Business
Trump’s Tariff War Has Added Risk to U.S. Bonds, Long the Surest Bet in Global Finance
There are not many certainties in the world of money, but this traditionally has been one of them: When life turns scary, people take refuge in American government bonds.
Investors buy U.S. Treasuries on the assumption that, come what may — financial panic, war, natural disaster — the federal government will endure and stand by its debts, making its bonds the closest thing to a covenant with the heavens.
Yet turmoil in bond markets last week revealed the extent to which President Trump has shaken faith in that basic proposition, challenging the previously unimpeachable solidity of U.S. government debt. His trade war — now focused intently on China — has raised the prospect of a worldwide economic downturn while damaging American credibility as a responsible steward of peace and prosperity.
“The whole world has decided that the U.S. government has no idea what it’s doing,” said Mark Blyth, a political economist at Brown University and co-author of the forthcoming book “Inflation: A Guide for Users and Losers.”
An erosion of faith in the governance of the world’s largest economy appears at least in part responsible for the sharp sell-off in the bond market in recent days. When large numbers of investors sell bonds at once, that forces the government to offer higher interest rates to entice others to buy its debt. And that tends to push up interest rates throughout the economy, increasing payments for mortgages, car loans and credit card balances.
Last week, the yield on the closely watched 10-year Treasury bond soared to roughly 4.5 percent from just below 4 percent — the most pronounced spike in nearly a quarter century. At the same time, the value of the American dollar has been falling, even as tariffs would normally be expected to push it up.
Other elements also go into the explanation for the bond sell-off. Hedge funds and other financial players have sold holdings as they exit a complex trade that seeks to profit from the gap between existing prices for bonds and bets on their future values. Speculators have been unloading bonds in response to losses from plunging stock markets, seeking to amass cash to stave off insolvency.
Some fear that China’s central bank, which commands $3 trillion in foreign exchange reserves, including $761 billion in U.S. Treasury debt, could be selling as a form of retaliation for American tariffs.
Given the many factors playing out at once, the sharp increase in yields for government bonds registers as something similar to when medical patients learn that their red blood cell count is down: There may be many reasons for the drop, but none of them are good.
One reason appears to be an effective downgrading of the American place in global finance, from a safe haven to a source of volatility and danger.
As Mr. Blyth put it, Treasury bills have devolved from so-called information invariant assets — rock-solid investments regardless of the news — to “risk assets” that are vulnerable to getting sold when fear seizes the market.
The Trump administration has championed tariffs in the name of bringing manufacturing jobs back to the United States, asserting that a short-term period of turbulence will be followed by long-term gains. But as most economists describe it, global trade is being sabotaged without a coherent strategy. And the chaotic way in which tariffs have been administered — frequently announced and then suspended — has undercut confidence in the American system.
For years, economists have worried about an abrupt drop in the willingness of foreigners to buy and hold United States government debt, yielding a sharp and destabilizing increase in American interest rates. By many indications, that moment may be unfolding.
“People feel nervous about lending us money,” said Justin Wolfers, an economist at the University of Michigan. “They are saying, ‘We’ve lost our faith in America and the American economy.’”
For Americans, that reassessment threatens to revoke a unique form of privilege. Because the United States has long served as the global economy’s safe harbor, the government has reliably found takers for its debt at lower rates of interest. That has pulled down the cost of mortgages, credit card balances and auto loans. And that has allowed American consumers to spend with relative abandon.
At the same time, foreigners buying dollar-denominated assets pushed up the value of the American currency, making products imported to the United States cheaper in dollar terms.
Critics have long argued that this model is both unsustainable and destructive. The flow of foreign money into dollar assets has permitted Americans to gorge on imports — a boon to consumers, retailers and financiers — while sacrificing domestic manufacturing jobs. Chinese companies have gained dominance in key industries, making Americans dependent on a faraway adversary for vital goods like basic medicines.
