May 8, 2026
Dear Interested Readers,
How We Got The Mess We Have
My letter to you last week was a review of Paul Krugman’s Substack letter of April 19, which he published as the first installment of a series he is writing about our healthcare. That first letter he entitled “Curing U.S. Health Care, Part I: America doesn’t have to be like this.” He published the second installment of the series this week and titled it “Curing U.S. Health Care, Part II: How we got to Obamacare.”
Krugman’s motivation for the series is to add facts to what he hopes will be a renewed healthcare debate during the 2026 mid-term elections and the 2028 presidential election. There is very little in his letters so far that I have not reviewed at one time or another over the 18-year history of this Friday letter, but he does an excellent job of covering the complexity, dysfunction, and lack of equity in our healthcare system in a very readable and logical way. In the first letter, he points out that all other countries at our level of wealth have achieved universal access to high-quality care for everyone within their borders at a sustainable cost. In the second letter, he exercises a little redundancy by reviewing the three different ways these goals have been achieved. He is saying in essence, “Don’t tell me it can’t be done, and don’t tell me universal access is a slippery slope toward socialism, because there are choices in the mix of public and private options that can achieve the goal within the realities of capitalism.
In his May 3rd letter, Krugman focuses primarily on the history of the effort to achieve universal access to care over the last 80 years since World War II. That is the period during which other nations have proven that it can be done. He mentions that President Franklin Roosevelt wanted to include universal healthcare in the New Deal, but was convinced that if he did, his overall program would not be approved by Congress. In The Heart of Power: Health and Politics in the Oval Office, which I have referenced many times, the authors David Blumenthal and James Morone tell the story of the AMA’s resistance to universal access in the New Deal, which was delivered to FDR by his son’s father-in-law, the famous Peter Bent Brigham neurosurgeon, Harvest Cushing. Blumenthal and Morone go further back in history than Krugman does, tracing the effort to establish universal access to healthcare back to Teddy Roosevelt and the progressive period of the early twentieth century. This debate has been going on for a long time! Krugman begins by reminding us of the ACA’s signing in 2010 and its impact when it was fully implemented in 2014. He writes:
On March 23, 2010 President Barack Obama signed the Patient Protection and Affordable Care Act — usually referred to either as the Affordable Care Act or as Obamacare — into law. Joe Biden, then the vice president, could be overheard whispering “This is a big f…ing deal.” And it was.
The ACA, which went into full effect in 2014, created a system of subsidies and regulations designed to make health insurance available to many Americans who had previously been left out. It worked: In 2010 there were 47 million uninsured people in America, but by 2016 this number had dropped to 27 million. This still fell short of the universal health insurance that every other advanced nation has, but it was real progress.
We all know that there was significant resistance to the ACA from the moment Obama’s ink had dried at the signing. The resistance was initially through the courts. After Donald Trump was first elected with majorities in both the House and Senate, the effort was through Congress. Ironically, the ACA was saved by a bipartisan effort. Thank yous go to Susan Collins, Lisa Murkowski, and John McCain. Krugman writes:
In 2017, during his first term, Donald Trump tried to destroy the ACA, replacing it with the American Health Care Act — legislation that would have eliminated most of the provisions that expanded health insurance under Obama.
At the time the Congressional Budget Office projected that the G.O.P.’s replacement bill would nearly double the number of Americans without health insurance, increasing the total uninsured population by 23 million and undoing all of the progress achieved under the ACA.
However, the attack on Obamacare failed by one vote in the Senate, and the ensuing public backlash against the G.O.P. delivered a large victory in the 2018 midterms to the Democrats. After these developments many observers assumed that the ACA had become a more or less permanent feature of American life.
Since more damage has been done to the ACA through the courts than through Congress, I asked Google’s Gemini to review the Supreme Court’s decisions that have impacted the ACA:
Landmark ACA Decisions
- National Federation of Independent Business v. Sebelius (2012): This was the most critical challenge. The Court ruled 5-4 that the individual mandate—the requirement to buy insurance—was constitutional under Congress’s taxing power. However, the Court ruled 7-2 that the federal government could not coerce states into expanding Medicaid by threatening to revoke existing Medicaid funding, making Medicaid expansion effectively optional for states.
- Burwell v. Hobby Lobby Stores, Inc. (2014): The Court ruled 5-4 that closely held, for-profit corporations could be exempt from the ACA’s contraceptive mandate if they had religious objections, citing the Religious Freedom Restoration Act.
