The House of Representatives begins its August recess this week. The Senate will join next week. Both leave DC. without a budget resolution which means reconciliation cannot begin and federal agency budgets will be in limbo when FY2027 starts October 1.
Primaries in 7 states (KS, MI, VA, WA, CA, TN, HA) start the wind-down to the November 3 General Election Day. Next week, 6 more primaries are on tap (AL, CT, MN, SC, VT, WI) followed by 3 the week of August 18 (AL, FL, WY). That sets the stage for contests for 435 House and Senate 36 seats, Governor’s races in 36 states and 3 territories, state legislatures in 44 states representing 84 of the 99 state legislative chambers.
And in 1200 communities, public schools open this week. By Labor Day, the rest of the U.S. 13,500 K-12 public school districts will open for the 2026-2027 academic year. That means household budgets—already stretched by inflation and higher prices for essentials- are even tighter. And it means pediatricians, community health clinics and school nurses will be slammed.
The common threads that run through politics, education and healthcare are the same: all are considered essential and all have seen steady erosion of the public’s support.
Polls show the public thinks all three are heading in the wrong direction. The majority think much of what’s spent is wasted. And the majority think special interests protect the status quo against needed changes. It’s true in healthcare but structural, financial and public expectations pose huge barriers to needed changes.
- Structurally, it is built to take care of people who are sick or injured, and controlled by those who benefit most directly.
- Funding is a complex, opaque combination of taxes, private investment, out of pocket payments and deals that protect have’s and deny have not’s, defy transparency and resist accountability. The healthcare money pit is hardwired in the economy as its biggest employer, biggest public benefit and biggest source of household financial insecurity.
- Public expectations are a system that features cutting edge drugs and specialty care accessible to all anytime, everywhere, at any cost. As for prevention and wellbeing, it’s personal. And it’s a system too complicated to be understood by mere mortals.
For the majority, politics is a necessary evil. Statesmen are few and far between. Public servants are rare exceptions and respected (though sometimes unelectable).
For the majority, public education is an essential, but teachers are underpaid, funding seems stretched, administrative bureaucracy is burdensome and the desired outcome—educated students—is problematic because social determinants (outside the classroom) impact results.
For the majority, the health system has plenty of money and makes its own rules. Outcomes are about recovery/management of a condition for which system dependence (visits, tests, drugs, facilities) is key. And the majority are content to be treated as patients believing self-care and shared decision-making beyond their reach.
The gap between the health system needed and the one we have is widening. Voter concern about healthcare affordability is the direct result of its chronic neglect of consumer demand for evidence-based care delivery at reasonable prices.
To those watching their kids board buses for school this week, they’re hoping their kids learn and stay healthy, and the political system helps that happen.
Paul
PS: I watched Anthony Fauci’s* testimony last Wednesday at the Senate Committee on Homeland Security and Government Affairs. I watched it again Friday to see if my initial impression changed. It was hard to watch. It was hard to watch the brutal questioning by the GOP Senators and hear Dr. Fauci’s 5th Amendment reply 111 times. But what lingered most was a nagging question “what’s the truth” about how the Covid pandemic was handled and who can be trusted.” AI-enabled social media have the ability to define American’s expectations about the health system, about what works and what doesn’t including vaccines, or treatments, or you name it. My hope is consumer education sans partisan bias and insider spin becomes the industry’s most important strategic imperative. Maybe the community benefit that justifies tax exemptions across this industry should be tied significantly and directly to effective engaging of consumers in their own health. Nothing can be more important to the system’s future.
*Former Director (1984-2022) National Institute of Allergy and Infectious Diseases, National Institutes of Health, U.S. Department of Health and Human Services
Sections in today’s Report
- Quotables
- Economy
- Hospitals
- Insurers
- Polling
- Population Health
Quotables
Anthony Fauci Testimony July 29 at the Senate Committee on Homeland Security and Government Affairs: “On the advice of counsel, I respectfully decline to answer.”
Anthony Fauci Invokes Fifth Amendment Over 100 Times at Senate Covid Hearing – WSJ
Vizient on trust: “Remember when healthcare workers were regarded as heroes? During those early days of the Covid-19 public health emergency, when most schools and workplaces were closed, people lined up on their driveways and apartment building balconies, literally cheering clinicians as they went to work.
