Hawaii’s health care system is in bad shape, and the way to make it better is to foster greater competition among doctors, hospitals, drug companies and insurance companies, by simplifying the regulatory environment in which they operate.

That’s according to former Hawaii physician Dr. Kyle Varner, who spoke recently at an event on Maui hosted by the Grassroot Institute of Hawaii. (Click here to see entire presentation. Transcript of presentation is below.)

Varner grew up in Spokane, Wash. and graduated from St. George’s High School before attending St. John’s College and earning a medical degree at American University of Antigua College of Medicine. Varner said he loves Hawaii and would like to have stayed, but returned to Spokane in 2016 because of too much red tape in Hawaii, which made it difficult for him to pursue his mission of delivering high-quality medical care to isles residents.

“I’m not opening a clinic (in Hawaii) where insurance companies and bureaucrats get between me and my patients,” said Varner. “It’s not how I want to practice medicine; it’s not the way medicine should be practiced.”

Varner noted that there are actually some areas in health care where the prices have been going down. Cosmetic surgery and laser eye surgery, for example, have declined in price, adjusted for inflation. The reason, he said, is cash.

“People walk into cosmetic surgeon’s office, and they pay cash, and they ask a very very crucial question: ‘How much is this? And is it worth it?’”

In essence, there is a direct, observable relationship between the patients and providers, motivating the patients (aka “consumers”) to shop more carefully, and the providers to provide higher-quality products at a lower cost.

By contrast, the rest of the American health care system is paid for not by consumers, but by third-parties such as Medicaid, Medicare or insurance companies.

Varner said patients in a third-party payer system don’t ask about prices, and tend to purchase unnecessary procedures and tests, whether at their own initiative or on the doctor’s advice.

“We don’t have anyone price shopping,” he said.

Other barriers to a more efficient, more affordable health care system include anti-competitive cronyism; the poorly crafted federal Affordable Care Act; and barriers to interstate competition between insurance companies.

To learn more about Dr. Varner’s views on how to fix health care in Hawaii — and America overall — see the entire Maui presentation here, or read the full transcript below: 

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Transcript of presentation by Dr. Kyle Varner
on “How to lower the cost of health care,”
July 25, 2017, at J. Walter Cameron Center, Wailuku, Maui

Keli’i Akina: Well tonight, Kyle Varner is going to talk about what the real problem is with the American health care system, and how to fix it. He’s going to talk for about half an hour, and then he’s all yours, for half an hour or more. You get to ask him any and all questions you might have. So without further ado, please welcome our guest speaker. He’s from Spokane, he has worked here at Tripler Hospital, so he knows the Hawaii market, and he is an internist: Kyle Varner. Aloha.

Dr. Kyle Varner: Aloha. Well, thank you for that introduction, Keli’i. And it looks like our PowerPoint is not working. So maybe we can take a look at that.

But to start off with, can anyone tell me what the most common cause of cause of kidney failure in the United States is?

Well, it’s actually diabetes, and a lot of other causes rank up there, but I think that’s an interesting trivia piece because diabetes is something that can be managed really well, and complications like kidney failure can be prevented, but here in the United States, we do a really bad job of managing diabetes, and it leads to kidney failure a lot.

So when I talk about health care, and the health care problems, and the health care system in the United States, I come at it from a free market perspective. I’m a guy who believes in freedom. And that leads a lot of people to calling me cruel, or heartless, or selfish. I don’t think I’m any of those things.

I think right now, people are suffering. And they’re suffering financially because the system is ridiculously expensive. They’re suffering physically because even though they might have a health insurance card, they can’t access primary care.

A couple of months ago, I was working overnight in my home hospital, and I had a patient I needed to admit to the intensive care unit. We didn’t have any beds. So I called around. And what I found was that there were no ICU beds in the entire city. Every ICU bed was full. And so I had to make the decision: Do I keep this person in the emergency room and try to manage their critical illness there, or do I put them on an airplane and send them to another city — those are my two options. And that made me really angry.

