Episode Summary
- New federal legislation and a proposed Department of Labor rule are forcing PBMs and insurance carriers to disclose more about their pricing schemes — and Katy Talento sees it as the most promising regulatory momentum in years.
- Katy's "school choice for healthcare" proposal would let any public or private actor — employers, government programs, even family members — fund a portable health account that individuals could use to buy whatever coverage works for them, from ACA plans to health shares to cash pay.
- A reconciliation package in late 2026 is the most likely vehicle for real reform, and Katy believes it could include federal tax deductions for health share memberships similar to the Kansas law that just survived a governor's veto.
Full Episode Transcript
Dan
Welcome to Uninsured by Choice, the podcast where we help you navigate the healthcare system without insurance. I’m your host Dan, and we are brought to you again today by Zion HealthShare, a nonprofit medical cost sharing community. My guest today has spent decades fighting to fix American healthcare from the inside out. She served as the top health policy advisor to President Trump at the White House, spent 15 years advising US senators, and holds a master’s degree in epidemiology from Harvard. She spent six years as the executive director of the Alliance of Healthcare Sharing Ministries. And today she’s the CEO of All Better Health, helping employers ditch broken benefits and actually take care of their people. You can follow her on her Substack at katytalento.com. So Katie Talento, welcome to the show.
Katy
Thanks so much for having me, Dan.
Dan
Absolutely. I just want to jump right in. Obviously you’ve got a very strong background on the regulatory and legislative side of all the happenings in healthcare. How is it looking today, early 2026? What does that landscape look like? Are there things we should be keeping an eye on or getting excited about?
Katy
Yeah, there are things that we should be keeping an eye on. In particular, the congressional activity early this year was somewhat shockingly good. There was a Consolidated Appropriations Act that came out — it’s basically the big annual spending bill — and included in that giant monstrosity was this little nugget of joy, which basically put the smack down on the broken pharmaceutical market and the employer-sponsored insurance market for PBMs and drugs. It had a little bit in there about not just the PBM side, but the insurance carrier networks as well. And it’s really going to force them to disclose more about their kind of corrupt business model schemes and the ways that they’re pillaging American employers and American patients. And I think it’s going to be amazing.
And then three days before that, the Department of Labor had put out a similar rule requiring the same things. They proposed it and haven’t finalized it because the comment period is still going on for two more weeks. Now they have to finalize it, or something similar to it, because it’s basically very similar to what the law requires. So that was just like a springtime miracle. So I’ve got my eye on that. The transparency and coverage latest rule also — their comment period just closed. Really hoping that they finalize good things in that. It was a little bit weak sauce for my taste. It was building upon the first rule that we did in 2019 when I was there. And there are some improvements they need to make. I’m not sure that they’re all the way there, but we affirm any positive change.
And meanwhile, the Speaker of the House has announced that he wants to do a big reconciliation package. What that means is that’s a big piece of legislation that does not require 60 votes in the Senate — it only requires 51 — which means it can be a party line vote, which means that the Republicans could do some health policy. They want to do health policy. The president has called on them to do some health reforms. And so I predict they’ll probably wait until the end of the year. After the elections they’re going to lose, they’ll do that big reconciliation package as their last hurrah during the lame duck session. And if they choose to do health reform as part of that package, which I certainly hope they do, there are a lot of opportunities for really good policy, including really good policy related to healthcare sharing organizations.
Dan
It sounds like there’s a lot going on, and that’s great. I, like you, hope for a lot of good changes to come on the legislative side. I saw this headline, I think on Monday — I want to say it was Kansas — where there was something about healthcare sharing ministries and tax advantages of some kind. The legislature overrode a veto and made something happen with taxes for health shares. Can you explain more about that? That sounds like a good victory.
Katy
Absolutely. About a year ago, we had dinner with many of the conservative Republican state legislators in Kansas, and all of them were on board with tax deductions for the spending that healthcare sharing ministry members make on their membership fees every month, and also the fees that they pay to the actual sharing organization. So, depending on how the ministry is structured, sometimes one month out of the year is your admin fees to the ministry itself, sometimes it’s a percent of every month that goes to the ministry. Both of those types of payments — whether it’s sharing to other members or sharing to the ministry itself — will now be tax deductible in Kansas. And that bill was moved with the support of the Alliance of Healthcare Sharing Ministries.
