Losing a Free Market Health Policy Legend + A Policy Update

Last week, the president of the Galen Institute and my dear friend Grace-Marie Turner passed away. Grace-Marie was a lovely human being, and I’m going to start the newsletter with a note about her and her legacy.

I will then discuss the One Big Beautiful Bill and highlight a new Paragon report on reforming the National Institutes of Health (NIH). Finally, Paragon is soliciting research proposals related to what really matters for health and the Make America Healthy Again (MAHA) initiative.

Remembering Grace-Marie

Grace-Marie was the founder of the Galen Institute and served as its president for 30 years. In that role, she was the unquestioned consensus builder within the free-market health policy community. I had the privilege of working for Grace-Marie at Galen for nearly three years after I left the White House and before I launched Paragon.

Grace-Marie was a constant source of encouragement who affirmed people and their contributions. She was intellectually rigorous and an exceptionally clear communicator. Grace-Marie helped me launch Paragon and guided me through many important decisions. Although her health policy achievements and influence were profound, her legacy is also evident in the hundreds of people she mentored during her career, including me. In fact, I doubt we would have been able to launch Paragon without Grace-Marie’s achievements and the example of Galen. The legacy of Galen and Grace-Marie will live on in Paragon. Next week, along with a few others who were deeply influenced by Grace-Marie, we will publish a piece on the main lessons from her and her work.

One Big Beautiful Bill

Last week, Paragon released a summary and analysis of every health care provision in the One Big Beautiful Bill (OBBB). OBBB contains a host of policies targeting waste, fraud, and abuse in Medicaid and the Affordable Care Act (ACA) exchanges.

To understand the health policy provisions of the OBBB, it’s vital to recognize the massive growth in federal Medicaid spending and the ACA exchanges under President Biden. In both programs, the Biden administration pursued two strategies:

1. Maximize enrollment at any cost – even for those ineligible for the programs.
2. Expand subsidies and corporate welfare to health insurers and big hospital systems.

While the strategies produced significant enrollment growth, they also caused massive waste, fraud, and abuse in both Medicaid and the exchanges. Previous Paragon research estimates that federal improper payments equaled $1.1 trillion over the past decade, largely from improper eligibility determinations. And last year alone, there was $15–$26 billion of fraudulent spending in the ACA exchanges due to poor policies and lack of oversight by the Biden administration.

In just four years, the federal Medicaid baseline spending increased $1.2 trillion, and the ACA subsidy baseline nearly doubled. Although the media is incorrectly referring to the OBBB’s health policy reforms as cuts, the reality is that these reforms would eventually return the Medicaid and ACA spending paths to what existed at the start of the Biden administration.

On Medicaid, the OBBB’s reforms have two primary aims: (1) reducing wasteful and fraudulent expenditures on able-bodied, working-age ACA expansion enrollees and ensuring ineligible people are not enrolled and (2) curbing Medicaid money laundering (the latter of which was the subject of a Paragon study this spring). To achieve the first aim, OBBB institutes more frequent eligibility checks and work and community-engagement requirements for able-bodied, working-age expansion enrollees. To achieve the second aim, OBBB freezes provider taxes, and caps state-directed payments at Medicare rates. The OBBB also eliminates a provider tax scam that allowed California to obtain large amounts of federal funds with no actual state contribution to expand Medicaid to unauthorized immigrants.

On the ACA, the OBBB reverses the Biden administration’s “enroll-at-any-cost” approach by:

• Requiring pre-enrollment verification of income and eligibility
• Replacing passive re-enrollment with active confirmation of eligibility to receive a plan
• Eliminating Special Enrollment Periods (SEPs) tied to self-attested income between 100%–150% of the federal poverty level
• Eliminating repayment caps for advance premium credits when income is misreported

The OBBB also contains an appropriation for the ACA’s cost-sharing reduction program, which will result in both lower premiums and lower deficits. In addition, it includes significant reforms to expand health savings accounts and individual coverage health reimbursement arrangements.

Improving the OBBB

The Senate can improve the OBBB by protecting Medicaid for the most vulnerable, further tackling Medicaid money laundering, and adding an HSA option that would enable lower-income ACA exchange enrollees to receive a portion of the subsidy directly, instead of it going solely to health insurers. We have developed one-pagers on how the Senate can reduce Medicaid money laundering and add the HSA option. Together, these reforms work to undo the harmful policies of the Biden administration while advancing policies to empower all Americans in their health care decisions.

Fixing the Engine of American Science: Why NIH Needs Urgent Reform

A new Paragon study by Stuart Buck, Fixing the Engine of American Science: Why NIH Needs Urgent Reform, outlines a comprehensive framework to restructure and reform the NIH. Stuart is the executive director of the Good Science Project.

The paper highlights many problems at NIH. Although NIH is the world’s largest biomedical research funder, it suffers from outdated organizational structures, burdensome bureaucracy, and inefficient grant processes. The agency’s 27-institute structure creates disease-specific silos that duplicate work and stifle interdisciplinary breakthroughs. Too much grant money is spent on activities unrelated to core research, while researchers spend excessive time on compliance, rather than discovery. Far too many studies cannot be replicated, and publication bias—favoring positive results over null results—distorts the research landscape. Most problematic, NIH’s current model favors risk-averse, incremental research over transformative, groundbreaking work.

To address these challenges, Stuart recommends a series of reforms, including:

• Consolidating NIH institutes around shared disease mechanisms and systems biology
• Modernizing administration by reducing indirect costs and easing researchers’ compliance burden
• Overhauling the grant system by reducing reliance on preliminary data
• Imposing term limits for institute directors
• Encouraging innovation through randomized experimentation with peer review
• Promoting research integrity by mandating data transparency
• Funding replication studies and fraud detection
• Incentivizing the publication of null results
• Protecting scientists by curbing exploitative postdoctoral employment practices

While NIH can implement many of these reforms through its existing administrative authority, the paper also recommends that Congress enact legislation or that the president issue executive orders to incentivize these changes. The goal is to refocus NIH on advancing meaningful scientific discovery, improving public health outcomes, and restoring public trust in federally funded research.

A Call for Research on What Really Matters for Health

Paragon invites research proposals on a broad set of issues related to health and American well-being, including reforms to restore American health and longevity through policies focused on physical activity, nutrition, work, and community—not by expanding government programs.

We seek research that identifies how government regulations and barriers worsen health and explores market-based solutions that enhance choice and competition. Projects can range from concise policy briefs to more in-depth research papers. Potential topics include the rise and consequences of sedentary behavior; low-value or counterproductive medical care; social engagement; dietary recommendations; Supplemental Nutrition Assistance Program (SNAP) reform; regulatory barriers to innovative care models; and evaluating state-based MAHA reforms.

For more information about the call for research, click here.