Luckily, that patient did fine, but people are suffering in a lot of ways, because we have a broken system. And today in Washington (July 25, 2017), they had a very momentous vote, one of many that they’re going to have in the current debate about health care, and it may surprise you guys to know that I wasn’t interested at all in what they do.

Here’s the analogy I use to describe health care in America. It’s a train headed for a cliff at a 190 miles an hour. Now, prior to the Affordable Care Act, I would say that it’s a train headed for a cliff at 180 miles an hour. Things have gotten a little bit worse.

I think that President Trump and the Republicans in Congress are making proposals that might slow the train down to 185 miles an hour. The fact remains, the train is headed for the cliff. We have a fiscally insolvent system, people are suffering, and it’s not serving our needs.

I’m not interested in what Congress does this week or next week, with one notable exception that I’ll mention in a little bit.

We need to take stock of the problem and understand it from an economic standpoint, and once we do that, we can craft wise solutions that lead to more affordable care and better access.

What we all want

So what does everyone want in a health care system? I think that’s an important place to start, and I would argue that we want, first of all, affordability. We want everybody able to pay their bills and not go broke.

We want abundance, meaning that when you need an ICU bed, one is available.

We want quality. We want our doctors to do a good job. We want the system to do the right thing for us.

We also want innovation. We want things to keep getting better. Every year, we want doctors to learn new ways to treat disease, and get better at it.

And finally, I think we want autonomy. We want a system that respects our own values. We want to be able to make our own choices. We don’t want someone telling us you will or you won’t have this therapy or that therapy.

So if we keep those five things in mind, going forward, we can start to see how we can craft a system that serves our needs.

High costs, low return

So there is one number that I’d like you guys to remember for today, and it’s 9,086. And that was the most recent data we have for 2015: The United States spent $9,086 per person on health care expenses. That’s more than double what the United Kingdom spends at roughly $4,000. In fact, we’re the No. 1 spender on health care worldwide. We dwarf everyone.

In Mexico, people live shorter life spans than they do in the United States, but they’re only spending $600-$800 per person every year.

So we have tremendous inefficiencies in our health care system. And by the way, we’re not No. 1 in life expectancy. So we’re spending more and getting less. It’s a major problem. And even if you’re relatively wealthy, you can be bankrupted by medical fees. So there’s a real problem, and people are suffering. And when people are suffering and they can’t afford their insurance premiums, and they can’t afford their hospital bills, they start looking for solutions.

That’s why we have such a spirited, passionate debate going on nationwide, and in the halls of Congress right now.

Bright spots in health care

But, you know, there’s some areas of health care where the prices are going down, and not up. And that should amaze us, and it should make us look in those directions. Those areas of health care are cosmetic surgery, and laser eye surgery.

Since 1992, prices of cosmetic surgery services have increased about 32 percent. Inflation, however, has added up to about 64 percent at that time. So if you consider inflation, cosmetic surgery has gotten cheaper.

Laser eye surgery cost about $2,200 an eye when it was first introduced back in 1999. Today you can go on Groupon and get it for $890 an eye. It’s cheaper! And it’s better quality too. I just had laser eye surgery about six months ago, it changed my life. It’s great!

So, we have to ask ourselves why laser eye surgery and cosmetic surgery are getting cheaper on the one hand, and heart surgery and the treatment of pneumonia and the treatment of diabetes is getting more expensive. Can we apply some things from the markets for cosmetic surgery and laser eye surgery to all the other health care and experience the same improvements in quality, and decreases in cost? And I submit to you tonight that we can.

The difference between laser eye surgery, cosmetic surgery and everything else, is cash. People walk into a cosmetic surgeon’s office, and they pay cash, and they ask the very, very crucial question, “How much is this? And is it worth it?”

And if they decide it’s not worth it, they don’t get it done. Or they go look for someone else to do it.

Nobody price shopping

Today, people travel all over the world looking for medical procedures and a lower price, and so doctors at hospitals, when faced with these cash patients who are price-conscious, who want the best value for their money, begin striving to please their customers. Very much like Samsung and Apple are striving to please their customers. Very much like any other company. And so we have a well-functioning market, and we have a lot of really good things happening.

