What A Free Market Vaccine for COVID-19 Would Look Like

Recently John Cochrane and recently Yaron Brook described what a free market solution for the COVID vaccine would look like. What is interesting is how when we have a free market for products and services that people love (BMW/Gucci/Crumbl Cookies-yes I an a fan) there aren't any complaints about their premium pricing. Generally if people don't like their pricing they just leave or don't do business with these establishments. However, if we apply the same concept to vaccines there tends to be public outcry. 

Allowing drug companies to directly auction off vaccines would make the allocation of vaccines much more efficient, would result in more vaccines for everyone else, would reduce the spread of COVID than otherwise would occur, would allow drug companies to continue to develop life savings vaccines and drugs (that would benefit even more people in the future). What is again interesting is how drug companies have been "greedy" for so many years, but if someone did a recent poll on drug/biotech companies I would be willing to bet the rent money their popularity has never been higher. To be able to develop a vaccine in less than a year is modern science miracle (also let's not forget it what private companies who were able to make this possible-if anything government agencies slowed this down). 

If drug companies had the ability to auction off the drug the people that would bid the most are people who are the most well off, older, and have the most to lose by contracting COVID. For instance, if there was a billionaire in their 80's and a vaccine could grant them 10 additional "quality years" of life you bet they would plunk down a substantial bid. If let's say the billionaire wanted to pay Pfizer or Moderna $1 million for the vaccine and Pfizer/Moderna would personally arrange for a nurse to come to the billionaire's home and administer it (for that price it should be thrown in!) who are we to get in the way? Also not only could individuals bid on the drugs but companies/charities/organizations could bid on the drug. Fortune 500 companies have a large incentive to make their top executives are well. These executives make decisions for multi-billionaire dollar enterprises. The executives are no spring chickens either. The median CEO of a Fortune 500 company is 58. Companies would have a large incentive to buy a vaccine for a CEO/executives (especially if the CEO/executive had any type of underlying health issues that could lead to adverse affects from contracting the coronavirus. Other people that would be interested in a vaccine are performers such as musicians, actors, actresses, comedians, and athletes. Some of these individuals earn millions of dollars per year and by becoming vaccinated they could go back to work without having to worry about getting COVID. Insurance companies would have a large interest in making sure it's policy holders didn't incur extraordinary expenses from coronavirus and would have an incentive to bid on vaccines. Health insurance companies would have an incentive to notify from their data who should get the vaccine first since they have a vested interest to perhaps pay $500 for a vaccine that could avoid $10,000 of hospital expenses. As I have said before regulation (more specifically medical loss ratios-thanks to Obamacare) insurance companies each year can't spend more than 80% of it's premiums on healthcare and only 20% on administrative costs (if the health insurance company fails to do this they must refund the policyholder). This regulation is foolish since health insurance companies should not be required to spend premiums every year as it induces them to overspend and not save for the future (life insurance companies often have to plan their cash flow for many decades to ensure they have enough reserves to cover people passing away). If health insurance companies didn't have to worry about medical loss ratios they could have save enough cash to bid on items such as vaccines. 

Conversely an individual/corporation/organization/entity could purchase vaccines and would obtain ownership (property rights) and could gift the vaccines to whomever they wanted. Pfizer and Moderna could set up an auction site to allow individuals to bid on vaccines. Pfizer and Moderna for the initial vaccine doses would receive large sums of cash flow. Right now the government (i.e. taxpayers are paying $20/dose so round trip costs with 2 doses is $40 per person (if I were on the board of directors at either of these companies I would ask if this was the true market price of a drug that could save so many lives-also who negotiated these contracts with the government).

Hospitals would also have large incentives to bid as some have surgeons who are super stars that earn millions of dollars per year and more importantly save tens of thousands of lives with their skills. Conversely if Pfizer/Moderna were allowed to sell the first dose for $1 million they could use that cash flow to plow back into manfacturing/development/allow the company to offer the drug free of charge to whomever it wanted/invest the money into research and development for the next drug/vaccine. The biggest benefit is this doesn't require any taxpayer money and would allow for vaccines to be allocated in a more efficient manner. Let's remember Amazon/FedEx/UPS ship billions of items per year and there is no question Pfizer/Moderna could directly contract with them (or whomever they wanted) to get vaccines to the right people. Why is the government in charge of distributing one of the most valuable vaccines? 

The first patient/organization/entity could have bid on the first dose that was administrated in March 16, 2020-in actuality if there wasn't bureaucratic red-tape the first dose could have been bid on as early as January 13, 2020 (this was the date Moderna designed the vaccine-only 2 days after the Chinese started sharing information). In July 1, 2020 the results of interim data were published in the New England Journal of medicine which was a complete waste of time since all it showed was safety information and didn't had any useful information regarding immunity. Frankly, given the pandemic a more efficient way to run the trial would have been to allow the companies running the clinical trials to release real time data as it became available regarding how many patients contracted COVID. This would have sped up the knowledge and understanding if the vaccine had worked. 

The Phase III clinical trial for the Pfizer vaccine included 43,000 patients which is utterly insane given most Phase III clinical trials only requires 3,000 patients. The more number of patients adds an enormous amount of data that must be analyzed and approved by regulators. The early stages of the vaccine showed it was safe with very mild side effects. Dr. Marty Makary a doctor/researcher at John Hopkins University who has run over 100 clinical trials argues that Operation Warp Speed is actually Operation Turtle Speed. He says that for clinical trials his team analyzes data for millions of patients and the data on the COVID vaccine (remember only 43,000 patients) would only have taken his team an hour to review (even worse he says the data for reviewing the FDA manufacturing data would have taken hours to review not months). Let's remember that out of the trials for the COVID vaccine (as I write this) no one has died from taking the vaccine. 

I compare the current state of regulation of healthcare to one of yesteryear. For example back in 1953 Michael DeBakey and Denton Cooley (who would end up becoming world famous surgeons) had a patient with an abdominal aortic aneurysm. DeBakey told the patient he never had performed this type of surgery before (although the surgery was successful on animals. The patient who was at death's door went elected to take a chance and have the surgery and went on to live another 15 years. Today this would never happen. The surgery today would have to go through so many different hospital board reviews/intuitional board reviews/committee review boards/meetings before it could even be performed (by then the patient would have been dead too). The state of current regulation of healthcare is literally killing many countless lives in the name of "science". Pfizer submitted data on the safety and effectiveness of the COVID vaccine on November 22, 2020 yet the FDA didn't even schedule a meeting until 3 weeks later on December 10th. In the meantime roughly about 2,000 people per day passed away. As anyone who has studied economics knows there are no perfect solutions only trade offs. 

What is sad is currently Pfizer has millions of doses of the vaccines in warehouses but have not received any additional shipping instructions from the government. Every day that passes allows fewer people to get vaccinated which from a public health perspective is not a good thing.  Amazon/UPS/FedEx/Uber/even Domino's Pizza could work the logistics of ensuring that these vaccines get to the right destination. A free market system would allow vaccines to be allocated much more efficiently/provide cash flow for Pfizer and Moderna to then be able to produce more vaccines which would then allow more people to receive the vaccine at a lower price. Most importantly more people would be vaccinated faster and decrease the risk of people becoming hospitalized or possibly passing away. The government should unleash the power of the free market to make a safer and better world. 