That seems like a lifetime ago. Today, healthcare suffers from a crisis of trust. Some of this is institutional and political, tied to the fallout from the pandemic. Americans increasingly perceive that healthcare quality has declined. We can give our advice as experts, but patients increasingly are tuning us out. Instead, they’re turning to tools and sources that are not grounded in evidence, sometimes with disastrous results.”
Vizient July 30, 2026 https://www.vizient.com/insights/articles/weve-lost-our-patients-trust-heres-how-to-earn-it-back
AMA President on physician-owned hospitals: “…The ACA restricts the creation and expansion of physician-owned hospitals, a policy that stifles innovation, limits patient access to specialty care, and has coincided with growing market power among large hospital systems.
The bipartisan “Patient Access to Higher Quality Health Care Act of 2025” (H.R. 4002) would repeal these statutory and regulatory barriers that restrict the formation or expansion of physician-owned hospitals…
Removing ACA restrictions on physician-owned hospitals is a logical, evidence-based step toward a more dynamic, patient-focused health system. This reform would increase innovation, competition, and access to care without raising federal spending.
Especially in areas with hospital consolidation or closures, physician-owned hospitals represent a promising avenue for new options for patients and communities. Congress should pass H.R. 4002, eliminate unnecessary regulatory barriers, and let America’s physicians deliver the specialty care and innovation that patients deserve.”
AMA President: It’s Time to Lift Limits on Physician-Owned Hospitals | MedPage Today
CMS’ Oz on elimination of Part D subsidies “The Biden admin gave BILLIONS of taxpayer money DIRECTLY to Big Insurance Companies. This is unacceptable. We are stabilizing the market so this bailout is no longer needed. Premiums will go up by less than $10 for most Medicare recipients, with many even seeing LOWER premiums. Every Medicare beneficiary still has access to low-cost plans, and we will continue to lower prescription drug prices for every American patient, from more MFN deals to our policy giving seniors access to GLP-1s for $50 a month.”
X Post @DrOz@CMS July 28, 2026
CNN on economy: “There were two discouraging signs last week on the US economic front. Five months into the war in Iran, rising oil prices and stubborn inflation drove mortgage rates to their highest level in a year. And second, the world’s largest economy lost steam heading into summer.”
CNN Sunday spotlight view.newsletters.cnn.com
Wright Lassiter III, President and CEO, CommonSpirit Health on system performance: “Meaningful and lasting progress will require government, payers, providers, pharmaceutical companies and other stakeholders across the industry to make affordability, efficiency and access truly shared priorities.”
CEOs navigate the intensifying cost-of-care debate
Brunswick Echelon poll on corporate leadership: “Every company should be prepared to answer three questions: Do you charge Americans fairly? Whose side are you on? Will people believe you?
Political conditions will continue to change. Companies and corporate leaders that react to every election or news cycle risk losing credibility. Long term trust is built through consistency, not constant course correction.”
Brunswick_Echelon_Polling_Three-CEO-Tests_072026.pdf
Forbes on private equity ownership of hospitals, nursing homes: “There are lots of reasons many community hospitals and nursing homes are at risk of bankruptcy. Thanks to healthcare cuts in the Big Beautiful Bill, many of these institutions are caring for an increasing number of people who no longer have adequate insurance. In addition, unless the institutions are part of a large multi-hospital company, they have difficulty negotiating generous reimbursement from insurers.
Oh, and one more thing. Sometimes the very entities owning these hospitals and nursing homes are purposely bankrupting them, pillaging them of their value to maximize the owners’ profits.
It is a type of self-dealing known as “related-party earnings,” and here is how it works.”
How Self-Dealing Is Bankrupting Hospitals and Nursing Homes
Commentary: Overlap in 340B and MFP drug pricing: “Additional research is needed to determine the short- and long-term implications of MFP and a future 340B rebate model. Key questions include whether and how stakeholders adapt behavior in response to MFP implementation, whether dispensing behavior, 340B participation, or patient access change, and whether effects extend beyond Medicare into other payer channels, especially as Medicare MFP for Part B approaches in 2028. Transparent data and timely monitoring will be essential to distinguish the effects of MFP from other policy changes and broader market dynamics.”
The Collision Of 340B Pricing and Medicare Drug Price Negotiation | Health Affairs
Economy
BLS’ Employment Cost Index: June 2026:Highlights:
- Compensation costs for civilian workers increased 0.9%, seasonally adjusted, for the 3-month period ending in June 2026. Wages and salaries increased 0.9 % and benefit costs increased 1.0% from March 2026.