I compare health care today to Soviet breadlines. While we do have different doctors and different companies providing the services, we also have CMS, Medicare, who set the individual prices for everything. All the insurance companies go alone.

And the key point is that the vast majority of people don’t participate financially in their health care decisions.

11 cents of every health care dollar spent comes from the patient’s pocket. The other 89 cents doesn’t come in the patient’s pocket; it comes from a third-party payer. That can be Medicare, it can be Medicaid, it can be Blue Cross Blue Shield; here in Hawaii it is HMSA.

So when the patient doesn’t participate, they don’t ask the question, “Hey doc, do I really need this MRI?” They just say, “OK, you say I should get an MRI, doesn’t cost me anything.” And as the doctor, the MRI doesn’t cost me anything either.

We’ll talk in a moment about unnecessary tests. But the point here is that we don’t have anyone price shopping.

In fact, I went about six months ago for a DEXA scan for body-fat percentage. I decided I was going to lose some weight, and I wanted the gold standard to find out how much body fat I have. So I called up a radiology center, and they told me $80 and you can have the scan. Perfect. I went there with $80, I had four $20 bills in my pocket, I said I’m  here for my scan, and the secretary said, “May I please have your insurance card?”

And I said, “No, that’s not necessary, I’m paying cash.”

And she kind of paused and said, “Oh, I don’t know what to do.”

It took her 30 minutes to figure out what to do with my four $20 bills. No one pays cash, and nobody cares about the cost.

Now, some people object to my suggestion that patients should participate in the economic decisions of health care by saying that heart surgery is different than cosmetic surgery. Or is different somehow than laser eye surgery, because you need heart surgery, but you don’t need cosmetic surgery, you don’t need laser eye surgery.

Spectrum of necessity

They have a point. You can have things that are medically necessary. But I would argue that the vast majority of health care is a spectrum of necessity.

So on the one side of the spectrum, yeah, there are sometimes surgeries or procedures that you absolutely need to survive or you will die very soon. And there are also surgeries that are just not necessary, or maybe even be harmful. But in the middle, where the vast majority of the care occurs, there are alternatives, some are more expensive, some are less expensive.

So you could, for example, if you had cellulitis, an infection of skin in your leg, and you’re not septic, the ER doc might say, “You know, why don’t you come into the hospital for a couple days of IV antibiotics?” Well, at $4,000 a day you’re looking at $8,000 just to get started.

You might say, “Well, I have a little bit of a better chance of getting this under control if I do.” Or you could say, “Hey, wait a minute, what if I just go home, take some pills, and go see my doctor tomorrow, see if I’m getting any better. Could we try that?”

And you know, the reality is, that’s probably pretty reasonable in the situation I just described. But, it’s probably not ideal. You’re probably not going to have the best chance of having a good outcome, and the ER doc is going to say, “Your best chance is to come into the hospital.”

Nobody cares about the cost; you come into the hospital; we end up not having enough hospital beds.

So that’s where this all starts.

The economic principle that this describes is called “moral hazard.” You can’t insure a car for more than the value of the car, because then you would increase your incentive to wreck the car.

In health care, we don’t have as doctors and patients and consumers, any incentive to control our spending. So I order unnecessary tests every night, maybe $10,000 a night of unnecessary tests. It’s crazy.

I hospitalize people in questionable ways. And when I say questionable ways, I don’t mean that I violate the guidelines. The guidelines say I should put this person in the hospital. I just know that, hey, if that was me, and I was spending my own money, I would probably try to go home, or figure out some way to deal with it. But the incentives are such that that doesn’t matter.

And me, as the doctor, you know, I have to worry about malpractice, about liability, so I’m going to suggest the optimal thing, without regard to cost. And that’s been going on, and on in health care, and it’s bankrupting us.

Cronyism for drugs

Health care is also subject to cronyism.

We have businesses in health care, from insurance companies to pharmaceutical companies, and,I’ll admit it, my own professions, doctors, and hospitals, who are all seeking a privileged position in the market.