R.I.P. Dr. Walter E. Williams and The World Mourns His Loss

Unfortunately I recently learned that Dr. Walter E. Williams passed away on December 2, 2020 at the age of 84. He died suddenly in his car not too long after teaching the final class of the semester for economics PhD students (the course ended at around 9:30 P.M) and then passing less than 12 hours later. His medical history would show that Walter had a history of hypertension and obstructive pulmonary disease. What many people may not know is that he drove two and half hours (each way) from his home in Valley Forge, Pennsylvania (Walter would fill his drives with recorded scientific lectures from The Teaching Company). Walter got his wish of wanting to be able to pass away after teaching his final course. Walter liked to remind people that he had been around for nearly a 1/3 since the country started in 1776 (which is mathematically accurate). Walter was an intellectual giant that had a profound change in my way of thinking of economics (Walter was actually tall too standing at 6'5). According to life long friend Thomas Sowell Walter was a black belt and did kick some butt in real life. Walter would spend most of his career trying to explain basic principals of economics to the masses and explaining why things like minimum wage, affirmative action, and other government policies while all sounding good didn't make any sense when examining the results. 

I first learned about Walter Williams back on February 7, 2007 when I was in college and I can clearly remember working out (I was in college at the time on an elliptical and it was a Friday afternoon) and I use to watch Kudlow and Company and Walter came out and debated Gary Gensler who was a former Treasury undersecretary and I can remember Dr. Williams explaining in a clear manner why labor unions weren't good and why the minimum wage didn't make any sense either. What I recall was how unique Dr. Williams was compared to anyone I ever heard before. After this I spent more time following the work of Dr. Walter Williams and then learned about other economists such as Thomas Sowell and spent more time studying Milton Friedman (I was somewhat aware of Milton Friedman after his passing back in late 2006). At the time YouTube wasn't as big as it currently is but I remember going to Dr. Williams website and reading his syndicated columns. What was clear was that Walter could take economics a seemingly and boil it down into digestible and understandable pieces. I took micro and macroeconomics as an undergraduate back in the fall of 2005/spring of 2006. What I recall was the classes were mostly either graphs/math/memorization which lead me to believe economics was more difficult then it was. I realized after reading more from Dr. Williams how easy economics really is when you get to the basics. 

What many people have not been aware of is Dr. Walter E. Williams put into practice his free market philosophy regarding his own personal wealth. Dr. Williams was able to command a $20,000-$30,000 speaking fee (at one point he was getting on a commercial flight 2-4 times per month which would say that just from speaking fees he was earning Walter could have been earning $600,000 to $1.2 million per year! The reality is the amount is probably substantially less because given he was teaching economics between September to December and January to June would reduce the ability to market his services. This doesn't include his income from teaching, his regularly published syndicated columns, or any fees from published books. His professorship was fully paid for my an endowment of the John M. Olin Foundation (Walter according to this video never met and he earned $175,000 per year towards the later end of his career. It should be pointed out that Walter also lived well as in 2010 he purchased a brand new Lexus LS 460 that was $70,000 at the time (it was published in an article in which he was trying to describe international trade. In addition to a all this he is was actually on the board of directors of Media General (for over a decade (from 2001-2011) and was the chairman of the audit committee. I am honestly surprised he was on more boards given he could run rings around most corporate board members when it comes to logic and reason. 

I can recall Walter in a speech one time saying "You know if I don't tell you these things you may go the rest of your life not knowing them". The name of this blog is in some ways an ode to his saying of pushing back the frontiers of ignorance. Back in 2003, some friends of Walter had a toast/roast for him that was captured on video. In the video (around the 33 minute mark) Charles Koch discussed how he had at the time known Walter for nearly 20 years and their friendship. This video I was lead me to my curiosity of Charles Koch and Koch Industries which then lead to my fascination and lead to this blog posting more on Koch Industries than any other source available. In a way you could say this blog really was inspired my Walter Williams and created many positive things. 

Walter turned out to live a good, rich, and fulfilling life, he lived 84 years on this earth (also especially true since he was a smoker/however he did work out). He lead a very productive life as a professor, economist, public figure, and no question woke up countless numbers of people to how economics truly works. What is even more interesting is that Walter who grew up in the Richard Allen housing project would lead a life as someone in the top 1% and in the year he was born (1936) the average life expectancy was less than 57 years old! My only wish is that Walter could have lived for another 184 years. Dr. Williams was one of the few defenders of personal liberty, individual rights, railed against the welfare state, and was against good sounding policies and was one of the few people I know that had the courage to do the right thing. His intellect, charm, wit, and take no prisoners' approach was rare and most likely won't ever be repeated again for many generations. You can look at the passing of Walter Williams as inspiring given that on the day he passed he taught his last course and just a few days before had his final syndicated column published which shows he maximized his marginal productivity. 

Believe In People: Bottom-Up Solutions For a Top Down World Review

Recently Charles Koch released his brand new book "Believe in People: Bottom Up Solutions For a Top Down World". The book is the third book from Charles Koch. Previously Charles Koch published Good Profit back in 2015 and Market Based Management back in 2007. Charles spent 5 years working on the book (the book is co-written with Brian Hooks). I first found out that Charles was writing this book back in April 2016 when he was interviewed by Bill Bennett. 

The first part of the book is part autobiographical which is a little repeat of what has been said in Good Profit however there are nuggets even for people like me who have covered the Koch family and Koch Industries for over a decade. The second part of the book focuses on Social Entrepreneurs who are trying to improve society by empowering people at all levels (from drug dealers who reach back out to the community, to individuals who use to be drug addicts who use fitness to fight their addictions. Not only are the stories personal and inspiring but provide the reader with real and tangible results. Charles Koch is results oriented and he shows through data how Social Entrepreneurs improve can improve the world by identifying people that are close to the problem and understand the problem to find solutions. The last part of the book focuses on corporate welfare. 

When Charles was only 6 years old he was put to work (performing manual labor around the farm) and then graduated to more difficult tasks. It is important to note that older brother Frederick Koch went through a similar process but had a breakdown. Charles Koch growing up was quite a rebel. He would go to bars with a fake ID, he got kicked out of school for drinking, and get into bar fights. He admits that he had a tenancy to short cut work and wanted instant gratification. Charles started out at MIT studying chemical engineering but then quit because it involved too much memorization then moved to geology but stopped because it again involved too much memorization of rocks and ended up at with a general engineering degree from MIT since he took a "scattershot academic approach". Charles even was looking to get a PhD in chemical engineering but when Charles talked to a professor the professor told him if he wanted to get into business to get out of school. Koch admits he wasn't even a good engineer as he once was driving a water truck when the truck was low on oil he accidently filled up the truck with too much oil which backfired. When he was 28 years old Charles began reading in his spare time to read to understand the world. Along the way Charles met his wife Liz Koch at a party (however she was dating someone else at the time). However, once Liz was single Charles (in a typical engineer manner) immediately called her for a date. Charles had a tendency to go to cocktail parties and given all his reading on economics, philosophy, psychology and etc. would try to slaughter people on his ideas in debates (when these people probably didn't spend more than a couple minutes thinking about it). When Charles raised his children pushed his kids to put forth their best effort into their areas of interest. For daughter Elizabeth (who I wrote a separate blog post here). When Elizabeth started running track Charles would provide additional coaching (example 5 A.M. runs on family vacation/sprints in a blizzard on Christmas Eve). He pushed his children to give 100% at whatever they did. When his son Chase was throwing tennis matches (he was ranked in the top 100 in the country) Chase got a job at Koch Industries spending six weeks sleeping on a couch, working 13 hours a day, 7 days a week while shoveling manure and treating sick animals (so much for a cushy job). 