“The U.S. dollar’s role as the primary safe currency has made America the chief enabler of global economic distortions,” the economist Michael Pettis wrote last week in an opinion piece in The Financial Times.
But economists inclined to that view generally prescribe a gradual process of adjustment, with the government embracing so-called industrial policy to encourage the development of new industries. This thinking animated the Biden administration’s economic policy, which included some tariffs against Chinese industry to protect American companies while they gained time to achieve momentum in industries like clean energy technology.
Encouraging American industry requires investment, which itself demands predictability. Mr. Trump has warned companies that the only way to avoid his tariffs is to set up factories in the United States, while lifting trade protectionism to levels not seen in more than a century.
Even an abrupt decision from the White House to pause most tariffs on all trading partners except China failed to dislodge the sense that a new era is underway — one in which the United States must be viewed as a potential rogue actor.
That Mr. Trump does not bow to diplomatic decorum is hardly new. His Make America Great Again credo is centered on the notion that, as the world’s largest economy, the United States has the power to impose its will.
Yet the pullback in the bond market attests to shock at how far this principle has been extended. Mr. Trump has broken with eight decades of faith in the benefits of global trade: economic growth, lower-priced consumer goods and a reduced risk of war.
That the gains of trade have been spread unequally now amounts to a truism among economists. Anger over joblessness in industrial communities helped bring Mr. Trump to power, while altering the politics of trade. But many economists say the trade war is likely to further damage American industrial fortunes.
The tariffs threaten existing jobs at factories that depend on imported parts to make their products. The levies have been set at rates seemingly plucked at random, economists said.
“What the market really didn’t like was the random crazy math of the tariffs,” said Simon Johnson, a Nobel laureate economist at the Massachusetts Institute of Technology. “It seemed like they didn’t know what they were doing and didn’t care. It’s a whole new level of madness.”
The immediate consequence of higher interest rates on United States bonds is an increase in what the federal government must pay creditors to keep current on its debts. That cuts into funds available for other purposes, from building schools to maintaining bridges.
The broader effects are harder to predict, yet could metastasize into a recession. If households are forced to pay more for mortgages and credit card bills, they will presumably limit spending, threatening businesses large and small. Companies would then forgo hiring and expanding.
The chaos in the bond market is at once an indicator that investors see signs of this negative scenario already unfolding, and is itself a cause of future distress via higher borrowing rates.
For years, foreign holders of American bonds have sought to diversify into other storehouses for savings. Still, the dollar and U.S. government bonds have maintained their status as the ultimate repository.
Europe and its common currency, the euro, now seem enhanced as a part of the global financial realm still subject to adult supervision. But Germany’s staunch reluctance to issue debt has limited the availability of bonds for investors seeking another place to entrust savings.
That may now change, suggested Mr. Blyth, the Brown economist. “If the Europeans decide to issue a ‘sanity bond,’ the world might jump at it,” he said.
The Chinese government has long sought to elevate the place of its currency, the renminbi. But foreign investors hardly view China as a paragon of transparency or rule of law, limiting its utility as an alternative to the United States.
All of which leaves the world in a bewildering place. The old sanctuary no longer seems so safe. Yet no other place looks immediately capable of standing in.
Business
How the ‘Wicked’ Movies Boosted the Musical’s Broadway Sales
Oct. 30, 2003
Broadway Opening
“Wicked” is an undisputed juggernaut — one of the biggest productions in musical theater history. The stage show, by the composer Stephen Schwartz and the librettist Winnie Holzman, has grossed $1.8 billion on Broadway, and $6.2 billion globally. Worldwide, it has been seen by more than 72 million people.
But none of that was a foregone conclusion. Based on Gregory Maguire’s 1995 novel, which in turn was based on L. Frank Baum’s “The Wonderful Wizard of Oz,” the musical had a so-so reception during its pre-Broadway run in San Francisco in the spring of 2003. In New York that fall, it divided critics when it opened on Broadway at the Gershwin Theater, starring Idina Menzel as the green-skinned “wicked witch,” Elphaba, and Kristin Chenoweth as her frenemy, Glinda, a.k.a. the Good Witch of the South. (“There’s Trouble in Emerald City” was the headline on the review in The New York Times.)