What I mean by a privileged position in the market, is that they’re seeking a way of keeping their competitors legally from doing businesses with their customers, so they can enjoy a financial benefit from having a monopoly.

So I want to break it down for you sector by sector, and show you what they’re doing.

So first, let’s talk about pharmaceuticals.

If you take Crestor, or any other statin, you might be paying somewhere around $700 to $1,000 a year in the United States. If you bought that pill from India, Mexico, Canada, you’d probably pay less than $100 a year. It goes on and on, drug after drug.

These American companies, usually, manufacture them, and sell them abroad, and then they go to Congress and they argue, it would be unsafe for Americans to re-import these products.

You guys are the one who manufactured them, how could it be unsafe for us to buy it?

We should also keep in mind that a lot of generic drugs are available overseas, and again manufactured by foreign companies, but the U.S. pharmaceutical companies say, “No, we can’t allow Americans to make their own decisions. Congress, please prevent the importation of these drugs.”

And what happens? Pharmaceutical companies rake in the profits by the billions. And doctors, patients, hospitals systems pay the price. And it’s bankrupting us.

Cronyism for doctors

So, now, I’m going to call out my own profession. Doctors are engaging in cronyism. We’re engaging in cronyism because we have created an byzantine system of medical licensure that prevents people from becoming doctors.

There are way more people out there who want to be doctors than who can be doctors. There are a bunch of people — I know a lot of them — who went to medical school, graduated and did well. They passed all their licensing exams, but they were unable to obtain a residency. They work outside health care.

You have to take classes, like organic chemistry, physics and calculus and English, just to get a chance to go to medical school.

So these hurdles have been placed, in my estimation, for one reason, and one reason only. They’ve been placed so they can raise the salaries of doctors already in the profession.

Now, once you’re a doctor, you also have this same dynamic playing out with specialties and training for procedures.

So the gastroenterologists say, “No, we’re the ones who do colonoscopies and EGDs or ]scopes.]”

And the cardiologists say, “We’re the ones who interpret echocardiograms and stress tests.”

Now, I will tell you, I could learn these things in fairly short order and do them myself, but I can’t get the training. I’m an internist, so I can do these with very little extra training, saving my patients time and money. In fact, I could see a world where if someone comes in with an upper GI bleed, I go down to the emergency department and do a scope right then and there. Can’t obtain the training without going through a prolonged fellowship that would require a significant investment of time and energy just to even have the chance to apply for it.

So at every step of the way, doctors are acting to increase their salaries, and they always do it this way, and you’ll find this with every type of cronyism in health care:. They speak in terms of quality, and then they think in terms of their own paychecks. It really disgusts me, because they’re robbing patients, and robbing the system.

Cronyism for hospitals

And hospitals are not innocent of this. In fact, they may be the biggest offenders.

Would you raise your hand if you’ve heard of certificate-of-need laws?

Here in Hawaii, we have certificate-of-need laws. In fact, I know here on Maui, that’s been a big issue with getting a second hospital up and running on the island. And what a certificate-of-need law says is that you may not open a health care facility if it will compete with another health care facility.

Isn’t that want we want?

I want Apple competing with Samsung giving me the best smartphone. I want cosmetic surgeon A competing with cosmetic surgeon B, giving me the best option. And, you know, I want hospital A to compete with hospital B, trying to both convince me that they’re the best.

But we don’t have that in health care. We have little monopoly fiefdoms for every hospital in this area or that area. And one hospital will have one service, and they’ll snipe at another hospital.

There’s a doctor in Iowa named Lee Birchanski, who has an ambulatory surgery center. He’s an opthamologist. He has an ambulatory eye surgery center connected to his office, and he’s had it since, I believe, 1999, and he has been unable to obtain a certificate of need. In fact, the local hospitals have gone to the state and said, “Please don’t let him open his ambulatory surgery center.”

And so, all of these ORs sit vacant.

There are stories about women going into hospitals in premature labor, giving birth to a baby that needs neonatal ICU care — that care not being available there, and the baby dying. And then we find out, that hospital applied for a certificate of need to open a neonatal ICU, but it was denied because the hospital in the next town over objected.

