republicans are going to get together to pass a bill to reopen government without going into the sort of weird arcane rules in the Senate. The house passed a bill with a majority vote party line. We’re now in the Senate and because of these super majority rules and the filibuster and cloture and ending debate, uh, 60 votes are generally needed on most bills to pass, right? And so the Republicans have 53 votes, so they don’t have 60. So you need a good number of Democrats to come over. To fund this government bill, and so far the Democrat have said. I want healthcare add backs, so to speak, and it’s largely focused on ECA subsidy extensions, which I’m sure we’ll talk about and I’m not gonna give you the votes to do that. So far there have been three [00:03:00] democratic caucusing votes. I say democratic caucusing because one of them is an independent, but pretty much votes with the Democrats. Have come over to the Republican side, but it’s not enough to get to 60 votes. So I think we just had our 11th vote. I’m sure we’ll have more. Uh, coming up, there’s some talk that the house might actually have to come back because the CR was for seven weeks. And we’re so far into it that even if the Senate passed the bill, we’d only fund it for two more weeks.

Right. Or three more weeks or something. So it’s all very interesting. Um, we’ve seen this before, but we could be in for a long ride here. And as I point out, the Democrats are saying we want. Some sort of extension of the subsidy. They say permanent, but they’ll settle for an extension of the enhanced subsidies.

It’s very important to them. The Democrats are saying, the Republicans are saying, no [00:04:00] clean bill. We need that passed. We’ll be willing to talk about it. And one of the reasons they don’t really want it in the bill because there’s no consensus in the Republican caucus between moderates and conservatives about whether those changes. Extending the enhanced subsidy should be in there. There’s talk of a second bill, uh, budget reconciliation. Bill a number two. One big, beautiful bill, but that’s down the road. We gotta get a government funding bill first. The practical implications, Erik, are that. There is a clear slowdown in healthcare payments and policy and things like that, right. Uh, however, fundamentally, so far, healthcare has operated. There’s talk of certain slowdowns of claims, so we gotta watch that, that could happen. Uh, but initially, uh, the Trump administration said we are gonna cut down on [00:05:00] claims to sort of force pressure on the situation. Then they had a backtrack. I have no doubt that there’s gonna be slowdowns and things of that nature. Uh, but you know, we’ll have to wait and see there, and we’ll have to wait and see how long this really

goes.

Erik Sunset: Yeah. And that’s, that’s what you’re calling out there, the slowdown in, in payments, that’s salt in the wound for providers that nobody loved. The, uh, 2025 Medicare proposed payment rule, when that was being discussed late last year, you, we had John to talk about that. Now that we’re in it, uh, not only are you not gonna get paid what.

You think you should be? It’s gonna take longer to get it. Ugly stuff. Nobody really wins, uh, in these government shutdowns. At least not the, the regular folks not in Washington.

Marc Ryan: Yep.

Erik Sunset: So, looking back in time a little bit, when we were looking at what are the potential implications to healthcare of this second Trump term, you very wisely pointed out that Trump doesn’t have to do a whole lot about the a CA except let subsidies expire.

And [00:06:00] that seems to be the hill to die on for some in Washington now. Uh, will you bring us up to speed, excuse me, on the, these exchange plans, subsidy, debates, and refresh us on what were the cuts in the big, beautiful bell?

Marc Ryan: Sure. Great. So, uh, let’s talk about the exchange subsidies. That’s interesting because notwithstanding the parties digging in their heels right now, and again, anything can happen in Washington, but, uh. It does surround the debate about the Democrats, as I noted, wanting the exchange subsidies extension, and those enhanced ex exchange subsidies.

It’s hard to articulate. It, um, occurred during COVID and they were extended in the Inflation reduction Act. So. Uh, for 21, 22, 23, 24, 25, about five years, we have had enhanced subsidies. Those enhanced subsidies have really led to [00:07:00] dramatic increases, a doubling of the number of people. In the exchanges from about 12 million, roughly, let’s say, to 24 million. Now in, in some ways I think that’s good, right? I don’t necessarily agree with everything in those enhancements and whether they should go on forever, because I’m sort of a fiscal conservative on that side. But it’s hard to debate that they did not have positives for consumers in coverage, and they provided a financial stability to the Marcetplace that wasn’t there before. I am not arguing. That there’s affordability in the exchanges by any means. I think there are warts and problems. I support the program because people need it, but that’s a big problem. It’s not terribly affordable. But if we didn’t have the, uh, enhanced subsidies, the stability. And the premiums would be that much higher. And [00:08:00] now if those subsidies go away, premiums will go up double, uh, for subsidized individuals, right? So they’ll go up at 114% with the killing in the subsidy and other increases because risk increases in rates go up because of it. Uh, but that’s a big deal, right? So we could see the exchanges drop from 24 million, I predict, down to somewhere. You know, probably four to 5 million enrollment lower over time, right? And it could be greater because of other reductions in there. There are some backroom talks going on despite the shutdown between moderate forces in Congress, some couple dozen moderate house Republicans with moderate Democrats. Then in the Senate, two or three moderate Republicans like Lisa Murkowski and Susan Collins, and people like that with some Democrat moderates about, Hey, how do we [00:09:00] extend these things?