Ty Masterson, who’s running for governor, was also involved, which helps because he’s running against the other team that’s currently in place. They moved that bill through and the governor vetoed it, and then the state legislature overrode the veto. So that is extremely positive. That means that in Kansas, all your members can deduct from their state income taxes any spending that they made out of their income.
Dan
That’s really cool. Do you see anything like that happening at a larger scale? Could that be a federal thing that gets taken up at some point by Congress — maybe a similar type of tax advantage for healthcare sharing? Is that a pipe dream?
Katy
Well, that is exactly what I was talking about when I was speaking of reconciliation moving in Congress. We do expect that we should get a similar piece of legislation nationwide. God willing — you never really know what’s going to end up in the final package. But we are seeing positive signs and lots of interest in moving a similar piece of legislation.
But ultimately, what we’d really like is to see HSAs for everyone and for every bit of health spending by anyone for any product or service to be tax deductible, either through an HSA or just through the regular deduction.
Dan
Very cool. And I know you’ve got a great proposal for what you’d like to see Congress put forth. Before I get to that, I’d love to know more about All Better Health. I think our listeners would probably like to hear — what is All Better Health all about? What are you doing there? What’s your current project and how is it going?
Katy
Yeah, so All Better Health is a sort of guerrilla, insurgent benefits advisory firm for employers. We typically work with mid-market employers — maybe 100 to 5,000 employees. What we do is we fire the carrier, we fire the PBM, we bring in concierge direct primary care and navigation to the highest quality doctors. And if our plan enrollees follow the nurse’s guidance to the highest quality doctors — they don’t have to, but if they do — then we waive their deductible and co-insurance.
What’s really important about the model is that we usually will rent a carrier network, but we don’t have the carriers administering anything in the plan. So none of their misaligned incentives and corrupt billing bureaucracies and bloat are driving prices up. But then we try to steer our members away from having to use the network at all by directly contracting with independent providers — independent doctor practices, independent imaging facilities, independent surgery centers, independent pharmacists. We also work with a fiduciary, transparent PBM for our drug costs and drug benefits.
When employers invest in providing these higher quality benefits to their people, that’s actually, ironically, the only way you can save costs downstream. All the incentives in our healthcare system are aligned against our interests. Our interests are that we are healthier and that we spend less. Every interest in the healthcare industry is that we’re sicker. Not dead — sick, sick for life, customers for life — and that we’re having high-priced stuff done to us. All those industry actors do better when we’re sicker and we cost more.
It’s a little bit unusual because we were sold that the value proposition of insurance is that they can get you better prices and discounts that you couldn’t get by yourself. But it’s absolutely the opposite. Usually a cash pay price is cheaper than an insurance-negotiated price. And even when that’s not the case, steering around the networks and trying to cut better deals — making better arrangements directly between the buyers and sellers of care rather than having an insurance company in the middle — is usually a better deal for everyone, including the doctors. We may pay less as an employer, but the doctor is keeping more of what we pay them than they would otherwise get from the insurance company in many cases. So doing this is our only way to sort of beat back the industry interests and align with the partners that share our same interests, which is healthier people at lower cost.
Dan
Exactly. I love it. I saw on LinkedIn the other day someone say that a cash pay discount is not a discount — that’s the cost. That’s what healthcare costs. Everything above that is what you’re paying for all the billing bureaucracy.
Katy
That’s the cost of all the billing bureaucracy, all the bloat, and corruption and kickbacks. Yes, that’s just the cost.
Dan
I love what you’re doing. And what I love about telling listeners about this is that there’s not a throw-our-hands-in-the-air, give-up mentality out there. We all know the healthcare system is kind of a mess — it’s very complicated, there are a lot of bad actors, there are problems. But there are people like All Better Health that are trying to do something about it. And you really have to start at employers because that’s where so many Americans get their healthcare coverage. If you’re a business owner, you’re thinking about your product or service — you’re not always thinking about benefits. You’re not an expert on that. So you just leave it to some random broker or agent to go shop benefits for you and you don’t really know what they’re doing or how it works. Bringing more transparency to that is great. Is it allbetter.health if someone wants to learn more?