- King v. Burwell (2015): The Court ruled 6-3 that the ACA allows for federal tax subsidies to be provided to individuals purchasing insurance on federal exchanges, not just state-run exchanges. This decision was crucial in maintaining the law’s affordability for millions of people in states that did not set up their own insurance marketplaces.
- California v. Texas (2021): The Court ruled 7-2 that Texas and other plaintiffs lacked standing to challenge the ACA. The lawsuit argued that because Congress reduced the individual mandate penalty to zero (in 2017), the entire law was unconstitutional. The Court did not rule on the law’s constitutionality itself, leaving the ACA intact.
- Kennedy v. Braidwood (2025): The Supreme Court upheld the ACA’s preventive services provision, which requires insurance plans to cover certain preventive care (like vaccines and screenings) without cost-sharing. The case centered on a challenge to the authority of the U.S. Preventive Services Task Force.
Even without the mandate, even if you were not among the millions who gained coverage through the Medicaid expansion, and despite the failure of 10 red states to accept it, the ACA has been a huge benefit for all of us. For everyone who finds coverage, it alleviates concerns about preexisting conditions, covers testing, and guarantees health maintenance care. There was a lot of confusion back when Obama was trying to sell the ACA because he misstated that the law would allow everyone to keep the plan they had if they liked it. What he should have said was that they could keep their plan if it covered those added benefits, which, by law under the ACA, we now enjoy. I always thought that his error was an honest mistake arising from the complexity of what the bill was designed to achieve and the difficulty of explaining such a complicated scheme to an apprehensive population. Those benefits which we all still enjoy through the ACA, according to Google, are:
Key Benefits and Usage Examples of the ACA
- Protection for Pre-existing Conditions: Insurance companies can no longer deny coverage or charge higher premiums for pre-existing conditions like cancer, diabetes, or asthma.
- Expansion of Coverage: Medicaid was expanded to cover individuals with incomes up to 138% of the federal poverty level, significantly reducing the uninsured rate among low-income populations.
- Subsidies for Affordability: The ACA created health insurance marketplaces where individuals with incomes from 139% to 400% of the federal poverty level can receive tax credits to lower their premiums. [Biden made the subsidies more generous, and Trump has now diminished them to the point that the exchanges now offer plans that are so expensive that millions will be unable to participate and lose their access to care.]
- Essential Health Benefits (EHBs): All plans must cover ten essential areas, including maternity care, mental health services, prescription drugs, and rehabilitative care.
- Free Preventive Services: Insurance plans are required to cover preventive services—such as cancer screenings, blood pressure checks, and immunizations—without out-of-pocket costs.
- Young Adult Coverage: Individuals can remain on their parents’ health insurance plans until they turn 26 years old.
- No Lifetime or Annual Limits: Insurers are prohibited from setting dollar limits on the amount they will spend on essential health benefits.
- Medical Loss Ratio (MLR) Rules: Insurers must spend at least 80% to 85% of premiums on medical care rather than administrative costs, or return the difference to consumers.
As noted above, perhaps the most positive events since Obama signed the ACA in 2010 were the bills Joe Biden signed during the pandemic: the American Rescue Plan Act of 2021 (ARPA) and the Inflation Reduction Act of 2022. Those laws made the ACA marketplace more accessible to several million lower-middle-class individuals and families who earned too much to qualify for the Medicaid expansion. Unfortunately, those subsidies expired in January, and the Republican-controlled Congress complied with President Trump’s refusal to support their extension. As a result of the failure to renew the subsidies, coupled with the attack on Medicaid, which will “kick in” after the midterms, Krugman reports:
“…the second Trump administration has taken actions that the CBO projects will add 16 million people to the rolls of the uninsured by 2034.”
That is probably a very conservative estimate of the number who will lose their access to healthcare, and it causes us to ask why there has been so much hostility toward the concept of universal coverage. The answer will include some speculation, but looking at history, we discover that, beyond the conservative inclination to limit government’s role in all aspects of life, there are other recurrent themes. One is racism. Even this week, we saw the immediate reaction in southern states to the Supreme Court’s final evisceration of the Voting Rights Act of 1965, which I consider evidence of continued widespread implicit racial bias. Even the New Deal failed to initially extend Social Security to farm workers, ostensibly because the majority of farm workers were African Americans. Medicare was resisted in the early sixties by powerful Southern Democrats for racial reasons. Medicaid requires hospitals to be integrated, and many southern hospitals weren’t universally integrated long after “separate but equal” was declared unconstitutional. As a child, I noticed that when I went to the doctor, there was no evidence of Black patients in the office. I wondered where they saw the doctor. As a teenager, I noticed that African Americans had a separate entrance and waiting room at the back of the doctor’s office. There remains a mountain of evidence suggesting bias in our care system.