Address your concerns, address our concerns, and see if we can sell it to leadership. So that’s in the making. Um. It surrounds short term extension, not having uncapped subsidies, minimum premium payments, which are important to Republicans. They don’t believe that free is always the best. I would note that I’m a supporter of the exchanges as, as you know from my appearances, but I have come around to thinking, um, and the Paragon Institute. Uh, is a conservative think tank, and I do a lot of reading there because I wanna know what they believe. They’ve made a compelling case that free everything for millions of people in the exchanges with the enhanced subsidies has led to fraud. And the Democrats wanna run away from that. But in my mind, there’s no question that it encouraged fraud.

And so it’s not unreasonable to wanna [00:10:00] address. Some of that fraud allegation and what I think is reasonable proof, the fact that maybe everybody should have some skin in the game, but going over to the Democratic side that you know, Hey, listen, maybe the subsidies were too lean in the original act, and maybe something more needs to be done. I’m especially fond of the fact that middle income folks got a little more because they didn’t have very generous subsidies under that. And you know, whether you agree that it should be totally uncapped, maybe there should be a little more subsidy for a family making $150,000 a year. That doesn’t have insurance and is being asked to pay $15,000 or more of their income, you know, for coverage.

So there’s good issues on both sides and I think hopefully they will get to a point. Moderate forces will prevail [00:11:00] and probably extend the subsidies. With some reforms, and maybe we can look at, you know, down the road more tweaks and, and making this a little better over time. Now on the impact of the one big, beautiful Bill, real quick, um, I’m gonna give you the one word about 1 trillion, right?

So about $1 trillion in cuts were made to Medicaid in the exchanges. By and large. I will tell you, there’s the. Thread of 500 million, $500 billion over 10 years in Medicare cuts too because, uh, the law increases the deficit and when that occurs, mandatory Medicare cuts can come in as well. So you can talk about 1 trillion or 1.5 trillion if you include some Medicare cuts that could occur. And I have argued that most of those cuts are fairly dumb. Because they are focused on getting rid of [00:12:00] coverage. They’re focused on reigning in provider taxes and Medicaid work requirements, and just enrollment contraction again. There’s good and bad here. Some of what the Republicans did on some of the reforms were good. I think provider taxes have gone too far. I think some enrollment fraud is there. Uh, and I also feel like, uh, you know, maybe you can make a case that, uh, work is important, but by and large. The work requirements aren’t well thought out. People are gonna lose coverage whether they work or not, because of administrative burdens and backlogs. So by and large, I don’t like the cuts, but again, I’m willing to hear from the Republicans about things that are bad in the system. And I’ll go back and say the Democrats don’t want to hear that. Uh, the Republicans always default to coverage reduction. There’s no [00:13:00] meeting in the minds in the middle and. That’s the real problem with healthcare coverage in AmErika. No, true comprehensive reform. That makes

sense.

Erik Sunset: Well, that, that’s what sticks in my more than anything else. Marc, we’ve talked about this on, I, I think probably every appearance you’ve had on the show is that at the inception of the a CA and. What is colloquial known as? Obamacare. You know, looking ahead in time or fast forwarding through time, you know, the argument becomes, yes, you have coverage, but no, you can’t use it because you can’t afford it.

That’s not good. We wanna see people get the healthcare that they need. You know, we’re the. Arguably the, the strongest nation that’s ever existed, and people still can’t get healthcare here. That’s, that’s not right. But on the other end, you see the Republicans saying, no, we need to contract coverage.

There’s, there needs to be a cap on subsidies. I don’t think that’s necessarily wrong. You point out the fraud and abuse that’s, uh, inherent to any system at this scale. So you wanna see that reduced. [00:14:00] But to get to my point about what’s really bothersome about this is there’s no proposed solution other than, as you point out the polarization of it’s find the way it is and it’s not find the way it is.

What is the actual fix here? Has anybody put pen to paper on that?

Marc Ryan: Um, I have and many other people have. Right. And, um. You know, there’s, uh, there’s a number of different groups out there, Republican and Democrat, that have sort of come together and said, the secret here is price reform, strong coverage. And emphasizing primary care, wellness, and prevention. But the parties can’t get together on that.

And again, I wrote a blog that said, listen, there would be smarter ways to cut a trillion dollars or more in the system over time. It’s not about axing coverage. And you know the, the Republicans say We didn’t ask coverage. Well, you did, [00:15:00] right. The work requirements, the massive change in Medicaid funding. Does that right? So you did X coverage and, and that’s my own party I’m talking about here, right? Um, but there are smarter ways to do it. I’m gonna talk about price reform real quick, and I mentioned it before, if over time. We migrated to site neutral payments, which means you’re going to equalize payments, uh, to hospitals for all sorts of care. With the standard at an ambulatory surgery center or a physician office, there’s hundreds of billions of dollars of savings there. If we actually set prices. Regionally or at a master level across all lines of business. We could save hundreds of billions of dollars, if not [00:16:00] trillions of dollars. There’s a recipe for price reform out there that actually would. Take money away from high priced hospitals, and I’m a former hospital board member, but take away price from high cost hospitals and encourage their efficiency and reallocate it to lower levels of care like primary care, which have been decimated. We could save more money, we would do it over time to stop the shock, and that would be true healthcare reform.