In the book, Charles does shed light into one of the darkest times of his life and for Koch Industries. He writes about the lawsuit between himself his brother David along will Bill Koch and other Koch Industries shareholders. The lawsuit went on for over 20 years. Charles mentions that before the trial he was in a deep depression and could barely function. Charles would take the stand of the trial on May 26, 1998. Even though the trial ended June 19, 1998  and Koch Industries was found not guilty on the charges brought by Bill Koch and the other shareholders the 11 week trial took a toll on his energy levels on personal health. In his first interview after the trial Charles commented "What doesn't kill me makes me stronger". Charles writes in his book that his depression still continued for another six months. However, he was able to bounce back by working hard, working out, and the support from his family. Also it is important to note that Charles was diagnosed with prostate cancer in September of 1999 spent two weeks undergoing treatment for prostate cancer. After he was diagnosed he was tested every 6 months. Although Charles had prostate cancer he didn't miss a beat and still went to work. 

When Charles initially took over Koch Industries he realized how screwed things up were. One of the leaders at Koch was an accountant who fretted over the cost of pencils while another leader was a hard drinking salesman who would settle for whatever big oil companies wanted. Once Koch changed this once he came on board. He introduced the "Challenge Process" at Koch industries to challenge anything (ideas, recommendations, ways of thinking) from all different levels). The company has a "Discovery Board" that meets every two months that contains 30 individuals. Charles admits he never comes away unscathed or without developing a better solution. The book provides the example of at a Georgia Pacific plant that only allowed senior mangers to hit the "stop" button in cases of an emergency. However, the individuals who were running the machines (not the senior managers) had better knowledge. Another example is a master technician at Georgia Pacific who spent 40 years with the company and noticed the company was making costly mistakes when the company was shipping pallets of toilet paper onto shipping trucks. The technician created a device to adjust the sensors on the vehicles that were moving the pallets of paper to reduce the number of mistakes and saving the company money in the process. Koch Industries has a philosophy that any employee can earn more than their manager if they are creating more value). 

Koch Industries has grown from $12 million of revenue in 1961 to $120 billion (recently) of revenue with 130,000 employees. This would represent a one million percent increase in revenue. When Charles joined the company he plotted out the growth of the company over his lifetime. In 2019, Koch Industries exceeded his lifetime expectation by 80 fold. Just to put some numbers around if Koch has revenues of $120 billion this would say that a 80 fold decrease would be only $1.5 billion of revenue which would then say the the annual growth rate would be a little under 9% per year (since 1961). The company has increased their revenue by a rate of almost 13% per year since 1961. Usually companies can increase their revenue by double digits for a decade or so but over close to a sixty year period is unheard of. Also if the company grew at the rate Charles predicted the dividends to him and other shareholders would be radically different. I estimated in this blog post that the amount of dividends Koch Industries throw off a year is roughly $378 million per year each for Charles Koch and the family of David Koch (Julia Koch and children). The original growth rate plan would have say that the dividends that Charles would have received would only be a little under $5 million per year! Lastly, the net worth of Charles Koch is roughly $45 billion as I write this. At the original rate of growth Koch would only be worth $560 million (and honestly probably not many people would have heard of him). Interestingly an article from the Washington Post from 1979 estimated that Koch was worth "in excess of $500 million" at the time which would be roughly the same net worth he would have today if he started out on his original growth plan (which would essentially say there would have been no growth from 1980-present day). There is no question that Charles Koch and his philosophy have grown Koch Industries beyond even his wildest dreams. 

The second part of the book highlights Social Entrepreneurs like Scott Strode who had issues with alcohol and cocaine and realized if he didn't get clean and sober the consequences would be devastating. By using the gym and working out Scott has lead over 40,000 people (as I write this) to kick their addiction of drugs and alcohol. Scott himself has been sober for 20 years. What is amazing is that less than 20% of individuals relapse after the first three months of entering the program (compared to traditional programs that have a relapse rate of 40%). Perhaps health insurance companies/companies should be looking at this to reduce their cost of insurance. Now if this program was applied nationwide think of how many individuals, families, and communities would be positively impacted. The sobering statistic that 70,000 Americans died from drugs and the rate of suicides and alcoholism has been increasing for more than two decades. To quote Victor Frankl (a favorite of Charles Koch) "people have enough to live by but nothing to live for; they have the means but no meaning". 

Everyone is able to make a contribution to the world if they identify their talents and capabilities and it may take trial and error to discover this. Everyone has the capability to contribute   Look to the people who have the experience who have seen the problems (gang members, drug addicts, etc.) instead of "experts" who claim to have all the answers yet haven't gone through the experience themselves. Koch admits correctly that he doesn't have all the answers to the problems and no one should claim they do. People are often treated as problems to be solved, instead of being empowered to help address America's biggest challenges. If it was possible to eradicate slavery in America then how much easier would it be to overcome the problems of today. Charles focuses on partnership rather than partisanship. Recently during the During COVID Stand Together helped aided 122,000 families, verification took 10 minutes, and money was transferred within 48 hours to bank accounts and raised more than $61 million. If anyone compares this program to the PPP loans that the government doled out it is obvious that this private bottom up solution was much more effective than a government top down solution that required lots of paperwork, waiting, and not everyone was able to receive a loan.

Overall I enjoyed reading the book and felt it was more personable than any book Charles Koch has written before. The book reads as a combination of a biography of Koch Industries mixed in with free market ideas with a touch of self help. The book is very inspiring and is rich with personal stories/vignettes of people from all walks of walk which provide a good application of the examples related in the book. The book as I mentioned before also sheds light on Charles Koch and his depression along with some additional insights not seen before (even for a Koch addict like myself). 

Allegations Against Julia Koch and Matchmaker for Her?

Recently it was alleged the 58 year old Julia Koch (widow of David Koch) used nurses to lock her husband David Koch into a room during a dinner party, used code names for real estate property she didn't want her husband to know about, and even had a male companion that she traveled with. 

The allegations were made by Felicia Racine a 29 year old bodyguard and former U.S. Air Force veteran for the Koch family (what is interesting is the security company that protects the Koch family is named Matador Security Company Inc.-which is also the name of the Koch ranch subsidiary/cattle company of Koch Industries). Racine filed an Employment Employment Opportunity Commission (EEOC) after working for the Koch family between January 2018 through April 2020. She was fired in April 2020 an she alleges a discriminatory firing as her husband who was in the Air Force was transferred to California. 