I am skipping around. Late in his analysis, after describing many events of the last 80 years, Krugman succinctly sums up all of the explanations for why we haven’t found a way to give everyone a path to coverage. He writes:
The answer to those questions lies in the special history of U.S. health policy, which has been strongly shaped by two forms of American exceptionalism: The power of big money and racial antagonism.
I will continue to use many more words to say much the same thing. Prior to the ACA, the AMA had resisted legislative efforts to expand coverage, for concerns about the emergence of “socialized medicine” or restrictions on the profitability of private practice. For many of the same years, the AMA also resisted efforts to expand medical education, fearing that training more doctors would create unwanted competition for established physicians who were AMA members.
The insurance industry has benefited from the ACA, but that didn’t mean they were always in favor of expanding access to care. The health insurance industry was largely responsible for scuttling the Clinton Administration’s attempt at universal coverage with its very successful “Harry and Louise” program of fear-mongering about what might happen to the quality of patient care (but really to its business opportunities) if the Clinton ideas were ever written into law. In the run-up to the ACA, the support of independent Senator Joe Lieberman of Connecticut, whose state was home to many health insurance companies, was critical to passage. Lieberman caucused with the Democrats to give them a filibuster-proof 60-vote majority, but he made his support contingent on removing a “public option,” which health insurers feared would damage their profits. I agree with Krugman that racism and endangered profits have made progress toward universal access difficult. I would also add that one of the defensive tools used by those who saw their business position potentially threatened was to exacerbate fears of “socialized medicine” among those who liked what they had, and who weren’t bothered much by the inequity of what many others did not have. Krugman’s short answer to the resistance in America to universal access and lower health care costs enjoyed by other advanced nations should cause us all to examine our own complicity in perpetuating inequities in healthcare.
Krugman keeps coming back to the idea that if other nations can, so can we. He gives an overview of the options other nations have used to succeed. Here it is:
In my previous primer, [Click on the link to read it] I explained that access to modern healthcare depends crucially on having health insurance. I also explained that there are three ways nations can guarantee more or less universal health insurance: insurance that covers major healthcare costs for every citizen.
- The government can provide care directly, as it does most famously in the UK.
- It can act as the universal insurer, as it does in Canada.
- It can use regulations and subsidies to corral private insurers into covering everyone, as it does in the Netherlands.
All of these methods can work and do work in some nations.
By contrast, the U.S. healthcare system is a patchwork of different programs that falls short of universal coverage yet achieves a relatively high level of coverage using versions of all three approaches. In the U.S. the private sector plays a larger role in healthcare than in any other advanced country. However, we are far from having a free-market healthcare system.
That last sentence may be the biggest surprise in Krugman’s letter, and perhaps is news for you, dear reader. Let me repeat it and have him expound on the data:
…In the U.S. the private sector plays a larger role in healthcare than in any other advanced country. However, we are far from having a free-market healthcare system.
To illustrate the patchwork nature of the U.S. healthcare system, here is a breakdown of how the U.S. population was covered in 2024:
A majority of Americans are covered by private insurers through employer-provided insurance and, to a limited extent, through individual plans that people have purchased themselves. However, more than a third of the U.S. population is covered through government programs: Medicare and Medicaid, which are government insurance programs, or military programs including the VA system of hospitals and clinics.
Furthermore, the US system looks less private and more public if we look at the dollars spent rather than enrollment. Seniors, whose healthcare costs are much higher than those of younger Americans, are covered by Medicare. As a result, the government pays a substantially higher percentage of total healthcare costs than private insurers pay…
Krugman’s paper includes lots of charts to substantiate his points. After a couple of pie charts, he continues with me continuing to bold points for you to notice:
Moreover, private health insurance is regulated and subsidized by the federal government to a greater extent than is generally realized. Notably, the tax code provides an effective subsidy for employment-based insurance: health insurance benefits provided by your employer aren’t considered taxable income, giving employers an incentive to offer health insurance benefits rather than paying higher salaries and letting employees buy their own insurance. This tax break, however, is only available, roughly speaking, to companies that offer the same plan to all of their workers, regardless of their medical history or rank in the corporate hierarchy. That is, companies that offer healthcare as a non-taxable benefit can’t deny coverage to employees with preexisting conditions or limit the plan to their top executives.