- Compensation costs for civilian workers increased 3.4%, not seasonally adjusted, for the 12-month period ending in June 2026. Wages and salaries increased 3% and benefit costs increased 3.8% over the year.
- Compensation costs for private industry workers increased 0.9%seasonally adjusted, for the 3-month period ending in June 2026. Wages and salaries increased 0.9% and benefit costs increased 0.9% from March 2026.
- Compensation costs for private industry workers increased 3.3%, not seasonally adjusted, for the 12-month period ending in June 2026. Wages and salaries increased 3.1% and benefit costs increased 3.8% over the year. Inflation-adjusted (constant dollar) wages and salaries decreased 0.4% over the year.
- Compensation costs for state and local government workers increased 1.0%, seasonally adjusted, for the 3-month period ending in June 2026. Wages and salaries increased 0.9% and benefit costs increased 1.1% from March 2026.
PK Note: what’s most notable about these stats is the distinctions between healthcare related employment and other industries in the economy:
|
Index Baseline Dec 2005 (100)
|
All Workers | Goods-producing Industries | Service Producing Industries | Health and Social Services | Hospitals |
| Index June ‘26 | 177.2 | 170.4 | 178.6 | 179.9 | 181.5 |
Employment Cost Index Summary – 2026 Q02 Results July 31, 2026
Digital Health Investing: Digital health deal activity fell 36% QoQ in Q2’26, to its fewest quarterly deals in more than a decade. Funding also declined, down 24% to $5.7B, as investors put more money into fewer, larger rounds centered on AI drug discovery. Highlights:
- 60% of funding went to just 10 mega-rounds, down from 19 in Q1’26
- 8 new unicorns in Q1’26, and just 1 in Q2
State of Digital Health Q2’26 – CB Insights Research
Gallagher: 2026 US Benefits Benchmarks Report: Based on input from 3,717 organizations nationwide: found that:
- 36% reported health plan premium increases of 10%+
- 78% expect healthcare costs to increase in 2026
- 66% rank specialty drugs among their top cost management challenges
- 57% cite leave compliance as a major concern
“At the same time, employers are balancing cost pressures with the need to attract, retain and support top talent.”
Gallagher: 2026 US Benefits Benchmarks Report Hospitals
Hospitalogy on Investor-owned hospital 2Q 2026 Financial Reports: “Four (Tenet, UHS, HCA, CHS) operators printed same-store adjusted admissions inside a 30-basis-point band between +2.6% and +2.9%, then produced adjusted EBITDA growth ranging from +16.3% to -13.2%. Demand was less important this quarter while mix and cost structure – e.g., increasingly variables of operating excellence and not macro tailwinds, did more the work.
3 of the 4 operators cut full-year guidance while sitting on larger supplemental payments than they had originally modeled mostly stemming from Florida’s program approval.” Madden concludes with these themes from 2Q performance:
- Exchange attrition converted to uninsured at roughly 1:1, and all four operators missed on the expected commercial pickup
- Supplemental payments decided who beat, and it’s thanks to Florida
- Supplemental Payments become a Headwind in H2
- An Elective Surgery Softening?
PK Note: Blake Madden’s reporting on hospitals and insurers is among the best in the industry. His conclusions are supported by hard data and the analysis is insightful. What’s harder to compare when looking at investor-owned systems are 2 variables which have huge impact on their operating performance: the markets in which they operate and their portfolio of non-hospital assets. The variance in financial performance between the 4 companies profiled in this report is understandable based on distinctions in their operating philosophies and how investment analysts assess their strategies. Investors don’t like surprises and analysts like consistently performance.
Hospitalogy – A healthcare industry newsletter covering the latest across strategy, finance, M&A, and innovation July 28, 2026
Georgetown University Center on Insurance Reform Case Study: Prospect Medical Holdings: “This case study examines how Prospect Medical Holdings (Prospect) and the private equity firm Leonard Green & Partners (LGP) destabilized safety-net hospitals in Pennsylvania, Connecticut, and Rhode Island while maximizing their own profits. LGP, which owned a controlling interest in Prospect for more than a decade, leveraged a private equity playbook that emphasized stripping these facilities’ assets through financial tactics such as debt loading, sale-leasebacks, and dividend recapitalizations. These strategies culminated in Prospect’s January 2025 bankruptcy filing that left a trail of shuttered facilities, unpaid vendors, and patient safety concerns. While LGP and Prospect executives extracted hundreds of millions of dollars in dividends and fees, they burdened the individual hospitals with high-interest debt and unsustainable lease payments for property the hospitals previously owned. The entry and exit of Prospect Medical Holdings in these states. highlights how targeting safety-net facilities for asset extraction and short-term profits can result in significant damage. While investors and executives walked away with hundreds of millions of dollars, health care workers lost jobs, and local communities lost access to critical services and facilities. The survival of the remaining facilities often depended on extraordinary state intervention and other taxpayer-funded financial backstops. Ultimately, the Prospect story demonstrates that current state policy and administrative structures may be insufficient to guard against these sophisticated predatory tactics, necessitating a fundamental reexamination of how states protect their health care delivery infrastructure from players primarily focused on their own short-term financial interests.”