When Racine began employment she alleged that Julia had a 58 year old "boyfriend" Charles Manger (it should be pointed out that Julia Koch is also 58 years old) even though she had been married to David Koch since 1996-which is odd since I can't find any photos of the Julia and Charles together. In fact their alleged relationship was discussed as part of the training for the bodyguards. However, I have seen over the years photos of Julia Koch with real estate agent Bradley Comisar. Manger apparently visited one of many Koch residences (including the South Hampton residence). Racine would have to provide protection for both Charles and Julia as part of her job. In a related news story it looks like a matchmaker may help Julia "find a new husband". Patty Siegal a Hollywood publicist is assigned with the task (she was brought down when the New York Times claimed she helped Jeffrey Epstein rejoin polite society". For the record though a representative for both Julia Koch and Siegal have denied this is true.

Other alleged duties of her job entailed Racine included getting David Koch Jr. a fake identification and making the bed for daughter Mary Koch (I would think with their kind of wealth they would have maids doing this) and preventing Mary from hopping on private planes for short trips to visit friends. 

Another claim was that Julia would refer to homes as code names so David Koch was not aware of these purchases. In October 2018 the Koch's purchased a $40 million Manhattan townhouse which was well publicized. In 2016 the Koch family suffered a small fire at their 740 Park Avenue home. Julia Koch had been renovating the home for a number of years and David Koch made the comment "I told Julia there was no budget, and she still managed to go over the budget". In addition to keeping real estate Julia also wanted to keep family trips secret as well. A so called Project X trip to South Africa where Julia would bring her siblings, nieces, and nephews was to be kept from David Koch. 

Also there is the allegation that back in 2019 during a dinner party David Koch was leaving his bedroom and attempted to put his arm around his wife and said he loved her only to have Julia asked another staffer and some nurses to take David back to his room and "lock the door, so he doesn't interrupt the dinner party again" according to the allegation. Given that Koch Industries never released what illness David was battling it is unknown whether his cognitive abilities were affected. 

A spokesperson for Koch Industries has called these allegations "baseless". Although, I have been following the Koch family for almost a decade (my first on Koch can be found here-back in 2011) I have never heard Julia Koch talk (despite spending hundreds of hours finding obscure documents/videos/and other interesting findings). The question will be will Julia Koch issue a press release regarding these comments including an interview or will the family settle the lawsuit out of court to keep things hush hush. 

It should be important to note that David Koch had declining health for many years before he passed. Charles Koch noted that back in October 2016 that his brother's health was going downhill. Also if you look at Getty Images the past few years photos of David Koch show him having lost weight, not looking well, and towards the end mostly Julia Koch in photos and his absence. Speaking of images if you look at photos of David Koch from the 1980's (here and here and even in the mid 1990's here it appears his teeth are discolored, however then by the early 2000's you can see his teeth are very white and straight (maybe Julia talked to him about this). 

Also I have reported before that David Koch in the mid 1990's attended some events with attractive women (one before he married Julia and one after he married Julia). I am guessing that David was friendly with these women but I would be curious to know how Julia felt about this. With these recent allegations the Koch camp claims they are baseless (if they are really baseless then Koch should counter sue for defamation).

It is hard to know how much (if any of the allegations are true). My hunch is that some parts may be true but until there is more data it is hard to speculate. Ms. Raccine may just want her 15 minutes of fame and move on. The thing that is surprising is I would have thought that Koch would have contracts that employees would be required to sign (especially ones working directly for the family) to avoid issues like this and to keep things confidential. The other question is if other former employees will start speaking out as well. Of course time will tell. 

David Koch Sells Aspen Homes (Available for Rent) and His Impact on Aspen Community

Recently, David Koch sold both of his Aspen homes. It was reported by the Aspen Times who reported it as the largest property transaction for the week. I blogged about the home in previous post regarding the lifestyle of David Koch here. Koch actually purchased two homes.

The first home was purchased by David Koch back in January 1989 for $1.9 million. This main Aspen home was 8,100 square feet, 5 bedrooms, and a sit on just over 1 acre of land. The home was remodeled in 2013. The home would be part of a Vanity Fair photo shoot in March 2003 (the photo shoot was just after Christmas in 2002). The 865 Roaring Fork Road home is available for rent for $175,000 per month. As you can see from the listing the home as a very extensive wine cellar. The home was sold in June 2020 to the Lauder family for $23 million (this would say that the annual compounded growth rate of the home was almost 9%/year-however this doesn't take into account money put into the home to update and upgrade).

Under a 2003 Trust (David H Koch 2003 Trust-the trust was created in January 2003) the home was purchased (David Koch himself was the original purchaser of the home. The problem is if you pass and you own a home in a state (which is not your residence) then the home is subject to the probate process. If the home is placed inside a trust it avoids having to go through the probate process (if something goes through the probate process it is open for the public to view it). The home was famous when David was a bachelor in the early 1990's and would have 800 guests for the annual New Year's Eve party and was ranked as one of the best parties by Newsweek to crash. On Christmas Eve 1993 Charles Koch gave a moving toast to his brother David Koch and after Charles was done with his speech David asked "Does this mean you will let your daughter Liz go to my New Year's Eve party" and Charles responded "Hell, no". Charles obviously knew what went on at those parties and knew his brother.

The second Aspen home David purchased was actually on the same street and had three bedrooms, 3.5 baths, 2,675 square feet (more like a guest home) and last year valued at $7.9 million. It should be pointed out that brother Charles Koch owns a property on the same road as his former brother David did.  David Koch purchased the home in December 1991 for only $1.75 million. The home in June 2020 was sold for $12 million (~6.8% appreciation per year). This home is actually available for rent as I write this for $50,000 per month.

David Koch had an impact on the Aspen community. Back in the 1990's Koch was a significant investor into the Isis Theater (the theater is temporarily closed due to COVID). The main attraction to him was the potential investment in the theater. In 1992 he tried to donate an Olympic size rink to the city of Aspen (Koch himself was willing to spend $3 million (he actually spent $50,000 on the planning and designing of the rink) however the rink was rejected by by the city council (it failed by 1 vote). The issue was during the summer the rink would having to be moved and transforming the area for other purposes was going to be too disruptive. David Koch during his life was also a board of trustees for the Aspen Institute. During the 1990's Koch gave over $1 million to the institute who was known for as a non partisan think tank that is committed to ideas in the area of business, energy, education, and other topics. It was actually at a July 2015 Aspen Institute event that David Koch ran into climate change activist supporter Tom Steyer were they chatted for a few minutes, posed for pictures (even shaking hands-I wonder how the woke folks would feel about this), and then after the event privately had coffee.

My guess is that the Koch estate is looking for liquidity. With $23 million on one home sell and $12 million would be roughly about $35 million of liquidity. Remember these monies were placed into trust as well so they will stay in trust unless distributed. Although, I don't know how the estate plan for David Koch works but there is no doubt it will provide estate liquidity.

