Senate Finance Must Reject Socialist “Solutions”

The U.S. Senate Finance Committee has scheduled a hearing ahead of Republican leadership’s fulfilling a deal with Democrats—a vote on Democrats’ Obamacare premium subsidies in exchange for a handful of votes by senators from the minority side to proceed with legislation to fund the government and finally end the Democrats’ heartless federal shutdown of nearly a month and a half.

The November 19 hearing, titled “The Rising Cost of Health Care: Considering Meaningful Solutions for all Americans,” holds the potential for health reforms that benefit patients, taxpayers, employers, health care providers and others in the U.S. health care ecosystem.

There are some grownups on both sides of the aisle in this committee. But the rosters include senators of each party who don’t value the art of legislating, but make up for that with blind ideology, either of the socialist Left or the populist Right.

The Democrats will likely march lockstep behind rescuing the expiring government handouts. Their “plan” is to continue Obamacare premium subsidies for people well into the upper middle class and others who shouldn’t qualify. Or worse.

Most Republicans will probably lean toward free-market-based solutions. That would be great, if they inject more consumer choice and competition into a highly regulated sector of the economy.

A good start would be to expand use of and access to health savings accounts. HSAs empower consumers to behave like consumers—comparing the value, cost and quality of medical goods and services, just as they do when buying other types of goods and services. The HSA provisions of the One Big, Beautiful Bill Act are a good first step. But properly amended, HSAs have the potential to enable consumers to move the needle significantly toward constrained costs, better quality care and greater value for the health care dollar.

Another free-market solution would empower patients and medical professionals with greater market power. Rent-seeking middlemen, such as pharmacy benefit managers and insurers, should undergo reforms that benefit the rightful decisionmakers (i.e., docs and patients). PBMs should no longer be able to game formularies to collect higher fees or keep manufacturer discounts that ought to help reduce patients’ out-of-pocket costs. And insurers’ barriers to patient-doctor decisions, such as prior authorizations, should be addressed.

Biden-era socialist price controls are contained in the Inflation Reduction Act. Those radical policies, which include the extortionary 95% excise tax on drugs and the “pill penalty,” continue to raise Medicare premiums, reduce coverage options and advantage China’s growing competitiveness in such areas as biotech and pharmaceutical innovation. One necessary, market-based solution is the Ensuring Pathways to Innovative Cures (EPIC) Act.

Other low-hanging health policy fruit that would clean up waste, fraud and abuse, reverse the Obama-era Affordable Care Act’s irresponsible expansion of 340B-eligible facilities, improve charity care for the truly needy indigent and help rural hospitals is 340B reform. The Congressional Budget Office finds that spending in this program grew from 2010-2021 about sevenfold. The 340B ACCESS Act would be a great place to start in fixing this problem.

Finally, in the “first, do no harm” category, the committee must soundly reject any type  of government price controls, including importation of “most favored nation” foreign drug price controls. Adopting any form of price controls—particularly on biopharmaceuticals, one of America’s critical and emerging technologies—would cement in the law of the United States social democracy’s means of undermining economic liberty. This would be unconscionable and disastrous.

Remember what conservative intellectual Michael Novak said: “Social democracy is based on the same errors as socialism, but in a form that takes a little longer to effect self-destruction.”

Going Where Free Enterprise and Property Rights Fear to Tread

In the middle of a lot of good policies, such as tax cuts, deregulation, curbing California’s stranglehold that forces its zany extremist regulatory hell on the rest of America and demanding that European countries pay their share for their defense, some really bad policy ideas have also come forth. The latter will certainly undermine the benefits the good ideas otherwise would produce.

Commerce Secretary Howard Lutnick has floated trial balloons — one for the government to collect a share of university inventions’ patent royalties, another for a patent tax of 1% to 5% of a patent’s value. Both ideas should be deep-sixed. Either or both will damage the U.S. innovation ecosystem and cost us far more than the secretary acknowledges.

Busting Bayh-Dole’s Successful Model

Taxpayers already benefit from federally funded research, thanks to the Bayh-Dole Act. This law ensures that taxpayer-supported discoveries reach the marketplace — they didn’t before Bayh-Dole. That generates more than a trillion dollars in economic activity, millions of jobs and thousands of new companies while delivering to Americans life-changing products. And all those translate into tax revenue for the government and an expanding economy.

Congress deliberately omitted government revenue-sharing from the 1980 Bayh-Dole Act because it would discourage licensing and slow commercialization. Lawmakers understood that the public gets the greatest returns in many forms when private industry has confidence to develop and invest in turning university basic research into practical applications. They proved to be absolutely right.

Universities don’t reap unrestricted profits from patent licensing. They must cover the costs of securing and managing patents, share royalties with inventors, and reinvest the remainder into future research. Not only does this cycle fuel breakthroughs in consumer products, it also yields essential medicines and technologies that benefit American consumers for generations. Redirecting a slice of that revenue to Washington would break this cycle, undermine property rights and diminish investment in early-stage technologies. As the Bayh-Dole Coalition notes, “Altering this model would deter future breakthroughs, jeopardize America’s leadership in science and technology, and undermine our national security.”

A Tax on Innovation

Assessing a tax on the supposed value of a patent is nothing less than a tax on American innovation. This unwise proposal courts extremely great risk from complexity, disincentivizing investors and entrepreneurs in patent-centric technologies, and handing competitive advantage to our foreign competitors.

