My letter to Joni Ernst – “Put insurance back in the American Health Care Act”

June 14, 2017


Senator Joni Ernst

111 Russell Senate Office Building

Washington, DC 20510


Re: American Health Care Act – let’s get it right

Honorable Joni Ernst,

I became a registered Republican in 1966 because I believe private enterprise can solve most any problem and the only role for the government is to give us a fair playing field conducive to the goal.  There has been little else the party has to offer to keep me in the fold.  I am now confronted with a new generation of Republicans who have lost the faith.  They believe they have a duty to rig the playing field to generate profit for profit’s sake, while ignoring the goal altogether.  Profit should be the reward for solving the problem (which the AHCA doesn’t) and forgetting this only erodes the cornerstones of capitalism.

There is perhaps no better example than the House version of the American Health Care Act.  During the run-up to its passage I heard some ill-informed opinions on how a health insurance plan should work which inspired me to write a series of articles on my blog, “Dare to Ask.”  To my astonishment the bill they passed on to you contained none of these bad ideas about how insurance might work.  Instead it wiped out the insurance altogether, while preserving the same profit-sharing formula that has driven up costs for Obamacare.  This uniquely American problem has been festering, not just for the last decade but for the last six.  By simply allowing health insurers to cut back-door deals with everyone from employers, doctors, hospitals, drug companies and medical suppliers, we force insurance companies to incur substantial additional expense just to keep the competition at bay.  This cost is passed on to the consumer with few benefits to show for it.  It is not the American insurance industry but rather these anti-trust exemptions that make ours the most costly healthcare system in the world.

I’m enclosing a copy of my blog article “TrumpCare Fails the Most Basic Tests of Insurance“ because it’s important to understand how the house plan is barely a health savings plan and certainly not an insurance plan.  I should know as my insurance career spanned 30 years including seven years as COO of an Iowa based insurance company but I can put you in touch with current insurance executives who will back me up if you like.  I think its crucial that the Senate put the “insurance” back into their health care insurance plan.  From what I’ve heard listening to your colleagues in the House, they seem to view insurance as some socialist plot to transfer wealth to the needy.  I would remind them we are a great nation today, due in no small part to an entrepreneurial group of patrons of Lloyd’s Coffee House who in 1686 came up with a plan to share the risk of “perils of the sea” making extensive shipping to America possible.

Please let insurance companies do their job which is by definition providing a means to “share the risk.”  Reject the House plan to “concentrate the risk” in pools.

“Who knew health insurance was so complicated?”  Well these complications trace back to the awkward structure that has become “baked-in” over many years.  I assure you actuarial science can solve many of the problems the committee faces. In fact the calculations will look similar to those life actuaries use for whole life policies with a fixed monthly premium that includes funding for an increased future risk.

Like you I grew up on a farm.  The ultimate free market business, we neither needed nor wanted government help.  We knew that things like farm subsidies were just for show since they flowed straight through to distributors and consumers.  So when I see a pending bill that will certainly do more harm than good, I have to speak out. I’m now retired so I would be glad to volunteer some time to consult with your staff about how to make a plan you can be proud of rather than one put together behind closed doors for fear of public outcry.  I will post this letter to my blog at where you can also find my four-part series How Not to Fix Obamacare

Speaker Ryan’s comments today following the shooting of Steve Scalise ring true reminding us that vitriolic language and impetuous actions have consequences.  I was heartened to hear the many calls for unity on both sides.  Now my bookie is taking all bets that the public will be unhappy with any changes in healthcare.  It seems to me this is a great opportunity to get rid of this albatross around the neck of the Republican Party by responding to these calls for unity. Someone in the party needs to call for open discussions of the plan and invite Democrats to contribute.  For at least this moment in time the risk/reward balance for being that someone is favorable. And if you make it a public announcement while the mood is set, your colleagues will have little choice but to join you.


Mike Sawyer