“You wake up the morning after opening night, and some of those notices were pretty devastating, and you think, ‘Oh, well, this is the final word,’” Mantello said. “But then the audiences are telling you a completely different story.”
The production pretty quickly became a fan favorite, and over the years, audiences made the show their own. The “Wizard of Oz” base was, of course, a huge factor — the 1939 film is a much-loved American classic — but, also, the musical’s depiction of female friendship became a central part of its allure, and kept audiences returning for repeat viewings.
March 23, 2006
1,000th Broadway Performance
“Once word kicked in, it took on a life that none of us could have ever predicted,” Mantello said. “It was the audience, and not a critical consensus, that turned it into the hit that it became.”
Menzel, the original Elphaba, won a Tony Award for best leading actress in a musical in 2004. In 2005, the day before her final performance, she fell through a trap door onstage; she couldn’t perform at her last show, but made a cameo in a red tracksuit.
Sept. 27, 2006
‘Wicked’ International
The show expanded rapidly, and now has a global footprint. The London production opened in September 2006, after the prior year’s introduction of a North American tour and a production in Chicago, where it ran for three and a half years. Los Angeles, Japan and Germany began in 2007; and Australia in 2008. In the years since, productions have run in the Netherlands, Mexico, South Korea and Brazil; productions are still running in London and South Korea, and touring in North America.
Oct. 30, 2018
Another Milestone: 15 Years
In 2018, the show celebrated its 15th anniversary, a milestone achieved by few shows. And “Wicked” has continued to outpace its peers: It has since become the fourth-longest-running production in Broadway history, following “The Phantom of the Opera,” “Chicago” and the top-grossing show, “The Lion King.”
Sept. 14, 2021
‘Wicked’ Reopens After the Shutdown
Broadway shows were closed from the spring of 2020 through the fall of 2021 because of the coronavirus pandemic. In August 2021, the touring production of “Wicked” restarted in Dallas — the first Broadway touring production to do so — and in September 2021 “Wicked” reopened on Broadway.
Dec. 7, 2022
Yes, We’re Making a Movie
The idea of adapting “Wicked” for the screen goes way back. In fact, it predates the stage musical. Universal Pictures had optioned the novel but couldn’t figure out how to turn it into a film, and agreed to let Schwartz, working with Holzman, develop it into a stage musical first. (Universal didn’t miss out; it is one of the lead producers of the stage musical, along with Marc Platt and David Stone.)
Once the stage production became a ginormous hit, the film adaptation was an inevitability, but still there were false starts, abandoned schedules and creative-team overhauls along the way. News coverage of a film adaptation began in 2010; at one point, the director Stephen Daldry was attached and a 2019 release was announced; in 2021 Jon M. Chu became the director, and the next year he said it would be split into two films.
Grande and Erivo had both become fans via the stage show. Grande saw it with her grandmother on Broadway in 2004 (and met Chenoweth backstage); Erivo saw the London production when she was a student.
Feb. 11, 2024
Marketing Saturation
The “Wicked” films’ rollout began in earnest in early 2024, with a trailer that ran during the Super Bowl, and the actresses were ubiquitous throughout that year, including in promotional spots that aired during the Paris Summer Olympics. (NBC Universal, the parent company of Universal Pictures, has the American broadcasting right to the Games.)
The marketing budgets for most Hollywood films are vastly larger than those for Broadway shows. In this case, because there are two films — one released last year and one released last month — the marketing campaigns, as well as publicity and news coverage, was doubled. The films had an estimated marketing budget of at least $125 million each — or $250 million total — along with the numerous brand partnerships that also generated a ton of attention. By contrast, the Broadway show has an annual marketing budget of about $11 million.