I think Democrats and Republicans should get together on that because as you point out, Erik, right now, the only way to save money in a Republican mind is chop coverage. The only way to do healthcare in a Democrat’s mind is. Throw more money at it and grow the system despite how inefficient it is. So, um, but there is a solution, but the parties don’t have the courage or the backbone to get together to [00:17:00] really do it.

The recipe is out there. I’m not saying it’s just my recipe, but take 10 different academic and individuals understand this. Put ’em together and you can save more money, do it smartly over a period of time. Force change. Right now, the hospital system of reimbursement does not encourage a hospital to ever be efficient.

They become more and more inefficient. There are some good ones out there that are actually making the efficiency conversion. And looking at hospital at home and doing the right thing. But the vast majority are defending bloated empires, and they spend tens of millions of hours a year fighting any kind of change.

And that’s, and unfortunately, the Democrats and Republicans are in the hip pocket of the hospital industry. Because they, they’re on boards and relatives are on boards and employees of and families are employees of [00:18:00] hospitals and they’ve taken over physician groups and therefore you can’t break it, but you gotta break that dominance and really push for

reform.

Erik Sunset: You, you answered my next question. Uh, you have an expert opinion and, and you gave it there. Why don’t we have site neutral payments today? I mean, I, I had conjecture there and sounds like I was right. Special interest and it’s tough to vote against your own self-interest. That’s, uh, that’s a tough ask.

Marc Ryan: Yeah. And, and, and way back in the day, I was a healthcare lobbyist for a health plan, so I know exactly what happens. It’s ugly. It needs to change. So, uh, healthcare reform in some ways also is about campaign finance reform. I hate to say it.

Erik Sunset: That’ll be a topic for the, for the next time we’re together. Uh, you know, midterm seasons not too far away. We’ll, we’ll wanna, we’ll wanna revisit that. But throughout, throughout this shutdown, uh, there’s an impact to providers and it’s a shame. This is a [00:19:00] profession and a career that is wilting away in front of our eyes.

I’m not seeing main mainstream media cover this all that much. Our friends at Becker’s Healthcare do and all of your sort of health. Um, publications are covering this, but we are on the brink of a collapse of, uh, not only primary care, but specialty care as well. This government shutdown is just one more, uh, straw on the camel’s back, so to say.

Uh, what, what impact are we seeing to providers now on Tuesday, October 21st?

Marc Ryan: Yeah, I think your point about the headlines are, is a good one because when I read the headlines and I read ’em every day, I often see, uh, health, uh, media people, journalists really write about hospitals, and the hospitals are painting the picture, which is globally accurate. Uh, that uncompensated care [00:20:00] will go up dramatically because a trillion dollars is being, being taken outta Medicaid in the exchanges and that, you know, it will destabilize healthcares in general.

Right. My criticism of that is that I’m not so much worried about the hospitals because the hospitals have a financial wherewithal. And they will always survive in my view. And so some of what they’re saying is accurate, the numbers are right, but it’s not a hospital problem. In my mind. It’s a problem for those remaining. Independent physicians out there as an example, that struggle every day to take in Medicare revenue and take in commercial revenue and and suddenly they’re gonna have people knocking on their door that are. Uh, long-term patients and they’re not going to be insured and [00:21:00] their levels of uncompensated care theoretically go up and their Medicare payments are gonna go down and commercial payments, uh, are going to be problematic because they won’t keep up with the times, even though providers will demand higher rates.

So. I worry about that infrastructure. I don’t so much worry about the hospital infrastructure. I think the cuts were dumb, and generally speaking, the hospitals are right about it, but the real problem is going to be with those independent docs. They’re actually gonna be with some of the, what I’m gonna call community health centers and federally qualified health centers out there because they are going to lose a massive amount and it’s going to impact many of the lowest income people in AmErika because they won’t have coverage and their providers are going to now have their financial position further

undermines.

Erik Sunset: if I, Marc, if I came and step on you here, these [00:22:00] CHCs and FQHCs, they have a hard enough time paying utility bills and keeping the doors open, and now that money is gone from the system, they’re just not gonna be able to treat patients. There’s not gonna be any, oh, you know, come in. We’ll figure it out.

The the doors are gonna be locked.

Marc Ryan: Absolutely, absolutely correct, right? Globally, everybody’s impacted because they may lose coverage or they have less affordability, but. You know, the middle and the higher income people are hopefully gonna find a way to get through it. It’s lower middle income and lower income people that really suffer here. And again, the hospitals will champion themselves as the defender of the poor. The defender of the lower middle class. I don’t buy it one bit. Uh, I think it’s some of the other providers that really, really serve those needs and, and, and get hurt. Right? Uh, and, and that’s a big problem because it’s a double whammy.

It’s an impact on, uh, you know, coverage, but it’s [00:23:00] also an impact on those very critical providers that don’t have financial stability in general, as you point

out.

Erik Sunset: This is step one. I mean, I, I don’t want to take anything away from our friends at, uh, at health systems and at large groups. There’s a lot of excellent care, world class care being provided at facilities that are parts of those networks. But as sort of the health of the profession, you’re gonna see independent physicians all but disappear, and then they will.