Instead of Flattening the Curve Expand the Curve.

With the coronavirus we have heard time and time again of the flattening of the curve. The basic premise is that we have to stretch out the number of cases of coronavirus due to the restraints within the healthcare system. There is some truth to this given any system can only absorb so much demand  in a finite period of time (there aren't endless resources after all). However, what gets missed in this view is the opportunity of the unseen as so many regulations and red tape prevents the expansion of the capacity for healthcare services.

The first thing to understand is how the government (mainly the CDC/FDA) totally mismanaged the testing for coronavirus. As I detail in my last post detailing how the CDC created it's own faulty test and then the FDA required the CDC to retest every positive coronavirus test for accuracy. If you remember in the early days of coronavirus anyone who tested positive for coronavirus "had" to have their sample sent to the CDC center in Atlanta. Even scientists in Seattle who tried to run their own testing were shut down by the CDC and FDA (their lab wasn't up to Medicare standards). In my last post I detailed the massive amount of regulation regarding lab testing (The Clinical Improvement Act of 1967 plays a large role in this). Also the FDA was asking this Seattle lab to require any of their samples to be run 5 times for accuracy (also this is utterly impractical given at the time there were few cases of coronavirus). Now you sit back and say to yourself how many people have gone un-diagnosed/passed away because of the mismanagement from the FDA and CDC? The FDA/CDC should have immediately let private companies and organizations testing organizations come on the scene to rapidly implement the tests they already have. If this had happened you would have seen tests been quickly deployed and individuals learning whether or not they had the virus so they could have determined whether or not to isolate themselves. Fortunately the FDA has backed down on the regulation front and currently 80 different companies are trying to apply to develop testing. You have companies that are innovating at home tests, blood tests that take 8-10 minutes, and developing processes for testing that the CDC/FDA would never dream of.

There have been talks the United States will run out of hospital beds to care for coronavirus patients. Looking at the data the United States is a little over 6,100 hospitals in the United States (this includes profit and not for profit hospitals). This translates into roughly 924,000 beds that can be used at any given time. However, at any given time roughly 66% of hospital beds are full. Running the quick math this would say that there are roughly a little over 300,000 hospital beds available. If you look back to 1975 there were actually more hospital beds then there are today (back then close to 1.5 million beds and there were also only 216 million people in the country at that time vs. 330 million people today. To translate this number this would say in 1975 we had a hospital bed for .69% of the US population vs. 28% today. Now it should be pointed out that there have been advancements made in medicine that has reduced the need for people to not require hospitalization. Another way to look at the number of hospital beds is per 1,000. The United States has 2.8 beds/1,000 people. Actually this is similar to Italy (3.2 bed/1000 people) and greatly lagging behind South Korea with 12 beds/1,000 people. Moving towards a country with more hospital beds would be a wise decision. However, the regulatory burden to open a hospital doesn't allow just anyone to open a hospital.

I haven't seen anyone study the regulation of hospitals but I did some research regarding what would it take to open up a hospital (this blog gets into the details). Well first you have to get a license from the state (I found the one for Texas which is 14 pages here). Also you shouldn't forget your fire safety report too. Also before you even get state the occupancy of your hospital you have to get approval by the Architectural Review Group of Health and Human Services. The Architectural Review Group has to approve an application before any construction begins (this is about 9 different steps by itself). It is also recommended for the applicant of the hospital to attend a feasibility conference before they get approval. Once all that is approved you will have to pay a license fee of  $39/bed (which is not refundable). Then if you want to get certified by the Joint Commission that will run you about $46,000 per year. If you plan to get any type of funding from Medicare you will have to at least abide by these rules.  Clearly, opening a hospital is time and capital intensive and has large barriers to entry. I haven't even gotten into the certificate of need (CON) laws that allow existing hospitals/medical facilities to block the opening of hospitals that are considering opening which reduces the number of potential hospital beds by tens of thousands.

On the other hand you have innovators like Dr. Devi Shetty who is able to open up hospitals all around the world and a hospital was built at a cost of $700,000 per bed (a 65% discount) to the $2 million per bed it would cost in the United States. These hospitals also negotiate prices with their suppliers. For example when the hospital was looking at disposable gowns one company offered to make the gowns for $75 and the hospital found a factory that could make the gowns for $37. If hospitals in the United States operated liked this not only would the cost of healthcare drop but the quality would increase as well as there would be more competition.

For years I have been saying for roughly the past decade that the FDA has over regulated and has left individuals with fewer options (to treat their own life). If the FDA simply had a longer Phase I trial to just simply test the safety of a drug and report the results and allow patients and healthcare professionals to determine what is best for them (also it is important to note the prices of drugs would decrease as there would be more competition). What people seem to forget is it takes a drug company roughly $2.5 billion of capital and 12 years to bring a drug to market to patients. If you just say the average life expectancy of the America is 78 years you have to wait 13% of your lifetime to watch one new drug get approved. The chances of getting a drug from the molecule level to market is 1 in 5,000. Now the important question to ask is how many drugs that were submitted to the FDA were safe however not approved for whatever reason (the FDA seems to believe we all comprise of the same biology-even though this is utterly insane). On the one plus side Mr. Kevan Shokat (chemist at UCSF is sifting through 20,000 drugs approved by the FDA to see if there are possible drug candidates for coronavirus. Now if the FDA just stuck to approving drugs that were safe that database could be have a multiple of the number of drugs approved today and possibly alleviate some of the symptoms from the coronavirus. Also it is important to consider once a drug is approved it is only approved for one use (cancer, heart issue, etc.). However, the reality is some drugs are used to treat multiple things (example Propecia was used originally used to treat men who had an enlarged prostate but then was found to help men regrow their hair). However, the FDA will not allow companies to tout additional benefits other than what the drug was originally approved for. Once a drug is approved however the FDA can't limit or control how drugs are prescribed. Doctors and patients should be allowed (once a drug is approved) to use that drug in anyway they see fit. Often times the doctor is knowledgeable about the patient's medical history/previous experience with drugs taken/aware of the benefits and side effects of the drug. Also let's not forget patients these days are armed with information too and often times are just as up to speed as doctors for treatments (especially if they have a chronic illness). It is worth noting too that there are specific databases for off-label use were medical providers compare notes on the drugs used, how effective they are, case studies, dosing issues, and the risk/benefit considerations when factoring in whether or not to prescribe certain drugs. The Wolters Kluwer database has over 2400 off-label uses. Allowing researchers/doctors to try different drugs for off-label use may potentially find a treatment to alleviate some of the symptoms of coronavirus.