Katy
It’s actually allbetter.health — allbetter.health.
Dan
Fantastic. Getting back to the legislative agenda — your Substack, which is fantastic by the way, I’m going to put in a plug — it’s great, well thought out, even gets a little personal sometimes, vulnerable. I love reading everything you post. President Trump gets on and says he’s got a health plan. He wants to not pay subsidies to insurance companies but pay directly to people, and he’s calling on Congress to act — like you mentioned earlier. And you put out this proposal of here’s a realistic scenario that could play out. I would love for you to share what that is and the highlights of how it would work in real life.
Katy
Yeah, thank you for the plug for the Substack. It’s fun. And I’m finally uncensored — I don’t represent anybody anymore except me, so I get to say what I think and talk about my life. President Trump, as usual, has incredible instincts. He put out on social media that we want to take all the money away from the big insurance companies and give it to the people. That is exactly the right instinct, exactly the right policy. And all I did was try to flesh that out — that’s kind of what a good staffer does. I can’t get the staffer out of me. I tried to flesh that out: what does that really look like, is there legislative language for it, and create some materials that anyone — like the White House — could take up if they were looking for a health plan, which I know they are.
The first, most important part with respect to people who are in the individual and small group market right now — in other words, in the ACA-regulated market — there’s about 20 million people in that market. Insurers are fleeing. Premiums have quadrupled since the ACA was first passed. Deductibles have tripled. It’s just a really bad situation, and the plans there are often not great. That said, almost everyone in that market is getting subsidized, because the rates are so unaffordable that everyone has to be subsidized or they’ve left that market. The people that are left are older, they’re willing to pay higher premiums because they have to, or if they can’t afford it, the government subsidizes them. Everyone else — small business owners, waitresses, truck drivers, individual market people — they flee. They can’t afford it. They may not qualify because maybe they have a small business or they’re doing well enough not to qualify for subsidies, but not well enough to really afford insurance.
Like you said, most Americans are covered in the big group market — that’s 160 million Americans — but these 20 million suck up all the policy oxygen, all the political oxygen in Washington. So it’s important that we come up with something that actually helps change the larger market as much as we can.
The policy that I think is really important for that market is what I call school choice for healthcare. Like in school choice policy, rather than saying we’re going to provide schools for you or accredit schools and tell you what schools to attend — we’re just going to give you the money that we would have otherwise spent on your kids’ schooling and you can go wherever you want. Charter school, private school, homeschool — your choice. And so that’s what I’m proposing for healthcare. Whatever subsidy the government was going to give you, whether it’s for ACA, whether it’s for Medicaid — frankly, even Medicare could go in this direction, VA, DOD, whatever — and also whatever your employer is paying, because employers pay two-thirds to three-fourths of most premiums in America. If your employer wants to do this, they can. And I would argue that anyone who wants to put money into a freedom account, a health savings account, or whatever we’re going to call it, they can put it in that account and use it to buy healthcare. That would include your grandma. It would include your church. It would include your healthcare sharing ministry if a sharing organization wanted to organize itself that way — basically just putting a certain amount into an account when it’s time.
So any public or private actor who wants to give you money for healthcare can put it into your account. It’s tax free. It can only be used for healthcare. But right now those types of accounts — health savings accounts — are very limited. You can’t use them to buy insurance. You can’t use them to buy a healthcare sharing ministry membership. You only recently could use them to buy a direct primary care membership. And you have to have a high-deductible insurance plan just to be able to own one and contribute to it. So we need legislative change. If you have legislation that says anyone can put money in there, any amount up to a very high limit — equivalent to an insurance premium — and you can buy an ACA plan, or an off-exchange non-ACA insurance plan, or a healthcare sharing ministry membership, or a direct primary care membership, or just cash pay for healthcare with no plan at all. Or you can just save and not use it, the same way we do with health savings accounts today if you don’t need it. That’s really, really important.