And then you’re gonna see, uh, consolidation into these larger systems and groups and that that can be a good thing. It’s generally not a good thing for the health of being a physician. But what we referenced earlier is that by 2030, they’re not gonna be near enough physicians, especially primary care, to treat the people that need primary care.

That’s a huge problem, and that’s what I’m saying. There is no coverage, uh, worth noting in mainstream media around this problem. And cuts like this do not help the the issue whatsoever.

Marc Ryan: [00:24:00] Absolutely correct. Yeah, the primary care crisis is hardly ever covered. Uh, it’s not covered by the mainstream media, uh, because it’s really a little bit too complicated. And the problem is, you know, the hospitals obfuscate that issue. They say we took over the primary care provider and we’re doing a service.

Right. Uh, but. Really the reason to take over primary care providers is the fact that they now, as the hospital overlord, can direct those physicians to change practice patterns at higher cost hospital owned settings, which creates a death spiral in terms of cost in the system. It’s not meant to safeguard primary care.

It’s a business decision. That pads the hospital bottom line and does very little to promote true primary care or the stability of independent, uh, practices out

there.

Erik Sunset: Just as a quick note, a quick anecdote here in Miami, [00:25:00] Florida, I waited eight months for a primary care visit. That’s just the booking

time,

Marc Ryan: Oh yeah.

Erik Sunset: uh, monopolized down here by our friends at the, at the big pineapple, and again. Love the staff, love the physicians here. They’re doing the very best that they can, but as a, a cog in the machine, the machine is not firing on all

cylinders.

Marc Ryan: Yeah. Yeah. And, and you know, I I, in past episodes too, Erik, I’ve sort of talked about the physician practice patterns, uh, change. And I’ve lived it, right. I. I. will try to go to independent primary care. I’ve had my same doctor. He hasn’t been taken over yet. He’s in a pretty good savvy practice and he’s not gonna be taken over. Um, but some of my other specialty physicians have been, and I’ve noticed changes in their behavior about telling me that I wanna do the out outpatient procedure at [00:26:00] a uh, hospital. And I

see.

Yeah, and I say, that’s place of service 22. I want a place of service 24. And they say, well, yeah, I, I guess I can do that.

I’m still associated with it, but you might have to wait another two weeks because I only spend about 10 or 20% of my time there. Now I’m really doing it at these places and I’d really like you to go there. And I said, you know what? It’s not a life-threatening thing. I’ll wait two weeks because I think I have a responsibility to the healthcare system. And, but it’s clear and it’s there and most people don’t really understand it unfortunately. Uh, and so they’re just taking that physician’s advice and going to the hospital and that care is manyfold more than it would be at an

A SC.

Erik Sunset: Yeah, uh, we fly the flag for ASCs. High and proud here at Doc. Buddy, as you were well aware, Marc, um, for any surgery center based listeners out there, if you’re not involved with asca, now is the time. Now is the time to be involved with the, uh, [00:27:00] ambulatory Surgery Center Association and all the great work they’re doing in Washington and at the state level.

Marc Ryan: And I, and I think their future is great. It’s growing already, but I do believe whether we have comprehensive reform or not, there is a push on Capitol Hill to begin looking at site neutral. Begin looking at three 40 b reform.

Erik Sunset: Check out.

Marc Ryan: And that can only help, you know, place of service 24 and other cheaper places of service compared to outpatient and, you know, hospital owned, outpatient, other places of service.

It’s gonna help them rather dramatically. It’s, it’s not. It is not gonna happen overnight, but they’re growing well. They have efficient models. Some of them are owned by physicians under the law, which is good too. Uh, so I, I really encourage that, that trend. I think it makes a lot of sense and I think over time we’ll get some [00:28:00] site neutral reform and that will help a great

deal.

Erik Sunset: Yeah, this, this is so off topic and maybe, uh, out of bounds, but it, it’s your duty as an AmErikan save the system money. It’s, it’s patriotic to pursue the same care, the same outcome at a lower cost.

Marc Ryan: Yep. A

Erik Sunset: But it’s education. Not everybody knows that you can even do

that.

Marc Ryan: Yep. Ask questions because unfortunately most providers these days. Uh, have a conflict of interest. They’re not necessarily always looking after you. They’re looking after what their bosses are telling them, which increasingly are hospitals or private equity firms. So know your doc. Uh, go independent. And if you are having to go to other areas, uh, push back and ask those questions because it is everybody’s duty.

In my belief, uh, health literacy is at a point where that’s difficult, but if you have it,

use it.

Erik Sunset: Yeah, well, well [00:29:00] said there, and on a, on a different, but also related topic. We always have to cover Medicare and the physician pay issue. We kind of referenced that a little bit earlier there. What, what’s happening, uh, with respect to the one big, beautiful bill

Marc Ryan: Yeah, just to refresh on that, so there is a, there was a provision in the one big beautiful Bill act and, but once again. Unfortunately it’s the physicians are a little bit like,

uh, Charlie Brown with Lucy in the football, where it’s constantly pulled out. You know, that famous cartoon. Some people may be too young to know it.