While we are on the topic of drugs it is important to point out the number of drug shortages. The University of Utah actually keeps track of the drugs that currently have a shortage. As I write this roughly 207 drugs are on the list. Roughly close to 50 drugs have been added to the list within the last week. Again the reason for the drug shortages has to do with the over-burdensome regulation of the FDA. If you have half a day to kill you can read through some of the regulations here. The regulations focus on things like the type of equipment used, the water quality used to make the drugs, how often your facility has been inspected, the records kept by the lab, packaging and labeling, along with personnel requirements. The FDA in recent years has increased their regulation of manufacturers and have adopted a "zero tolerance policy". Drug manufacturers must ask the FDA for approval to make the drug, then get approval on how much of the drug it plans to make, and agree on the time frame. Also if a one drug manufacturer shuts down another drug manufacturer can't increase it's production without FDA approval. Also a program as the 340B drug rebate program allows hospitals and clinics to get discounts (between 13-23%) on drugs in order to provide these drugs to provide to patients on Medicaid (low-income) which then allows these medical institutions that participate in the program to stockpile drugs at a reduced cost. Drug shortages will continue to grow in this time of crisis and not allow patients to truly receive the treatments they need unless the FDA reverses course lightening the regulation and become more flexible in allowing companies to produce the drugs that some people are in desperate need of.

Also some other low hanging fruit is to reduce the regulatory burden on physician assistants/nurse practitioners. Currently 29 states require some level of supervision for nurse practitioners and 20 states require a percentage of physician assistant charts to be co-signed by the physician. There are more than 290,000 nurse practitioners and 118,000 physician assistants. If regulations in these professions were relaxed doctors, physicians assistants, and regular physicians would save tens of thousands of hours that could be used to treat patients who are suffering from coronavirus.

In this time of crisis however there are some creative solutions. For instance empty hotel rooms are being turned into hospitals and even using cruise ships for additional hotel rooms.  Speaking of other sensible regulations that allow individuals who may have an out of state medical license to practice in different states.  Even Medicare has expanded to include telemedicine (it is important to note that private companies have been using medicine for years.

Instead of flattening the curve the focus should be expanding the curve by reducing regulation to allow more drugs, procedures, medical professional and resources to work on the problem. If the FDA and CDC had allowed more testing companies to get their product out to the market more people would have known whether or not they had the coronavirus and then the public would have better information has to who should stay home or who is okay to go out (instead many states have shut down for business). The lack of the number of hospital beds could be greatly helped by reducing the barriers to entry. We need more innovation in terms of letting more companies and individuals open more hospitals that could be housing coronavirus patients. Letting the FDA relax their rules regarding off-label use would work wonders to allow researchers to experiment with any drug that is approved by the FDA may help find some accidental wonder drug that could help. While we are on the topic of the FDA having them back down on the "zero tolerance" for drug manufacturers would reduce the number of drug shortages which is critical in times like this were patients need these drugs the most. Lastly, allowing states to not require nurse practitioners to be supervised or require physician assistants to have their charts co signed by doctors would free up the much needed time of medical professionals to attend to sickly patients who are in need of treatment (and also reduce the work load on these medical professionals who are already burning out). Attacking all of these issues would help not only expand the curve of possibilities but end of saving more lives, improve the quality of living, and reduce the red tape for researchers, doctors, and medical practitioners and result in a win-win for everyone.

Why the Private Individuals and Organization Are Ahead of the Government in Responding to Coronavirus

For the past couple of weeks coronavirus has been in the news. Back in Dec 2019 China had a number of cases of pneumonia and then within the first week of December 2019 the Chinese government confirmed that these individuals actually had confirmed this was coronavirus. Since then there has been fear, angst, and anxiety around the world regarding how quickly the coronavirus has spread (as a result people are hoarding toilet paper, antibacterial soap, and bottled water acting as if the world will end). While I feel the spread of the coronavirus is awful I believe the federal government has only made the problem worse with excessive regulation and now allowing the decentralization of decisions from private companies, individuals, and organizations to override government power. Some companies have voluntarily told employees to work from home to avoid the spread of the virus while others have even created their own coronavirus schedule. Luckily there are some individuals and private organizations that are helping out.

The first major issue has been the ability to test individuals who have the coronavirus. During the months of January and February 2020 the number of coronavirus cases in China was rapidly increasing however The Centers for Disease Control (CDC) decided to create it's own test rather than use the World Health Organization (WHO). The CDC has issues in terms of having people testing positive (who actually didn't have the disease).  What is insane is the FDA requires the CDC to retest every positive corona virus test run by a public health lab for accuracy (the CDC is also the same organization that predicts 1.7 million in the U.S. will die from coronavirus).  I remember hearing on the news that samples for the coronavirus "had" to be sent to Atlanta first and having the thought "why?-surely there are thousands of other labs in the country that could test for coronavirus". 

Now take the case of a German scientist named Olfert Landt within 10 days after the New Year created a viable test kit for coronavirus. Landt and his team worked 12-14 hours per day (his son works a "part-time 60 hours a week" job) and within the past 2 months the company has created 40,000 test kits. The test kits run about $180 each and he has received orders from all around the world. The company has produced enough test kits to have 4 million individual tests. What is interesting is the test is just a throat/nasal swab and the results can be found within a few hours. The WHO began shipping these tests out February 1, 2020. The CDC created a test was then approved by the FDA on February 4, 2020. However the results of the CDC test were flawed as an ingredient in the CDC test created false results. It wasn't until February 29, 2020 that the FDA allowed hospitals to use their own tests for coronavirus. 

There are even situations were individuals take testing matters into their own hands and the government shuts it down. Dr. Helen Y Chu (she went to Duke for medical school and taught at Harvard Medical School) in Seattle who is both board certified in infectious diseases and internal medicine. The Seattle Flu Study (funding came from the family office of Bill Gates) studied individuals who were both health and sick individuals to try to help the city of Seattle detect the flu earlier, develop new ways to treat, and help the city prevent outbreak. The Seattle Flu Study is constantly taking nasal swabs from residents in the area so had good data on what the general flu looked like. On February 25, 2020 Dr. Chu and her team couldn't wait any longer and decided to take matters into their own hands and began performing their own coronavirus tests. The government from both federal and state levels had told Dr. Chu and her colleagues that no they could not create their own tests for multiple reasons. The first is patients never gave their explicit permission, and the labs were not certified by the FDA because the lab would have to meet Medicare standards-this could take many months before approval. The FDA for example would require the test to be run 5 times on the sample sample to validate it (which is insane since the number of positive cases for coronavirus is so few given the lack of testing due to government mismanagement). The CDC promised kits would be distributed within days (days would turn into weeks). It wasn't like you had Elizabeth Holmes running these tests. The CDC told the Seattle Flu Group creating their own test would not be possible. The CDC and FDA told Dr. Chu to stop testing thousands of samples they had already collected from individuals. During this time 22 people were dying from coronavirus. 