Nov. 22, 2024
‘Wicked: Part I’ U.S. Theatrical Release
The movies’ effect on the stage production was significant. In 2023, “Wicked” grossed $97.85 million on Broadway; in 2024 it was up nearly 15 percent, to $112.13 million, and this year it expects to be up another 13.4 percent, to $127.3 million.
The show says the effect in London has also been sizable: It expects London “Wicked” grosses this year to be up 29.4 percent over last year, and last year the grosses were up 10.5 percent over the previous year. (The show also holds a record for the highest weekly grosses in West End history, set this year during the week that included New Year’s Day.)
“It’s amazing,” Schwartz said in an interview. “Before the movies came out, I wondered what the impact would be on the show. I don’t think any of us anticipated how strong it would be. You can never plan on this kind of thing, or even hope for it, but it’s really lovely.”
Dec. 25, 2024
$5 Million on Broadway
The Broadway production of “Wicked” grossed $5 million over Christmas week last year (just a month after the first film’s release) — it is the first and only Broadway show to gross that much in a single week. (It was also the first show to cross the $2 million mark and the $3 million mark.)
Nov. 21, 2025
‘Wicked: For Good’ U.S. Theatrical Release
What’s next? The second movie was released just before Thanksgiving, giving a second surge for “Wicked” in all its forms, and now the year looks to be ending strong for the stage show. The Broadway production grossed more than $3 million over Thanksgiving week (by comparison, it had generally been grossing $2.3 million to $2.5 million during Thanksgiving weeks that preceded the films’ release). Just around the corner: the Christmas and New Year’s stretch, always a good period for Broadway, and this year, even more so for “Wicked.”
Broadway grosses reflect the most recent box office receipts as reported by the Broadway League. Grosses are not adjusted for inflation.
Images: Sara Krulwich/The New York Times and Universal Pictures.
Videos: CBS; Wicked Musical Korea; Broadway.com; Theater Mania; Ariana Grande; Pink News; Out; FOX; NBC; Universal Pictures.
Produced by Leo Dominguez, Hollis Johnson, Rebecca Lieberman and Josephine Sedgwick. Additional reporting by Leo Dominguez and Jeremy Singer-Vine.
Business
Senators dig into FCC chairman’s role in Jimmy Kimmel controversy
U.S. senators peppered Federal Communications Commission Chairman Brendan Carr with questions during a wide-ranging hearing exploring media censorship, the FCC’s oversight and Carr’s alleged intimidation tactics during the firestorm over ABC comedian Jimmy Kimmel’s comments earlier this fall.
Sen. Ted Cruz (R-Texas) called Wednesday’s hearing of the Senate Commerce, Science and Transportation Committee following the furor over ABC’s brief suspension of “Jimmy Kimmel Live!” amid social media backlash over Kimmel’s remarks in the wake of conservative activist Charlie Kirk’s killing.
Walt Disney Co. leaders yanked Kimmel off the air Sept. 17, hours after Carr suggested that Disney-owned ABC should punish the late-night comedian for his remarks — or face FCC scrutiny. Soon, two major TV station groups announced that they were pulling Kimmel’s show, although both reinstated the program several days after ABC resumed production.
Progressives were riled by the President Trump-appointed chairman’s seeming willingness to go after broadcasters in an alleged violation of their First Amendment rights. At the time, a few fellow Republicans, including Cruz, blasted Carr for suggesting to ABC: “We can do this the easy way or hard way.”
Cruz, in September, said that Carr’s comments belonged in the mob movie “Goodfellas.”
On Wednesday, Carr said his comments about Kimmel were not intended as threats against Disney or the two ABC-affiliated station groups that preempted Kimmel’s show.
The chairman argued the FCC had statutory authority to make sure that TV stations acted in the public interest, although Carr did not clarify how one jumbled sentence in Kimmel’s Sept. 15 monologue violated the broadcasters’ obligation to serve its communities.