You’re laughing so you know it. But the famous cartoon, uh, you know, we should probably put it up in. Feature it in every any article, and there’s so few about physician pay reform, right? But there was some great hope. That Medicare physician pay reform would finally happen, [00:30:00] and that there were commitments made by leaders to the physician caucus that works very hard. Uh, and again, their, their Lucy and Charlie Brown with the football here too. They were, they were promised commitments. That would be comprehensive reform. It does cost a lot of money, but it makes sense. But as usual. The, the powers that be prevailed and they gave another short term, in this case, 2026 fix, which is helpful because. Things are going down. It now may go up, uh, but it’s a, it’s a partial fix. It’s only a one year fix. You can make a case that that fix has some positives into the future, but it’s not comprehensive reform. And with the Medicare, you know, potential sequestration cuts, they talked about 500 billion over 10 years. There’s even reason to believe that even the [00:31:00] positive of that could go away over time, and we could be back to negative, but this is not a fix. Physicians have to lobby harder. Uh, especially independent ones because as we know, Medicare, uh, physician payments and commercial phys physician payments are the key to the stability of practice, right?

You’re not gonna make money on Medicaid, you’re not gonna make money usually on exchange. You gotta make money on Medicare and commercial. Commercial is pegged off of Medicare. So if you don’t have a strong Medicare reimbursement system, you’re, you’re further undermining the independent practices out there.

Erik Sunset: I, I mentioned this earlier, things sticking in my craw when they label a decrease in Medicare reimbursement as a negative increase. I just can’t imagine sitting in that seat and reading that and going, negative increase. Just tell me you’re paying me less. It’s not a negative increase. Uh, I’m not such of the [00:32:00] opinion that words matter all that much.

The meaning and the context, you know, is what gives them real value, but that is just. It’s crazy town and we’ve, we’ve, we don’t need to re-litigate it once again during this show, but stop killing the profession. Anybody listening, stop killing the career of medicine.

Marc Ryan: Yep,

absolutely.

Erik Sunset: And Marc, I’m gonna be totally transparent with you here. I’ve kind of had my, my head in the sand. I’ve been skimming the headlines, but haven’t done a whole lot of, uh, consuming of the news. But there, there are some drug deals being announced. I need, I need the basic primer there. I would imagine they, they sound good.

I’ve heard earlier in the year some things that I like the sound of, but are they too good to be true?

Marc Ryan: Um, your instincts are right there, Erik, right? So, um, you know, listen, I. I criticize a lot of President Trump’s healthcare policy. Uh, but I think he is right on drug price reform, right? So I’ve spent a lot of time saying his [00:33:00] instincts are right on this. I’ve even said that he’s sort of the first president. That has actually been out there and I think he’s actually analyzed price in the drug world. Um, I’ve never heard Democrats or Republicans in the past be able to articulate it. And he’s basically gone out there and said, you know, on Super Bowl Sunday when he came back to office, he said. By the way, uh, Brett Bearer of Fox News.

I’m pissed off about the fact that GLP one drugs can be bought for a little over a hundred dollars in the United Kingdom, and our list price in the United States is a thousand dollars, right? You don’t normally see that nuance. And he’s had a couple of executive orders where he’s argued that there’s gotta be comprehensive reform of the drug channel. And it was very nuanced and very good. And again, some of that goes to his policy advisors, but I think some of that goes to Trump. And then he came out with a second executive order related [00:34:00] to implementing most favored nation pricing. Which essentially says it’s the strictest form of what’s known as international reference pricing, where we would adopt this policy, the lowest price drug in any developed world nation as our price.

Now, there’s a whole lot that goes into that. Does he have the authority to do it? It would be litigated. You would probably have to get Congress to pass a law. And my party, the Republicans are sort of in the hip pocket of big Pharma, but that seems to be changing a little. Um, and so that is a long-term possibility.

So do I see MFN pricing happening immediately? No, but I give Trump a lot of credit for. Bringing us back to the issue, I liked the. Inflation Reduction Act, Medicare drug price negotiations because it was the start of change. But I think [00:35:00] that thing is so labyrinthian and long that it doesn’t mean major price reform immediately. I think Trump is trying to tap into the idea that we have to go faster, which is very admirable. Right. The drug price deals, so far there’s been three of ’em. The third one was really just on fertility drugs. There’s actually a couple more that have joined what’s now gonna be known as the Trump RX discount site for drug pricing. But there have been two major deals so far that have been announced. Uh, Pfizer and AstraZeneca more will come. This is where I’m a little worried that. That Trump and his advisors could be being hoodwinked, as I call it, by big pharma because they’re coming in with deals that sound good. They’re offering most favored nation pricing in the Medicaid program. They’re offering to discount dramatically. Uh, the amount that [00:36:00] self-pay folks pay, and there’s nebulous promises, and I wanna know what this means about most favored nation pricing for future drug releases. But it fundamentally is not reforming price in the system, and it’s not impacting the big drivers of price in Medicare and the commercial employer world.

And so when you put it all together. It’s cosmetics, it’s window dressing in my mind, and it sounds good, we’re standing up for most favored nation pricing, but it’s only in a very small part of things. We are going to promise in the future that we will equalize price, but it’s not really in a rule right now.