This is disgusting, but it’s also driving up the price of care.

So hospitals are very much not innocent.

Cronyism for insurance companies

So we’ve got insurance companies as well. And they are also huge offenders.

I’m one of the people who says the Affordable Care Act was a big handout to insurance companies, and their profits have roughly doubled since the passage of the Affordable Care Act.

The government said, “Hey everyone, you’re mandated to buy their product. If you can’t afford it, we’ll give you subsidies.” And then, insurance companies were able to raise rates through the roof. And I think anybody here who has bought a plan on the exchange, or knows someone who has, understands what that’s like when you get something in the mail saying, “You were paying $300 a month, now it’s $500, congratulations.” It’s harming people.

And that’s cronyism in health care.

The case of Martin Shkreli

There’s a particular case I’d like to address about cronyism. Anybody heard of Martin Shkreli?

Martin Shkreli is a gentleman, if you can use the word, who purchased, through his pharmaceutical company, Turing Pharmaceuticals, a drug called Daraprim. Daraprim’s a generic drug; it means there’s no patent on it. It means anybody can buy the drug, or anybody can manufacture the drug, theoretically.

It was selling for about $13.50 a pill. And it’s an HIV medication, it’s actually an anti-parasitic medication that is used in AIDS patients with certain opportunistic infections, so it doesn’t have a big market. It’s a pretty small market; about 12,000 people a year in the United States get the drug.

So Shkreli bought the rights to the drug, and he raised the price immediately, from $13.50 a pill, to $750 a pill. And there was an outcry, and he got called before Congress to testify, and people were saying, “How can you do this? You’re price gouging!”

And he said, “Well, it’s our drug.”

When I looked at that, I said, what in the world is going on? It’s a generic drug. Anybody can make it. How can he get away with this? Shouldn’t the free market immediately slap him down?

Well, it turns out, it doesn’t quite work that way because here in the U.S., you have to file a new drug application, even for a new generic drug, pay about $20 million in fees in order to conduct the studies, and you also have to obtain the drug that’s already on the market in order to conduct your trials.

Shkreli was smart. He set up a private distribution network so that he could prevent potential generic competitors from ever gaining access to the drug.

So this is the quintessential example of cronyism victimizing consumers. And in every instance that I’ve mentioned about cronyism, what we’ve seen is that the government partners, or in some way protects, a private business, and then allows them to reap profits far in excess of the value they create for their customers. And that is one of the central problems in health care.

By the way, Daraprim’s available in India for five cents a pill.

And you can actually import for yourself three months of a drug from abroad, as long as you have a valid prescription for it from the United States. For some people that’s an option. A lot of people, especially if they live in border towns, whether it’s Canada or Mexico, will go across the border and buy it every three months. But if you live in the heartland, or if you live here in Hawaii, it’s harder to get abroad to buy those.

The hospitals can’t go and buy the drugs and then give them to the three-month exemption is really only carving away at the edges of the massive windfall profits that the drug companies are receiving.

And when I get to this point, and I talk about how we’re just getting robbed left and right by companies partnering with the government, someone always tells me, “Wow, see? That’s why we need single-payer healthcare. We need to get the companies out of it.”

Health care as political weapon

And my response is two-fold. First of all I would quote Margaret Thatcher: “The problem with socialism is that you eventually run out of other people’s money.”

And the second thing I would say is: Do you really want bureaucrats making your health care decisions.

And so let’s address running out of other people’s money. What happens in a system where the government pays for and controls all of your health care when there’s a crisis?

Well, Greece experienced that. Greece may not be as wealthy as us, but I think most people would agree that at one time, they were a well-developed, well-off country. They have a government system of health care, and austerity happened, and the German creditors turned the screws on them. Spending went down, taxes went up, and all of a sudden, hospitals got overcrowded, drug shortages happened, and an interesting thing happened: Doctors in Greece who had had their pay cut as part of austerity, started suggesting to their patients that they give them envelopes full of cash in exchange for good care.

