Exclusive: GOP think tank pushes heavy health spending cuts

• Even though Republicans may lose one or both chambers of Congress in the midterm elections, the Paragon worldview is likely to remain highly relevant for the remainder of the Trump administration.

The big picture: The very design of federal health care programs — including Medicare, Medicaid and Affordable Care Act — incentivizes waste and higher health care prices, Paragon CEO Brian Blase writes in a paper provided first to Axios.

• Most of the policy changes Paragon calls for are highly partisan, and nearly all of them would draw fierce criticism from the health care industry.
• But some of the topics Paragon takes aim at — including Medicare Advantage, hospital payment policies and the ACA's medical loss ratio — have also attracted scrutiny from Democrats or their allies and could be the basis for bipartisan policymaking in the next Congress.

What they're saying: "I think that there are pieces of what we recommend that you could see being part of the policy discussion in 2027," Blase told Axios, adding that "there's a lot of really great people who do health policy for the Trump administration, and I'd say they're very familiar with these ideas."

• Beyond specific programs or industry groups, the idea that health care companies profit at the expense of patients is becoming more politically salient, even though the parties disagree on root causes and solutions.
• Government programs enable the health care industry to "make money from being wasteful and inefficient," Blase said. "I want profits to be made by serving patients well."

Between the lines: Health care affordability has emerged as a prominent voter concern, but more so from the perspective of what consumers pay for health care, not the federal government.

• But Blase told Axios that the design of federal health care programs "also lead[s] to higher prices and utilization in the commercial market."
• "We're not going to increase health care affordability if we have programs that incentivize lots of inefficiencies," he added.

The intrigue: Even after Republicans enacted the biggest Medicaid financing overhaul in decades in last year's budget bill, Paragon argues Congress should go substantially further.

Details: The policy changes Paragon advocates include:

• Medicare: Equalizing payments across sites of care (referred to as site-neutral payments); reducing hospital subsidies; reversing the Inflation Reduction Act's Part D redesign; overhauling Medicare Advantage's risk adjustment, benchmark setting and the quality bonus programs; and increasing wealthier enrollees' premiums and cost-sharing.
• Medicaid: Equalizing the Medicaid federal match rates across beneficiary categories, eliminating higher payments for the ACA expansion population, and further cracking down on Medicaid provider taxes and state-directed payments.
• ACA: Requiring ACA premium payments for all enrollees, transforming the subsidy structure and repealing the medical loss ratio that limits insurer profits to a percentage of revenue.
• Other programs: Capping the tax exclusion for employer-sponsored insurance and overhauling the 340B drug discount program.

The bottom line: Reductions in federal health care spending will always be framed as bad for patients, either by the opposing political party or by the health industry group poised to get less money.

• But the think tank that seems to have Republicans' ear on health care policy is pushing for aggressive spending reductions, foreshadowing what could be on the agenda after the midterms.