And they could back out at a moment’s notice. So again, I applaud the President for forcing people to the table. He’s really good at that. But I hope he doesn’t back away from [00:37:00] true regulatory reform or pushing for legislation on this, because that’s what you would ultimately need. Anytime Big Pharma comes to the table. With their pockets open. I tend to check my pockets to see if they actually took the my money outta my pocket to fund what they’re doing, because they’ve never done anything outta the goodness of their heart. There was a guy with a spreadsheet for each drug maker sitting behind the scenes looking at. Drugs that really don’t hurt them to give in on because they’re close to coming off patent and the self-pay world, they really weren’t having people buy ’em anyway. So you can make an argument. There’s gravy of revenue there by discounting it. Nothing they have done is out of the goodness of their heart.

Or for the AmErikan consumer, it’s all about their bottom line. So I would just recommend to the president. Look at really what you’re agreeing to before you back off some of the [00:38:00] very good ideas you have now. People argue MFN will cripple it, cripple innovation and things like that. I go to two things.

One, um, okay, maybe, uh, but there are ways around that we could save the consumer and government programs. Tons of money and maybe reinvest in government research. That’s where I think Trump is wrong. He’s been cutting that in international collaboratives, in investments, in truly looking at disease, uh, and, and that could offset the innovation gap. You can equalize price between nations because I do think he’s right that, uh, you know, the rich nations of Europe are riding AmErikan consumers backs, and they should pay more and they should pay more toward innovation in the end if there are innovation impacts. I would also make this point. Price is so high [00:39:00] that mortality and morbidity of people in AmErika is much higher than in other developed nations because they can’t afford medication. So if there is some innovation impact that is likely offset. By the fact that better affordability will bring disease states under control in lessen mortality and morbidity. And the big pharma folks don’t want you focusing on that. They want you focusing on the X number of drugs that they say will not come if we suddenly lower price. They don’t wanna tell you about the hidden impacts. Of high price on people dying earlier or having compromised life because they can’t afford drugs in their pill splitting or they’re going without because of it.

Erik Sunset: I, I’m hoping this is a juicy follow on question. It might be a little technical and, [00:40:00] uh. If anybody has the answer, Marc, it’ll be you. It’s, it’s, there’s a couple prongs here. Number one, why is the NHS in Britain getting a better price on AmErikan drugs than we are? And number two, if we do peg our drug prices here domestically to the most favored nation, does that open up, uh, Europe, Australia, uh, Japan, China, I, I would imagine those are all.

Qualified entries here on, on the list of nations to be most favored. Does that not just open up those Marcets to manipulation and say, Hey, look, everybody’s getting GLP once for a thousand bucks. You do too.

Marc Ryan: Yep. I, I, I think you’re absolutely right. So let’s tackle that the first point. Why do other developed nations get that best price? So there is clearly a difference in philosophy, which is, is true here that we would need to overcome, right? Uh, and I think there’s sort of a balance, right? I would not go as far as the developed [00:41:00] nations, but you can craft an a, a. Middle ground that allows access and perhaps slightly higher price. Right. I’m not arguing. Maybe we should go all the way down to theirs, but the way most of these developed nations do it is they basically use clinical effectiveness standards that we don’t have in this nation, and they basically say is a drug that we’re negotiating. More effective and actually more clinically, more effective and more cost effective than other drug treatments on the Marcet. And we’re gonna base our setting of price on that. We don’t do that in the United States. We say we’re gonna theoretically, and I say theoretically, evaluate a drug safety. And anybody that meets that standard can have a drug on the [00:42:00] Marcet. So it’s a very different standard. I would argue. We do need to look at cost effectiveness and better clinical effectiveness in our drug approval and pricing process, but perhaps not go to the levels that other developed nations do. They do have better health outcomes, but we also see. Some greater mortality and morbidity related to certain cancers and things like that in these nations because of that policy. They would disagree with that, but I think there’s some, I think big pharma is right on that, right? So we could create a middle ground where. Cost effectiveness, clinical effectiveness, evaluation brings down price may not be as low, but we begin to merge the two systems.

Right. It’s also,

Erik Sunset: I know I’m stepping on your mid train of thought here. Is it, is it fair generally to say that the NHS in Britain, Canada’s health system, Germany, [00:43:00] I mean you, you name it, uh, obviously all different models of healthcare than we have here in the us, but they’re looking at utility to set price versus what you just went over for what we do in the us So is that the magic word?

Marc Ryan: I think that’s very fair and I, it’s very price conscious. Keep the price low. And let’s also remember we just talked about how they do it. They also do this in the rest of their system. It is based on rationing. Let’s not fool ourselves. Many people say, oh, let’s do single payer, let’s do socialized medicine.

It’s so much better. But the reality is, is there are many mechanisms to rationing, and that drug strategy is one part of it. It is rationing, right? I would argue there’s a middle ground, right? Because we gotta get to better price. We have to adopt some of those characteristics. So you’re absolutely right.

It’s about utility and, and, and cost by and large. Um, I will also tell you that the drug companies readily [00:44:00] accept the model. They agree to bottom bargain basement prices because 70 plus percent, about 70% to three quarters of the entirety of their profits. Worldwide, and this goes for AmErikan drug companies.

And foreign drug companies are from AmErika.