They actually have a word for it … I don’t remember the word, but there’s a word for it, and it’s actually become common practice. So even though the government’s providing “free care,” you still have to pay the doctor if you want good care.

Health care will become a political football if we let the government take over any more of it in the United States. Every time the debt ceiling comes up in Congress, they’ll threaten our health care. Every time one party wants to raise taxes, or another party wants to cut taxes, they’re going to start threatening our health care.

So, I would ask, do you want to give politicians that kind of leverage over your life? I don’t want that to happen, and I hope that other people don’t.

Direct primary care the way to go

But finally, in any system, whether it’s a capitalistic or a free market system or whether it’s a socialized system, you have to have someone saying “No” to something. You cannot have spending without somebody bearing the consequences. You can’t just have an unlimited blank check for everyone.

And in a free market, people make decisions — Is it worth it, or is it not? — and the market reaches an equilibrium.

Everywhere where the government has an even larger role in health care, has some kind of a bureau that makes determinations about who will, and who won’t get care. As Sarah Palin said, someone histrionically, that these were “death panels.” In England, they talk about “quality adjusted life years” and some guys with calculators figure out if you’re this age, and you have this disease, you will with this treatment get this many quality-adjusted life years, it’s worth this much, yes or no. Bureaucrats decide.

I don’t want bureaucrats to decide, I want patients and doctors to decide, and that means you have to have a measure of freedom in your system.

And so I advocate kicking third parties out of the doctor-patient relationship. That sounds pretty radical. And what that means is that I think doctors and patients should have a direct financial relationship.

Direct primary care is something that’s taking root all over the country. To my knowledge, it hasn’t taken root in Maui yet. Please, if I’m wrong, please somebody correct me, but I think it soon will. It has? So there’s a few docs.

So it’s great. You can have a retainer with your doctor, sometimes it’s $60-$70 bucks a month. You know there’s a doctor out in Iowa who charges $60 a month per adult, and $25 per child, and that covers all your primary care.

You get an appointment when you need it, and any and all health care decisions are between you and your doctor alone. There’s no third party involved.

There’s a surgery center in Oklahoma that said, “We’re not going to work with insurance of any kind anymore. It’s between you and us.” They charge less than half of what the other local hospitals charge for any and all outpatient procedures.

People are finding that something their insurance didn’t cover, and was unaffordable at the local hospital, is now affordable at the surgery center of Oklahoma. And the best part is that insured patients can go there, get the procedure, and then submit the bill to their insurance company, meaning that there’s actually a savings for the health care system.

So I think that’s really, really exciting.

‘Health-sharing ministries’

Something else that is really, really exciting to me is called “Health-sharing ministries.”

So when the Affordable Care Act was passed, there was an exemption carved out for four existing ministries. They were religious faith-based groups, where they said, “We’re going to pool together and share our medical expenses. It’s insurance, by a different name, we’re going to share our medical expenses as a group.”

And one of these, they called themselves Liberty Health Share, after the Affordable Care Act, said, “We’re going to try to open this up to as many people as possible. We don’t want them to be stuck on the exchanges.”

And so Liberty Health Share has gone national. They’ve worked to expand their network, and they will offer sharing of up to a million dollars of medical expenses for $149 a month if you’re under 30. If you’re over $65 it’s $224 a month. Compare that to what you’re paying Kaiser, or what you’re paying to the exchanges, it’s pretty amazing.

And to be fair, they don’t cover pre-existing conditions, you can’t be health sharing if you smoke. If you diabetes, you have to keep it under control, or you’re going to get kicked out. But the vast majority of people, you’re going to be able to find significant savings with Liberty Health Share, and you’re still going to be covered if something catastrophic happens. That’s pretty exciting.

Now I mentioned direct primary care a moment ago, and I want to just come back to that, because I get asked, all the time here, why did you leave Hawaii? It’s such a great place. And I admit, it is a great place. I love Hawaii. I wanted to stay.