Cruz was conciliatory Wednesday, praising Carr’s work in his first year as FCC chairman. However, Democrats on the panel attempted to pivot much of the three-hour session into a public airing of the Trump administration’s desire to punish broadcasters whom the president doesn’t like — and Carr’s seeming willingness to go along.
Sen. Ted Cruz (R-Texas) called Wednesday’s Senate committee hearing.
(Associated Press)
Carr was challenged by numerous Democrats who suggested he was demonstrating fealty to the president rather than running the FCC as an independent licensing body.
Despite the landmark Communications Act of 1934, which created the FCC, the agency isn’t exactly independent, Carr and fellow Republican Commissioner Olivia Trusty testified.
The two Republicans said because Trump has the power to hire and fire commissioners, the FCC was more akin to other agencies within the federal government.
“Then is President Trump your boss?” asked Sen. Andy Kim (D-N.J.). The senator then asked Carr whether he remembered his oath of office. Federal officials, including Carr, have sworn to protect the Constitution.
“The American people are your boss,” Kim said. “Have you ever had a conversation with the president or senior administration officials about using the FCC to go after critics?”
Carr declined to answer.
Protesters flocked to Hollywood to protest the preemption of “Jimmy Kimmel Live!” after ABC briefly pulled the late-night host off air indefinitely over comments he made about the fatal shooting of conservative activist Charlie Kirk.
(Genaro Molina / Los Angeles Times)
The lone Democrat on the FCC, Anna M. Gomez, was frequently at odds with her fellow commissioners, including during an exploration of whether she felt the FCC was doing Trump’s bidding in its approach to merger approvals.
Trump separately continued his rant on media organizations he doesn’t like, writing in a Truth Social post that NBC News “should be ashamed of themselves in allowing garbage ‘interviews’” of his political rivals, in this case Sen. Raphael Warnock (D-Ga.).
Trump wrote that NBC and other broadcasters should pay “significant amounts of money for using the very valuable” public airwaves.
Earlier this year, FCC approval of the Larry Ellison family’s takeover of Paramount stalled for months until Paramount agreed to pay Trump $16 million to settle a lawsuit over his grievances with edits of a CBS “60 Minutes” pre-election interview with Kamala Harris.
“Without a doubt, the FCC is leveraging its authority over mergers and enforcement proceedings in order to influence content,” Gomez said.
Parts of the hearing devolved into partisan bickering over whether Democrats or Republicans had a worse track record of trampling on the 1st Amendment. Cruz and other Republicans referenced a 2018 letter, signed by three Democrats on the committee, which asked the FCC to investigate conservative TV station owner Sinclair Broadcast Group.
“Suddenly Democrats have discovered the 1st Amendment,” Cruz said. “Maybe remember it when Democrats are in power. The 1st Amendment is not a one-way license for one team to abuse the power.
“We should respect the free speech of all Americans, regardless of party,” Cruz said.
Business
Commentary: Republicans don’t have a healthcare plan, just a plan to kill Obamacare
For millions of Americans, Jan. 1 won’t be an occasion to celebrate the coming of the new year. It will be an occasion for dread.
The reason is the impending termination of crucial premium subsidies for Affordable Care Act health plans. Without a last-minute agreement between congressional Democrats and Republicans, the subsidy structure that has been in place since 2021 will revert to the original arrangement written into the act in 2010.
Millions of Americans dependent on the ACA will face potentially ruinous increases in coverage costs. Many will have to drop their coverage. That process will leave those with the most urgent and costly treatments in the ACA, and those who think they can get away with dropping insurance — or simply can’t afford it — on the outs. The result will be a sicker coverage cohort, which will raise prices for everybody.
I want to see the billions of dollars go to the people, not to the insurance companies and I want to see the people to go out and buy themselves great healthcare.
— An empty promise from President Trump
The current stalemate is the offspring of the GOP’s 15-year campaign to undermine — really, to kill — Obamacare.
Republicans have dressed up their attack on the ACA with reams of empty rhetoric. They habitually call the ACA a “disaster,” without offering a cogent explanation of why.