So not just anyone can start a lab (this isn't Breaking Bad). In order to be certified by you first have to comply with The Clinical Laboratory Improvement Act of 1967. Let's not forget the Clinical Laboratory Improvement Amendments of 1988.  The 1988 was passed in response to false negative Pap smear tests. Also let's not forget each state may have their own regulations which may be even more stringent than the federal laws. Under this act any facility that performs testing under the law is considered a lab-even if only a few basic tests are performed and the lab isn't charging. If you want to start a clinical laboratory. Here is the 10 page application you have to fill out to get certificate from Medicare. The certificate is only valid for a 2 year period. Oh and before signing the application you must make sure you comply with Section 353 of the Public Health Service Act you could possibly be imprisoned for up to one year. Let's also remember if someone violates the regulations they could face possibly: criminal penalties, up to a year in prison, a fine of $10,000 per day, and possibly not able to participate in other federal programs. In 1995, inspections showed that 80% of labs had compliance issues. Thankfully Medicare publishes the top 10 deficiencies of labs. Regulations also specify who can work in the lab. For example an individual that performs "high complexity testing" must either be a doctor or have at least a science undergraduate/associates degree with 60 semester hours of sciences (chemistry/biology/etc), complete a training course, have at least 3 months of laboratory training in each specialty in which the individual performs high complexity testing. So if you were a philosophy major don't bother getting near a laboratory. It should be pointed out that the smaller to medium size laboratories are not getting rich either. About 50% of laboratories have a profit margin at 3% or less (meanwhile companies like LabCorp/Quest Diagnostics and other labs are able to generate much higher profit margins because of their scale and size). Medicare recently also increased the fees on these labs by 20%. Now depending on the type of lab (determined by how many tests are performed each lab could be paying up to tends of thousands of dollars for each certificate.  

As I write this 9 different companies are working on a vaccine for the coronavirus. It looks like Gilead Sciences is the furthest along with an IV treatment (remdesivir) currently in a Phase 3 trial (the treatment has already been used on a woman in California who was on the verge of death who improved after taking the drug (it should be pointed out it took the CDC 4 days to just to agree to evaluate the samples (it didn't meet their strict criteria) and then another 3 days for the results to come back. As her health declined her doctors at UC Davis applied for compassionate use (the drug manufacturer has allowed hundreds of patients to try remdesivir) from the FDA which would allow patients that are not part of a clinical trial to test a drug. Also it is believed that the earlier the drug is administered the higher probability there is to help the patient. The government wasting time telling a patient they are too sick to get treatment most likely made the woman worse off than she would have otherwise have been. Also if someone is dying don't they have a right to their own life and what treatments they receive? As I write this a Canadian company has said it has a "vaccine candidate" just 20 days after obtaining the gene of the virus and once they get the green light could produce 2 million doses/month. My question is why can't patients work privately to determine what drugs are best for them? Most likely by the end of the year with all these companies working on vaccines and probably even more will try to enter to create a vaccine (remember it usually takes 10-15 years to create a vaccine). 

Speaking of testing just yesterday the FDA approved a test (as I write this the first approval from the FDA from a private company-the only other approved tests are from the New York Department of Health and the CDC). According to Roche the company can provide millions of tests every month and can test patients 10 times faster than their old system. Speaking of testing as I write this there is a testing capacity of ~27,000 patients per day. It is important there are over 260,000 clinical laboratories in the country. Although hospital labs are only roughly 5% of the labs they perform 55% of all the lab testing. Innovators and entrepreneurs have came into the market and are offering different ways to diagnose coronavirus. One small biotech company called Aytu Bioscience in Denver will be able to test for the virus with just a small drop of blood within 10 minutes! This blood test has already been used in China for the past 6 weeks (however the company needs to get emergency approval from the FDA). There has even been some innovation with setting up drive through coronavirus testing. Speaking of Colorado another company has devised a UV light that kills 99.9% of bacteria and viruses (however it is not known if it can kill the coronavirus but the companies believes it can). Entrepreneurs, companies, and organizations are much better at quickly adapting to solve problems (even in national pandemics) then government entities given the incentives at stake. The market would develop a coronavirus test that could be ordered off Amazon Prime or have someone pick up at Wal-Mart/Target/CVS. 

Many people have talked about how the hospitals will be overburdened with the coronavirus as a result of many people possibly needing to be hospitalized. One big issue is that certain states have are certificate of need (CON) laws that prevent just anyone from opening a hospital or medical facility without first getting approval from the state. There are currently 36 states that have CON laws. A study showed that having these laws actually reduces the number of hospital beds to patients (beds that could be taking care of patients with coronavirus). In some states this can add up to 10,000-20,000 hospital beds for some states. Now when you aggregate all the states that have these laws you are looking at many thousands of people who wouldn't be able to access healthcare because of regulation.

It is important to note much of the advancement in fighting the coronvirus has come from private individuals and organizations. Scientists from around the world were the first to sequence the genome of the coronavirus and put it online for others to study. A German company created a testing kit that is now being used around the world (while the CDC couldn't even get an accurate test out and could only produce it in limited quantities. Compare this to the power of Roche, LabCorp, Quest Diagnostics who were ready to step in with their tests (these companies can run substantially higher number of tests and more accurate than the CDC testing), however were blocked by the FDA and the CDC. The many weeks of delay from the FDA and CDC could have allowed individuals to get tested for the virus and given them the knowledge to know whether or not they poses a risk to others. The U.S. government knew for many months of the coronavirus and it looks like finally this coming week will have enough tests for people. Also you may have many people worrying if they have the disease which may cause them anxiety and panic for the fear of not knowing. I have no doubt that a private company or organization will find a vaccine for this virus. The real heroes are those individuals who are working day and night trying to advance the understanding, treatment, and hopefully cure for the coronavirus. The coronavirus like many other things has taught us that viruses move much faster than government bureaucracy and red tape. The collective efforts of Gilead, Roche, Olfert Landt, Dr. Helen Chu and Aytu Bioscience have done more to help individuals around than the FDA or CDC could ever dream of. 

Free Market Solution for Medicaid: Turn It Into An Health Savings Account

After my post on how to transform Medicare into more of a free market system I thought about what if the same idea was applied to Medicaid. Medicaid currently provides benefits to 74 million low income and disabled people. Medicaid in 2017 spent $582 billion. This would mean on average Medicaid spent $7,800 per Medicaid beneficiary. Each state administers Medicaid but the actual funding comes from the federal government (i.e. taxpayers). Medicaid spending is used for hospital care, physician services, prescription drugs, and nursing homes. In a previous post years ago I pointed out how to the government makes it extremely difficult and expensive to open a nursing home (there were more nursing homes in 2010 than 1995 despite a dramatic increase in the number of people requiring these services). One major issue with Medicaid is the improper payments for turn out to be about 12% of it's budget or $139 billion (even Wells Fargo with all it's issues doesn't have a improper payment rate close to this). What if individuals were allowed the freedom to spend Medicaid dollars as they see fit?

A solution that would offer Medicaid beneficiaries a health savings account (HSA) that would allow individuals  more options, better quality care, and reduce the burden on taxpayers and greatly improve efficiency. The basic idea of an HSA account is that money is contributed and the growth is tax free and if distributions are taken to cover medical expenses the growth in the account is not taxed. These accounts over a variety of investment options that allow individuals to invest the monies as they see fit. The idea is allow contributions to grow over time and then to use the monies inside of the HSA for medical expenses as they come up. It is important to know that each states have their own rules regarding Medicaid (so not only would the states have to approve this plan but the federal government would have to approve it as well).