And so about 18 months ago, I sat down and started looking at job offers coming in, job offers from Straub and Kaiser over on Oahu, and then looking at what I do on the mainland. And I realized, yeah, I can make more money on the mainland. And second, I realized that in Washington, they don’t have a state income tax. And then I realized that housing costs would be a lot less.

But with all that, I was still not sure that I was going to leave Hawaii. I love it here.

Hawaii broaches Orwellian future

But then, a bill was proposed in the Hawaii State Legislature by Speaker (Joe) Souki. I understand he’s no longer the Speaker. And it would require physicians practicing in Hawaii to accept Medicare and Medicaid patients. And the way they would do that is by not renewing your license if you didn’t show them evidence that you did that.

Now, I’m a hospitalist, I have to accept Medicare and Medicaid, because I’m in a hospital, I work for hospitals. But, my plan has always been, I’m going to work at this high-intensity pace for the next 10 years or so, and then when I’m ready to settle down, I’m going to open up a direct primary care practice. And at that point, I wasn’t sure that I would be able to do that.

I’m not opening a clinic where insurance companies and bureaucrats get between me and my patients. It’s not how I want to practice medicine, it’s not the way medicine should be practiced. And if I’m going to spend my life doing something, I’m going to do it well.

You know, I saw a clinic in residency, and I treasured the relationships that I built with my patients, and I was always very hostile to bureaucrats and third parties getting involved. And the patients make the decisions with my help; they don’t have bureaucrats dictating to them.

And so, I said, you know, there was no outcry over this bill, yeah, it died quietly. But if one of the most powerful politicians in the state feels bold enough to propose this Orwellian proposal, at that point I said, no, I have to back away, I have to find a more politically favorable environment. And I regret that because I love Hawaii, and I wish that I had felt comfortable to stay here.

Political solutions

Finally, before we open it up for questions, I want to talk about political solutions.

So, I told you at the beginning of this talk that I don’t really care what Congress does in the upcoming months. But there is one thing that I would care about. And the president actually proposed it.

If you’ll recall, in a Republican Primary debate, Donald Trump had a real run-in with Marco Rubio; it was pretty epic to watch. And Donald Trump kept saying, “We’re gonna remove the lines around the states.” And he did this with his hands. “We’re gonna get rid of the lines around the states.”

He didn’t know what he was talking about. But the advisers who put that in his mind and told him to say that knew what they were talking about. And what they meant was, we need to allow people to buy insurance across state lines.

That means that if Rhode Island passes favorable laws that allow creative insurance products that people in Hawaii want, people in Hawaii should be able to buy them. This should be a no-brainer. Congress should pass this as a stand-alone bill. The Affordable Care Act could stay in place, and they could pass this, things would get better. Because the states are actually 50 laboratories of innovation. And one state can figure out a really good idea, and then the other states can go along with it.

And I’d like to, I guess, end here by talking about one other reform idea that I heard from Sen. Rand Paul, before he was a senator. And I haven’t heard it from him since he got elected. But he suggested that once we eliminate the lines around the states, one state should allow insurance to pay a lump sum of cash based on the diagnosis.

So this would look something like: You have squid cell carcinoma of the lungs stage II B. That corresponds to $100,000, here’s your check. And that would be the extent of the insurance company’s involvement.

The patient then can take that money and get medical care if they want, they can shop for better value and pocket the difference, or they could forgo the care and just take a cruise around the world.

But what this would do is give us a large pool of patients who are now making financial decisions regarding their health care. It would force hospitals and doctors to justify to their patients why exactly the care they’re offering is worth what they’re charging, and I think that would cause a huge sea change.

And that’s what we have to get back to, is patients making financial decisions, determining if the cost and benefit are worth it. And weighing those. And the market works when you have hundreds and thousands of people individually weighing those, and service providers striving to convince their customers that they’re the best.

So when we have that, I think we can have affordable health care in America, where there aren’t that many people who need subsidies, and the people who do are easy to subsidize, because the health care is cheap, and there aren’t that many who need it.

And then, we don’t have to have these horrible debates in Washington about who is stuck with a ginormous bill. We can have a reasonable discussion about how to cover the very few people who are actually indigent.