And one nice thing I’d like people to be able to do with those accounts is pay for someone else’s healthcare too, if someone else needs the assistance. That 20 million would really unleash a competitive coverage market — and also a competitive non-coverage market — whether it’s healthcare sharing ministries or just cash. It would also bring relief to employers who are tired. They’re in the car business, the steel manufacturing business, running a law firm. They don’t want to be a healthcare business, but they all are. This could allow them to get out of being a healthcare business. They just take the money they would have otherwise put toward a group premium for a plan that they’re running and managing and have fiduciary responsibility over, and just let their employees take that money and go into the market and buy what works for them, rather than having their employer make all their decisions.
That would expand this dramatically. Not every employer would do it — some would still want to run their own health plans — but many would start to do this. And that would create demand for suppliers out there to come up with all kinds of new, innovative coverage options and non-coverage options. It would create a competitive cash market as well, because now there’s a huge consumer base paying cash. Right now, why would any provider compete on the basis of their cash price? There’s basically no consumers out there paying cash — it’s the roughly one million people in healthcare sharing organizations, and not even all of them are paying cash. Most are using a network. And then there’s uninsured individuals paying cash, and that’s pretty much it. Even people who have a health savings account are using their insurance-negotiated rate. And if they don’t, the money they spend using that health savings account doesn’t apply to their deductible. So very, very few people are actually paying cash. That means our doctors, hospitals, imaging centers, and surgery centers are not competing on the basis of a cash price because there’s no market for that competition. Under this proposal — the president’s proposal — there would be a dramatic market that just forms to meet this demand, with all these people who have all these dollars to spend.
Dan
That is such a good plan. Bravo. I just want to stand and cheer. It just makes sense at so many levels because America was built on competition and free market principles. Like you just said, that will lead to innovation. The competition that comes from that leads to innovation. It’ll just make for better health outcomes overall. It’s such a game changer.
So I want to ask you about something — we had a guest talk about ICRAs. This is kind of like the ICRA on steroids, right? So ICRAs, my understanding is that instead of only this limited plan you’d be reimbursed for, you can be reimbursed for a whole wide range of things. Is that a good way of characterizing this?
Katy
ICRAs on steroids — yes! I was there in the first Trump administration when we created ICRAs. They are individual coverage health reimbursement arrangements. They’re not accounts, meaning that if an employer uses this vehicle, the employer is not putting a bunch of money into your account off his books. He keeps it on his books until you have a health expenditure and then he reimburses or pays for that expenditure. What I’m proposing is more like the money’s off his books — he’s giving it away whether you use it or not, however you use it. But it is the same principle.
When we created ICRAs, the limitation was that we were told we don’t have the statutory authority to allow people to take that money and buy non-ACA qualified plans. Whether that was really true, I don’t know — lawyers, what are you going to do. They told us we couldn’t do that. We really, really wanted to. My colleague Brian Blase from the Paragon Institute was the champion and leader of this policy and fought hard to try to get it, but the lawyers said we were going to get sued and didn’t have the authority.
What I’m proposing would require legislative changes to change the rules on health savings accounts. And if you wanted to, you could just blow up and expand ICRAs. Either of those vehicles works, but I really prefer an account-based solution because with an ICRA, you’re still tied to your employer. That money is still only coming from your employer when you have healthcare expenses. I’d rather everybody have the money and take it with them to the next job, or be able to go be a 1099 and still have that money. That’s really important.
So let’s say you have a W-2 job today and you’re getting money into your account, and then you go start your own business as a 1099. You have that money, and maybe you also qualify for subsidies on the ACA. Now you can get your subsidies into that same account, building on what your old employer used to contribute.
When the Democrats created the ACA and the qualified health plan definitions, they had really good intentions. And I think there are still some reasons why people would want a qualified health plan that has all the preexisting condition protections and guaranteed pricing protections — even though those rules have inarguably destroyed the insurance market and driven costs up so that almost nobody can afford them. People are sick. They come into this process sick. And I think it’s important that insurance products are available for that population. We do have to have a safety net. We have to protect people who are really sick. But insurance isn’t really for sick people. What we’re really doing with the ACA is prepaid healthcare — it’s not insuring you for catastrophic financial events that are unexpected. That’s what insurance is. But that’s not what the ACA is. The ACA is basically just paying for you to get care. That’s not needed for everybody and is driving costs up for everyone else. So having the law allow you to buy the right thing that meets your needs — not just what the government or your boss chooses for you — is really important.