The most knowledgeable experts, such as Grover Norquist of Americans for Tax Reform and economist Steve Moore of Unleash Prosperity (see item 2), have assessed this proposal and found it wanting. For instance, the U.S. Chamber of Commerce, along with allied cosignatories, explains: “This unprecedented idea, if implemented, would undermine the foundations of America’s intellectual property (IP) system, diminish our global competitiveness, and put millions of innovation-driven jobs at risk. Moreover, this approach conflicts with the administration’s laudable goal of reshoring manufacturing to the United States, a goal which depends on a strong and reliable IP framework to attract investment and foster domestic innovation.” IPWatchdog founder Gene Quinn’s bottom line is, “Charging patent owners a percentage of the overall value of a patent is catastrophically stupid.”

Nearly 40 center-right organizations, including the leading tax reform groups, wrote Sec. Lutnick opposing his patent tax scheme, explaining how it's bad tax policy and is at odds with and counterproductive to the One Big Beautiful Bill. Notably, this coalition said the tax would “undermine the benefits of hard-fought business tax provisions of the OBBBA for America’s most innovative and competitive companies – including the Foreign-Derived Intangible Income provision that encourages companies to develop and locate intellectual property (IP) in the United States. This tax on valuable patents would simultaneously drive private venture capital away from U.S. R&D innovators while making our competitors in overseas markets more attractive as investment opportunities.”

Now is not the time to undercut the innovation system that’s delivered so much value to American taxpayers, workers and consumers.  However, that’s exactly what the proposed university patent royalty share, the tax on patent valuation or both will do. Grownups in the administration must reject this proposal. Rather than gush money to line Uncle Sam’s pockets, these tax leeches will stall innovation, jeopardize America's security and open the door for foreign rivals to surpass us in science and technology.

The United States must protect the framework that keeps us at the forefront of global innovation and progress. Official rent seeking is still rent seeking, which disincentivizes enterprise while shrinking the rewards of pursuing innovation and commercialization. Or as Steve Moore put it, “Someone needs to remind Secretary Lutnick that when you tax something you get less of it.”

IRA and MFN: Two Sides of the Same Coin

“Will Mr. Biden still be crowing when the price controls he and Sen. Joe Manchin made a cornerstone of their [2022] ‘Inflation Reduction Act’ don’t work as touted? Will he still praise government price controls on Medicare pharmaceuticals when Bidenomics meets economic reality, as this experiment in socialized medicine plays out?”

These are questions Locke’s Notebook asked in 2023. Back then, President Biden and Sen. Manchin were jubilant over having accomplished Bernie Sanders’ and Elizabeth Warren’s socialist dreams in the IRA.

Fast-forward to the present, and neither of those architects of U.S. socialized medicine remains on the political stage. Their IRA has now borne fruit that’s proving our clear foresight and their blindness by their political ambitions.

Word is that health insurers' 2026 premiums for ACA health plans have come in at a significant increase over 2025—driving up Americans' health care costs. The median rate hike is 15%, with some plans charging in excess of 20%--even 25%--more. Every beneficiary pays the premium, whether he or she needs a lot or very little medical care.

Medicare Advantage plans had been stable before the IRA, explaining enrollment in the MA program’s private insurance options now exceeding half of all Medicare beneficiaries. But the IRA is forcing unwelcome changes.

The IRA incentivizes Medicare Part D and Advantage-participating health plans to raise Medicare beneficiaries’ costs. A recent study by the University of Southern California’s Schaeffer Institute finds that Medicare health “plans have substantially increased beneficiary cost-sharing exposure” thanks to the IRA. The IRA has caused these health insurers to raise deductibles and replace copays with coinsurance (where a patient is liable for a percentage of the overall cost, in the case of prescriptions, based on the list price), the Schaeffer Institute reports.

Prior authorization has also become a barrier for more Medicare patients to receiving care promptly and efficiently. Fewer Part D plans are now available, posing access challenges to Medicare beneficiaries who live in rural areas.

Those who hold property rights, economic freedom and free enterprise dear should cry out for IRA repeal. Demand the bolstering of Medicare’s dynamic pre-IRA private-sector options.

Further, we all must insist on stopping the dangerous, unprincipled trend pushing government intervention in the free market. In particular, this includes opposing government price controls, such as “most favored nation” foreign reference pricing. Conservatives for Property Rights has cautioned about price controls’ dangers here, here, here and here, for example.

Reference pricing such as "most favored nation" price controls, just like IRA's Medicare drug price controls already, would further diminish drug sector R&D funds, reduce the number of viable biopharma projects, slow the rate of innovation and lower the number of new generic drugs available to patients.

CPR, a member of the Coalition Against Socialized Medicine, has consistently opposed price controls, regardless of the party in power. That’s because self-imposed price controls do nothing to end foreign freeloading by socialized medicine countries that set artificially low drug prices. Rather, such price controls only harm patients, dehumanize medical practitioners who must carry out inhumane consequences like rationing care and forcing un-QALY-fied patients to die, and ensure that medical innovation doesn’t happen in that country.

In short, adopting the very policies that have led to terrible consequences in other nations should not be an option in the United States of America. Rather, we must return to our principles and lean on our strengths. We’ll be a better nation for it.