Plainly, they see Obamacare as a nice, juicy partisan target, but they’re not reading the room. The ACA’s popularity has steadily increased since mid-2016; in KFF’s most recent tracking poll, taken in September, favorable opinion swamped unfavorable opinion 64% to 35%.
Americans have voted for the ACA with their feet. Since 2018, enrollment in Obamacare plans has more than doubled, from 11.4 million to 24.3 million this year, with a notable enrollment increase starting in 2021, when the premium subsidy structure was improved. That’s the change due to expire on Dec. 31 (Republicans, please note). The enrollment figure doesn’t include the 16.7 million Americans enrolled in Medicaid under ACA expansion rules — a provision still rejected by benighted political leaders in 10 red states.
They blame the ACA for higher healthcare costs. A few things about this: Yes, healthcare costs have continued to rise since its enactment. But they’ve risen at a much slower rate than before. Out-of-pocket per capita healthcare spending rose at a rate of 3.4% a year from 2000 to 2018, often exceeding the general inflation rate, but by only 1.9% a year since then.
That increase isn’t driven by the ACA. It’s the result of several factors, including the general aging of the U.S. population and a sharp increase in pharmaceutical costs, due in part to the advent of high-priced specialty prescription drugs.
The GOP has amended its attack on the ACA in recent months, as the clamor to extend the premium subsidies has intensified. Republicans are now decrying the ACA as a haven for fraud — “a broken system fueled by fraud,” says House Speaker Mike Johnson (R-La.). Johnson drew his conclusion from a report by the Government Accountability Office published earlier this month.
Johnson may have been hoping that no one would actually go and read that report. I did so, only to find that it doesn’t say what he claims it did. The GAO tested ACA enrollment controls on the federal marketplace — did enrollees accurately estimate their income and submit accurate Social Security numbers? Its test involved submitting applications from 20 fictitious individuals, of whom 18 were approved.
Is this an adequate sample? The GAO itself says it isn’t. The results, it says, “cannot be generalized to the overall enrollment population.” In some test cases, the applications included false Social Security numbers, which are used to verify income claims. But the GAO says that in the real world, absence of verified Social Security numbers “does not necessarily represent overpayments.”
Are these findings cause for concern? Sure, even though the GAO provided no findings about how widespread these flaws may be. In any case, there’s no evidence here that “the ACA marketplace is a magnet for fraud,” as Johnson called it, suggesting that thousands or millions of applicants are lined up for some healthcare gravy train. And it’s certainly no reason to kill the subsidies.
The other linchpin of the GOP attack on the Affordable Care Act is heavy breathing over how the ACA premium subsidies are paid directly to insurance carriers, rather than as cash to households. This idea trickles down from President Trump but has been embraced by Republicans in Congress. So it deserves a very close look.
Here’s Trump last week: “I want to see the billions of dollars go to the people, not to the insurance companies and I want to see the people to go out and buy themselves great healthcare. Much better healthcare at very little cost.” This has been an enduring promise from Trump, who never bothers to explain how the nirvana of great healthcare at little cost can be achieved.
Here’s Sen. Bill Cassidy (R-La.), a physician who cast the final vote to confirm Robert F. Kennedy Jr. as Health and Human Services Secretary, a vote that has left him humiliated over and over by Kennedy: “Republicans absolutely want to help the American people with the affordability of their out-of-pocket [spending]. We want to put money in their pocket to pay the out-of-pocket.”
Before delving deeper into this issue, a few words about the existing ACA premium subsidies.
The original ACA subsidies capped premiums on a sliding scale ranging from 2.07% of income for those earning 138% of the federal poverty line to 9.83% of income for those at 400% of the poverty line. This year, 138% of the poverty level for a family of four is $44,367, and 400% is $128,600.
The ACA’s architects knew these subsidies were inadequate. Especially troubling was the sharp cutoff of any subsidies for families earning even a dime more than 400% of the poverty level. This became known as the “subsidy cliff.” But it was an artifact of political compromise; the expectation was that Congress would get around to fixing the cheeseparing subsidy schedule at a later date.