Dan
Right. Another guest said once that your employer doesn’t tell you which gas station to fill up at or which grocery store to shop at, but they do tell you which doctor to go to. It just doesn’t make any sense. It’s so tied to the employer. Like you’re saying, it should be portable — you should be able to take those dollars with you. Your plan shouldn’t be an anchor that keeps you at a job rather than a benefit. I can’t tell you how many prospective entrepreneurs I’ve talked to who said they’d love to jump all in on a side venture, but they can’t lose their benefits. It’s so sad to me that there are so many people held back from unleashing their potential — well beyond just healthcare — because of access to coverage. Your plan would really allow a lot more people to do what maybe they feel their calling is, or where they could contribute a lot more than they are in their nine to five, if they just didn’t have this big worry looming over them. I feel like so many good cascading benefits would come from adopting this plan.
Katy
Yeah, agreed. Listen, if someone has a very expensive health condition and that’s why they can’t leave the insurance coverage they have — let’s say my policy is already in place. They’re going to leave, and they’re still going to need to buy a real ACA-type qualified insurance plan because they or someone in their family is already sick. But you could have someone in the family buy an individual plan and everyone else in the family buy something else. And that would really help in terms of overall cost for that family and allow those people to go pursue their dreams or start their businesses.
Dan
There’s so many things we can do if we just get back to the original premise of America — freedom. Freedom to make these choices, competition, innovation. We just need that introduced into healthcare and it will unlock so many other things. What we’re seeing right now in real time is that this one problem of healthcare is actually cascading into many other problems. So if we can solve that one mess, we can actually solve a lot of others. And I think that’s just really exciting to be a part of. You’ve been doing it for well over a decade. From the sound of it, we may be looking at possibly December, or perhaps sooner, where something is on the horizon and being voted on. What do you think are the chances of something like this getting the ball rolling this year?
Katy
Well, you can always count on Congress to do nothing as long as they possibly can. And so I think they will probably wait until after the election and then they will be in high gear. They’ll have until January when a new Congress gets sworn in — first or second week of January. So they’ll have basically the last half of November including Thanksgiving, plus December including Christmas. So if they’re smart — which they’re usually not — they will start this process around now, building consensus, building the package that they want to see.
Dan
So now would be when those talks are happening — when people are probably calling you right now about, hey, if we were to put this into the legislation or include that. Those conversations are happening right now in real time as they prepare, hopefully, to introduce something by the end of the year.
Katy
Yeah, they were happening with much greater intensity at the beginning of the year because there was talk of Congress actually doing something on healthcare, especially last December and then into January. They were really trying to do things. And there was thought that there was going to be a reconciliation package at the normal time in the budget cycle, which is around March. But now that it’s not happening — and also there will probably be war funding needed, and whenever there’s either a natural disaster or supplemental war funding that needs to get done, that’s another impetus that requires Congress to act when they would otherwise do nothing.
So I do think we’ll probably see something. Also, the government funding runs out at the end of September this year like every year. So there will be another big budget fight — though there’s always a temporary patch and then another extension, and it always goes into Christmas and sometimes beyond. So there are going to be a couple of vehicles: the government appropriations bill, which is a big omnibus, and the reconciliation package. And I think they’ll probably all be moving together around late fall.
Dan
I keep an eye on these kinds of things — I’m always on LinkedIn, following headlines. If anyone wants to follow Katie, go to katytalento.com or follow her on LinkedIn. She’s always posting interesting things. I’m sure if there’s any kind of news on this front, that would be a good place to see it. Is that safe to say?
Katy
Usually — or I’m writing about it. But yeah, if you follow me at katytalento.com or on any of the social platforms at KatieTalento, you’ll usually hear me opining about unsolicited opinions on policy matters in Washington.
Dan
Well, I think it’s fascinating and I really appreciate you taking the time to come on today and talk to us. I’ve learned something. I think anyone listening has probably learned something. Again, just another plug for katytalento.com — go give her a follow. You will not regret it.
Katy
Thanks so much, Dan.
Dan
Of course. Thanks for tuning in and we will catch you next time on Uninsured by Choice.