Uh, and therefore they’re okay getting what I call the gravy from other developed worlds to fill in the 30%. And if it’s a low price, that’s fine. I’ll do it, but because I’m getting it all from over here. Right, and that’s where the inequity happens because maybe AmErika should fund the majority of drug profits, but it shouldn’t be funding 75% just based on wealth of nations and consumers in the rest of the developed

world.

Erik Sunset: That’s, that’s, uh, I know you’re right, but that’s bizarre to hear that non-US sales are just incremental revenue. They’ll, they’ll take, they can [00:45:00] get at the right number and if not, I don’t have call N hs. They, they don’t get this one

then.

Marc Ryan: Right, right. And you, you’ve raised the point about manipulation. You know, big pharma and academics are aligned with big pharma. Whenever you read an article that’s an academic article, go to the bottom and look at the disclosure, as I always say, because these academics are not academics. They’re shilling for big pharma, right?

They’re funded by them. So make sure it’s truly unbiased, but. A lot of these academic articles say, and even the economists, my favorite magazine in the world, which I’ve subscribed to for decades, fell into this trap. Uh, you know, the argument is, oh, Donald Trump can never do most favored nation because what’s gonna happen is, uh. The, uh, brand pharma is gonna go and agree to higher prices on other nations, but in the back room they’re gonna agree to [00:46:00] discount, similar to the rebate system we have in the United States. So there’s no way of policing this and therefore just give up the ghost on this, right? Uh, but I do think you can find ways to stop that manipulation again. I think getting lower price is important. I’m not arguing bottom, you know, bargain basement prices, but I do think that over time we can force the rest of the developed world to pay legitimately toward innovation. We can probably have slightly higher prices because we don’t wanna have a model. That is absolutely ration based, which is what socialized medicine and single payer are, and get real relief and have the best health system in the world.

Right? If you’re rich, we have the best health system in the world because you have access to everything. But if you’re not rich, you don’t necessarily have the. Best health system in the world because you can’t afford it. And let’s try and bring lower and middle [00:47:00] income people, uh, to get better access and, and part of the best system in the

world.

Erik Sunset: And I’ll just add to that as a very short. Uh, for a very short time, I was a Canadian uh, resident living in Toronto. You really don’t wanna need healthcare in that type of system. Uh, I don’t want to, and I encourage a bunch of hate mail to come my way. But in socialized medicine, you don’t, you don’t want to be in a position.

You need care. You are going to wait a long time, or you better have the cash to come to the US and get the care you need.

Marc Ryan: And a lot do, and I, I’ve made the case as an aside that, you know, we generally spend anywhere, uh, you know, on average our gross domestic product across these developed nations is almost double. It’s just short of that, but I say it’s double right. I made the case that through true healthcare reform, what we, what we may wanna do. Is bring that [00:48:00] down in half to maybe 50% or maybe one third more or 40% more, and that would be trillions of dollars in savings over time per year. But it would also recognize that AmErikans want a different system of healthcare than single payer and socialized medicine. It’s a good way of thinking about it, right? Because you don’t have the waiting lists. You don’t have. A poor technology uptake as we see in many of those systems right now. And we have the most advanced medicine. Uh, so it, it’s a better way of thinking about it. We don’t wanna be the least, but we do want reform to provide affordability and true

access.

Erik Sunset: And I just, I just want to add there that everybody has heard through the course of this episode, Marc say he’s pro coverage. I’m pro coverage. We’re not arguing against that in any shape or form or fashion whatsoever. We’re just not [00:49:00] doing it the right way currently.

Marc Ryan: absolutely.

Erik Sunset: And Marc, we’ve got a, we’ve got a few minutes left.

We, we covered some of the, the, the drug deals being announced in the news. There’s always merger and acquisition developments. What? What are you seeing? What’s on your radar?

Marc Ryan: Yeah, so it’s interesting that, um, you know, mergers and acquisitions have. cooled off a bit, right? In the healthcare world, they are still out there. Uh, but in the last year or so, and even under Trump, we have seen issues related to a doubt. About where the healthcare system is going, right? We’re starting to see some recovery there.

So you’re starting to see hospitals merge again, you’re starting to see hospitals take over physician practices, which is a strategy they’ve always had, but now you’re starting to see that again. So you’re, you’re, you’re having more and more of that. Um, the [00:50:00] private equity investments in healthcare are a little bit problematic because Capitol Hill is looking at private equity’s impact. I happen to believe that there’s some role for private equity, for financing, right? But, uh, there’s also some high profile issues related to private equity coming in, taking over. Uh, a hospital chain and essentially obliterating it and impacting client care. And we’ve seen that right out there. And so those major implosions have impacted. There’s also some reason to believe that some private. Equity are taking over physician practices to abuse the No Surprises Act arbitration process. So that has created bipartisan tension within the le within Congress parties coming together to say we need to reign [00:51:00] in private equity. Uh, we do need to rain in. A lot of this hospital and physician consolidation. Uh, and again, the Trump doubt is still out there, but m and a is, is sort of recovering a bit and I think you’ll continue to see it out there. President Trump is not being as active on antitrust issues as Biden was, but I do believe he’s going to focus there over time.

I think it’s not gonna be a huge fall off. I think generally speaking, regulatory wise and congress wise, we’re gonna be looking at competition in healthcare. So that will quell in general some of this m and a inactivity, but it will come back because, uh, people get a little more comfortable about the one big beautiful bill and impacts and things like.