In the pandemic-driven American Rescue Plan Act of 2021, Congress refashioned the subsidies so families with incomes up to 150% of the poverty level ($56,475 for a family of four this year) could find decent Obamacare plans for free. For those above that level and up to 400%, the subsidies were significantly increased. That’s the change set to expire Dec. 31.
It’s true that eligibility for these subsidies is technically unlimited, but the conservative trope that they benefit “millionaires” is nonsense. As I reported earlier this year, the new structure means technically that someone earning $1 million a year would have to pay no more than $85,000 per person for an ACA plan.
Is this a handout? ACA expert Charles Gaba tested the claim by hunting for a benchmark Silver ACA plan, on which the subsidies are based, costing that much anywhere in the U.S. The highest-cost plans he found anywhere are in four counties of West Virginia, where a Silver plan for a 64-year-old couple tops out at $63,100 a year — in a state with the highest ACA premiums in the nation.
Cassidy’s proposal is essentially to replace the existing subsidy enhancements with health savings accounts, which must be paired with high-deductible health plans, and to seed them with $1,000 a year per adult ages 18 to 49 and $1,500 for those 50 and up. Households with income up to 700% of the federal poverty level would be eligible — that’s about $225,000 for a family of four.
Let’s start with the plain arithmetic of this proposal. The accounts must be paired with a bronze-level ACA plan. Those plans cover only about 60% of average healthcare costs. Deductibles are high — at Covered California, the state’s ACA marketplace, the bronze plan deductible is $5,800 per person and $11,600 for a family. Out-of-pocket maximums are also high — $10,600 per individual and $21,200 for a family.
So right from the outset, the Cassidy proposal would leave families facing serious medical expenses out in the cold.
The HSA idea is part of a GOP argument that giving families cash to spend on healthcare gives them “skin in the game” — that by forking over dollars, they’ll be more sensitive to the cost of medical care and therefore seek out or negotiate lower prices.
Two of the argument’s leading academic promoters, Liran Einav of Stanford and Amy Finkelstein of MIT, wrote in a 2023 book lauding deductibles and co-pays that “patients must pay something for their care, otherwise they’ll rush to the doctor every time they sneeze.” More recently, as the facts have come in, they’ve said: “We take it back.”
The truth is that there’s no evidence that higher financial obstacles to healthcare produce better outcomes. They do discourage unnecessary treatments, as a seminal Rand Corp. study found in 1981. But they also discourage necessary treatments.
The idea that deductibles and co-pays will prompt the average person to seek out low-cost providers is a fantasy. People typically seek out medical care in an atmosphere of urgency. They don’t take the time to compare prices as if they’re buying a car; they go to the doctor and follow his or her instructions, including prescribed procedures and diagnostic tests. (Sometimes they do price shop, but generally for treatments that can be deferred and are medically routine and elective — one study showing cost savings from price shopping focused on hip and knee replacements, for instance).
As for the claims of Trump and other Republicans that Americans, armed with cash in their pocket, can use it to negotiate medical care — who has the time, energy or bargaining skill to do that?
In any case, the HSA is mischaracterized as a healthcare provision. It’s not; it’s a tax break in disguise, useful for higher-income taxpayers who can afford to cover the high deductibles themselves while pocketing a tax deduction. It’s especially appealing for those who are in good health and expect to stay so — they proceed on the assumption that they probably won’t have a serious (and expensive) medical issue.
U.S. healthcare costs per capita have continued to rise since the enactment of the Affordable Care Act, but at a much lower rate than before.
(JAMA)
The bottom line is that the Republican Party is out of healthcare ideas. They’ve had 15 years to conjure up a better program than the Affordable Care Act, and have nothing to show us except proposals that won’t work for the average family. They’re up against a wall of their own making, and are pretending that they have something better. They don’t, and you and I will be paying the price of their failure.
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