Ironically, it seems that the healthcare industry is fine with government involvement as long as it augments their profits. In fact, according to many, like Blumenthal and Morone, it was tax breaks versus a government program like the one Harry Truman tried to pass after World War II that put us on the road to where we are now. One thing to remember is that tax breaks work best for those with taxable income, which may partly explain why so many of our economically disadvantaged neighbors don’t have access to care.
Krugman continues to make points worth your attention. Many of them should not be news to you, but it is good to remind ourselves that our high cost of healthcare is paradoxically related to our willingness to deny it to many until it becomes very expensive, in ways that impact all of us who do pay and are taxed. He writes:
So U.S. healthcare is, as I said, a patchwork — but one in which the government plays a crucial role in promoting health insurance coverage, even in the seemingly privatized parts of the system.
About 92 percent of the U.S. population, and a somewhat higher percentage of legal residents, has health insurance, but the gaps in the system and its complexity still leave millions without coverage. And the persistence of widespread uninsurance has large costs, even to those with insurance. For example, U.S. hospitals spend tens of billions a year on uncompensated care, costs that must be passed on to other patients. And lack of health insurance leads many Americans to forego preventive care, which ultimately both raises costs and causes long-term health problems that are a drag on productivity and the economy as a whole.
I have not done justice to Krugman’s 80-year retrospective of our painful journey toward universal coverage. I hope that the links in the first paragraph of this letter will allow you to dive deeper into his analysis and excellent description of the path we have been traveling.
Krugman ends with a shift from a review of history to a warning and a brief look into a possibly worse future. He writes:
…many of the achievements of Obamacare will soon be destroyed unless legislation enacted under the second Trump administration is reversed.
The new assault on healthcare:
First, they refused to renew the expanded healthcare subsidies introduced during the Biden years. This has already drastically increased insurance premiums for millions of Americans, leading many to drop coverage. Early estimates suggest that 5 million or more people may drop out of the individual insurance market this year alone, with millions more downgrading to policies that provide inadequate coverage.
Second, the One Big Beautiful Bill Act — the combination of tax and spending cuts Republicans enacted last year — will drastically cut funding for Medicaid. CBO estimates that these cuts will cause around 10 million Americans to be kicked off Medicaid by 2034…
How can and should Democrats respond? And what should be the agenda for future healthcare reform?
He promises to take up those questions in the next installment. Rest assured, I will share the insights from that post with you. My hope is that you will use the information to make your own small contribution to the effort that will finally make equitable, high-quality healthcare available for everyone in America.
Daffodils, Dandelions, and Mother’s Day
My mother died in early January of 2013. She was a little less than two months shy of her 93rd birthday. I think of her every day. I make almost daily attempts to converse with her, even though I can only imagine her response to the questions I ask her. One of my greatest regrets in life was not spending more time with her after I left home. Most of those years, I would call frequently, but usually there were at least a thousand miles between us, so our face time was limited to a half dozen or fewer moments a year. I hope that, if your mother is still among the living, you will let her know how much you appreciate her this Sunday, but, more importantly, endeavor to spend as much time as possible with her throughout the year. Where would we be without our mothers?
For sure, there were times when I chaffed at what I thought was my parents’ inability to see the world as I saw it. I know that many feel justified in their persistent grudges against one or both of their parents. Take it from an old man: if your parents are still alive, any time spent with them and any effort to repair differences that may have their origins in painful realities or misunderstandings of long ago will be worth it in the long run. If you feel that you are hopelessly estranged from your mother or father, let me suggest that you check out Adult Children of Emotionally Immature Parents, written by Lindsay C. Gibson, PsyD.
I think it is very appropriate that Mother’s Day comes in early spring. Well, it is still early Spring where I am. As I have said before, spring comes and goes here, and winter can make a encore appearance almost anytime until June, but as the header today reveals, we have had enough spring for the daffodils, which my wife planted several years ago to make their appearance. What you can’t see in the picture is that the remainder of my front yard is turning into a sea of dandelions, which will persist long after the daffodils fade. Isn’t the renewal of life every spring amazing! Get out and enjoy it this weekend. Find time to honor your mom, and
Be well,
Gene