Current legislation only allows individuals with high deductible insurance plans to have HSA plans. This current legislation would have to be repealed to allow anyone to have a health savings plan (which wouldn't be a bad thing). The state government every year would deposit monies spent on Medicaid into the HSA plan for Medicaid beneficiaries and allow Medicaid beneficiaries to use the funds for health insurance or health expenses (I prefer the money being deposited into the account over vouchers so Medicaid beneficiaries don't have to go through a middle person or agency). If money is taken out from an HSA for non-medical expenses the penalty is to pay both the income tax and a 20% penalty (for Medicaid beneficiaries I would be okay increasing this penalty to 50%-75% ) as an incentive not to withdraw monies. Any penalties would be just be additional government revenue.

As Medicaid is run by each state there are financial requirements in terms of how an individual can qualify. However, if an individual Medicaid beneficiary was able to use $7,800 of benefits every year that would allow them to have power in the market place and make choices in terms of what health care they wanted and allow them choices in deciding what doctors to use, what prescriptions to purchase, and what treatments they would like. Also with 50 different states there could be experimentation which plans and see which plans worked and which ones didn't. The $7,800 could be the maximum amount of benefits allowed with it being phased out based off income. For example someone without any income would get all the benefits however someone that earns $15,000 would get a reduced amount of the $7,800 (this would help in rein in the cost of Medicaid). Now when you run the math if there was a family of 3 is on Medicaid this would be over $23,000 of health benefits annually that could be used (I am not opposed to a family maximum limit either). Not only could the health benefits be used for the current year but could be saved and invested for future years if Medicaid established HSA for beneficiaries. Allowing individuals to invest the monies in their HSA accounts would over time allow the account to grow in value which would allow individuals to save for their future medical costs (and have individuals learn about deferred gratification). In addition to this, if the monies were invested in either the stock market/bond market it would provide a boost in giving corporations capital (possibly hundreds of billions of dollars) which would give the economy a major boost.

In addition to this, if Medicaid beneficiaries could use the funds in the Medicaid HSA account to bid on medical services it would create even more competition. Medibid is an online platform that allows individuals seeking medical services to bid on medical procedures and services online. Recently the platform had over 265,000 paid subscribers (83 employer groups are included in this number too). The online provider features "all in prices" for medical services and you don't have to worry about separate bills from different providers. Patients are able to see the ratings a particular doctor has and the number of those procedures the doctor has performed (Medicaid doesn't even have this type of information). As a result patients are provided transparency in terms of quality and price. Medibid users are saving 70% on MRI scans, 63% on CT scans, 53% on colonoscopies, and 35% on ultrasounds. Now if Medicaid patients were able to use Medibid they would be able to shop around and Medicaid would actually be savings tens of billions of dollars a year. An interesting point is if you the 74 million people on Medicaid shopping online for medical procedures there is no doubt the price would decrease even further and induce more doctors to want to offer their services.

Medicaid doesn't even provide quality care to its beneficiaries. What is fascinating is that patients on Medicaid are 13% more likely to die than patients who didn't even have insurance and 93% more likely to die than patients with private insurance. Shouldn't we allow low income individuals the freedom to make choices so they don't die? The funds in the health savings account could be used by Medicaid patients to enroll a direct primary care program. Direct primary care is not health insurance however allows patients to pay to directly contact their doctor 24/7 if that have any issues. The fee covers clinical and lab services and sometimes doctors can get prescription drugs at a cheaper price. The cost of direct primary care can range start at $50/month. If a Medicaid beneficiary thought $600 was worth it they could use their HSA to purchase direct primary care services.

Medicaid has a low reimbursement rate. It should be noted that Medicaid pays about 61% of what Medicare pays. Of course doctors would be weary to accept Medicaid patients. In addition to getting paid less doctors have to worry about filling out more complicated forms.  Not only do doctors receive less for their work but in addition have to fill out more complicated paperwork. Doctors would receive payments direct from these Medicaid HSA accounts and not have to worry about billing or reimbursements from the government. Given that reimbursements from Medicaid can take doctors up to 2 months to get paid doctors wouldn't have to worry about the timing of payment.

The cost of health insurance premiums has exponentially increased. In 2008, the average monthly premium for an individual cost is $159/month and then by 2017 the premium would be $393/month which is a 147% increase. As of 2018 the monthly cost for a family health plan cost was $1,168. Obviously the large increase was due to the passage of Obamacare which mandated coverage and required insurance policies to cover "essential benefits". In in this post  I explored 10 ways in which the cost for healthcare costs could dramatically be decreased. If Obamacare was repealed and these reforms were in place health insurance could be a fraction of the cost (and more like the rates from 2008) and allow many more individuals (including those on Medicaid) to afford a decent health insurance policy and allow them to get more bang for their buck out of the $7,800 provided by Medicaid. If there was massive insurance deregulation and the premium per individual was only $159/month (2008 figure however with massive deregulation it be even less) it would say over 1 year an individual would pay close to $2,000 a year in premiums.

The $7,800 amount per person is already being spent by taxpayers on Medicaid beneficiaries. Why not allow Medicaid recipients and families decide how they will spend their healthcare money to allow for greater efficiency, more access, and allow individuals to take control of their health/financial futures.

One state that has attempted to try a Medicaid HSA program is Indiana. In Indiana Medicaid members "HIP POWER account holders" get a $2,500 deductible health plan. The state contributes $1,100 per adult per year to pay medical costs. Participants pay up to 5% of the family gross income (this can be between $0 to $105/month (depending on the family size). Also it is important to note that roughly 1/3 of beneficiaries pay nothing). Employees were less likely to use high-cost emergency rooms and most likely to use generic brand name generics. This resulted 35% lower health-spending and individuals were going in for mammograms, check ups, and other preventive care at the same rate as traditional insurance plans. Members contribute 2% of their income (members own their contributions and if they leave the program are refunded the pro-rata share). What is interesting is that 70% of members make contributions (only 5% of the members left the program due to affordability). The interesting thing is about 80% of members are satisfied.

The example of a Medicaid like plan rolled out nation wide would do wonders to help Medicaid beneficiaries. If roughly $7,800 is spent on each Medicaid beneficiary and you had individuals pay a small portion of their income to get access to Medicaid HSA plan (with a deductible of a few thousand dollars) this would save the government lots of money, allow patients greater access to their healthcare decisions, would allow doctors to get paid quicker and more efficiently and if patients had health savings accounts it would dramatically reduce the current Medicaid fraud (save over $100 billion on this alone). Adding Medibid to Medicaid in the base case would save Medicaid billions of dollars a year. Most importantly Medicaid beneficiaries would have the same power that all other individuals have in the market place to decide who provides them medical care. Often times patients can't go to a doctor because they don't accept Medicaid. Of course too I wouldn't have state/local governments administering the HSA accounts either (you could have companies like ADP, Fidelity, Paychex bid on these projects-which would add additional revenue for the states)

A change like this to Medicaid would be a much needed improvement over the current system and be beneficial to Medicaid beneficiaries, doctors, and taxpayers. Of course politically this would be hard to pass given that politicians like to run other peoples lives.