Erik Sunset: And I that, that’s a great take. Thanks for the nuance there and I’m kind of laughing to myself. I misread my own cue. I [00:52:00] know the ma you really want to talk about is Medicare advantage.

Marc Ryan: We can talk about that too. That’s right. But M&a and Ma, absolutely. There’s no question. But I think the m and a issue is a good one too, right? Because it’s cornerstone of, of part of the problem in

healthcare,

Erik Sunset: Sure. Yeah. It’s, it is endemic to what we discussed with independent physicians drying up and then what happens from there. It’s not, not gonna be pretty if, uh, everything else remains status quo, but me, I know Medicare Advantage is an issue near and dear to your heart issue, not the right word, but a program near and dear to your heart.

Marc, take us, take us through that if you’ve got a couple more

minutes.

Marc Ryan: Yep. Sure. Absolutely. So these are some big development developments happening too, that we’ve talked about earlier. And the reason I raise them is because they have dramatic impacts on physicians, right? And even hospitals, because we are seeing a majority now in Medicare Advantage from the Medicare fee for service system. So a couple interesting things have happened. So [00:53:00] number one. Huge financial mess in the MA industry over the last couple of years. A lot of that was due to huge. Operational and leadership missteps at some of the largest plans out there. It’s actually very embarrassing, but they overexpanded, they did not see some of the trends happening in the industry from utilization to the rate setting process and reform there, and they just were doing just bad decision making and. Many of these leaders are now gone because of it. And so now the industry is trying to get back to investor margin over a series of years. Certainly the one big beautiful bill because some of them have multiple lines of business with their MA A complicates their lives, so it’s gonna be a little bit longer. But what’s happened in MA because of the financial problems is that benefits [00:54:00] in 25 and 26. Have come down dramatically. So the value proposition compared to traditional Medicare is not there as much right now. I would argue it’s still a great value proposition compared to traditional Medicare, but that value has come down quite a bit. There’s been massive contraction from their over expansion. So we’ve seen some areas of the country lose investment. We’ve seen. PPO products, which are a little more liberal in terms of who you can see in the network contract, and we’re now focused more on HMO. We’ve seen special needs plans grow. Uh, versus, uh, less investments in other areas.

So there’s a whole bunch of product and geographic and benefit contraction in Medicare Advantage. So people are suffering due to that because the [00:55:00] ones very generous products of 22, 23, and to some extent 24, are now coming back from the stratosphere. Uh, and that is impacting people in terms of cost and what they actually have out of pocket because of covered benefits and supplemental benefits and things like that.

So that retrenchment has really happened. We are seeing more contraction in 26. Obviously, uh, we will see more risk adjustment reform. We’ve seen, uh, plans voluntarily agree across lines of business. To reign in prior authorization, uh, to basically ensure that Dr. Oz and, uh, secretary Kennedy don’t go after, you know, more regulatory rules related to prior author, right? So all of that regulation, voluntary or not, will create more problems for health plans. [00:56:00] So we’re in for a couple years of more Medicare Advantage flux in contraction. Uh, and you know, that is sort of impacting providers, hospitals, network, access for consumers and things like that. So, um, just a lot to digest so when your elderly friend, you know, comes to you or your, uh, your parents come to you or your in-laws come to you and say, what do I do? I was in Medicare Advantage. Uh, and I’m not seeing what I saw before that, that’s why. And so open enrollment is, uh, just started October 15th. And, and that will, that will have huge implications. And of course, the exchange open enrollment begins on November 1st. And there’s a whole lot of flux there for people because of 114% rate increases.

So our two big open [00:57:00] enrollments and government programs are, are happening. Um, Medicaid, uh, coverage will come down in the future, and we’re seeing sky high utilization in employer where rates are increasing. Utilization has gone up by about 9%. So open enrollment in the commercial world. Is a bit of a problem too.

So a lot of consumer impacts that we’re seeing right as we go into Thanksgiving and Christmas here, unfortunately.

Erik Sunset: Uh, nothing new under the sun Marc. Uh, the only constant has change

here.

Marc Ryan: Absolutely. Yep.

Erik Sunset: Well, Marc, what a, what a thrill to get you back on the show. Thanks for taking us through the government shutdown and all of the, uh, the implications there. Before you go, tell everybody where they can find you online and, uh, where they can get more of you.

Marc Ryan: Absolutely. So you can go to lilac software.com for um, my new initiative with two other co-founders. That is seeking to transform how health plans operate. And then you can see [00:58:00] me@healthcarelabyrinth.com where I do a newsfeed, a blog and podcast multiple times each week to keep, uh, really healthcare authorities up on it.

But it’s good for just general readers too, that wanna learn more.

Erik Sunset: That’s awesome. Well, you better believe we’re gonna get links to those destinations into the show notes. Marc, thank you again for joining us and on behalf of the entire DocBuddy team, we thank you for listening. Be sure you’re subscribed on Apple Pods, Spotify and YouTube to get all the newest episodes of the show.

Subscribe to the Healthcare Labyrinth as well. Get to the site. Um, I’m sure you can get an email notification when new content is published. And until next time, I’m your host Erik. Thanks for joining us.