Insurers
Humana study challenges MedPAC overpayments to Medicare Advantage Plans: Last Tuesday, Humana released its study finding evidence of lower levels of Medicare Advantage favorable selection — when healthier, lower-cost patients are disproportionately enrolled in the private plans — than the Medicare Payment Advisory Commission has previously estimated. MedPAC has estimated the federal government will overpay the private Medicare plans $76 billion in 2026, with favorable selection as one of the top causes — contributing to roughly $57 billion of those overpayments.
The Humana study found that one small change to methodology significantly reduced favorable selection estimates compared to MedPAC’s findings. Using data from the full Medicare Advantage population, the study estimated favorable selection at 4.9 to 5.8% from 2020 through 2022, compared to MedPAC’s estimates of roughly 10 to 15% for that time period.
MedPAC acknowledged analytic challenges in estimating the effects of coding and selection within Medicare Advantage.
Health Affairs Scholar July 28, 2026
WSJ on Part D Subsidy cuts: “The Trump administration plans to end a subsidy program that helped hold down premiums for Medicare drug plans, a move that could leave many seniors facing higher rates for their prescription coverage next year.
The move will eliminate a program that is giving insurance companies an estimated $3.6 billion in subsidies this year to blunt increases in premiums for the Medicare prescription plans, known as Part D. The program will end after 2026, according to administration officials.
High drug costs are a perennial issue—especially for seniors on fixed incomes—and healthcare affordability is expected to be a focus in the midterm elections. Roughly 25 million people have Part D plans, and they will learn about their 2027 rates in the fall.
A Trump administration official said the extra subsidies encouraged insurers to raise rates, knowing the government would pick up the extra cost. He said the subsidies weren’t needed, and other policies that help hold down Part D costs also remain in place.
The average premium for a Part D plan was around $36 a month this year, according to KFF, a health-policy nonprofit.
The administration official said around 25% of Medicare Part D plan enrollees would see premiums for their plans stay flat or go down next year. Around 30% will have an increase of less than $10 to their monthly bill.
For the remaining 45%, he said, the increases are largely in the $11 to $20 range a month.”
Exclusive | Medicare Part D Premiums Set to Rise as Trump Ends Subsidies – WSJ
Polling
Pew: Voters concerns (July 2026) “By a wide margin, voters most want candidates running for Congress to talk about economic issues – with many specifically mentioning prices and affordability.
Americans are now almost evenly split over which party they most agree with on economic policies: 37% say the Democratic Party, while 36% say the Republican Party.
At this early stage, Democrats have both an edge in voters’ congressional candidate preferences and an engagement advantage among their coalition… The survey also finds that President Donald Trump looms large in the campaign. Most voters say the president is a factor in their vote – though by roughly two-to-one, voters are more likely to say they think of their vote this fall as a vote against Trump (42%) than to say they think of it as a vote for him (22%).
As the 2026 Midterms Approach, Economy Is Front and Center | Pew Research Center Survey of U.S. adults conducted July 6-12, 2026.
SAMHSA: 2025 National Survey on Drug Use and Health Highlights:
- More than half (56%) of people age 12 and older used tobacco, nicotine, alcohol, or an illicit drug in the past month. Most of those people were drinking alcohol.
- Among those who were currently drinking, 44% engaged in binge drinking over the course of the year. In the past month, 19.5% had binged, a decrease from nearly 22% in 2021.
- The percentage of people who used nicotine products largely didn’t change from 2022, the earliest year to which comparisons can be made. But among nicotine products, the percentage of people smoking cigarettes decreased across age groups while the percentage of people vaping mostly increased.
- Marijuana was the most commonly used illicit drug, with 21% of people using it in 2025. By comparison, just 3% used hallucinogens and 2% misused prescription opioids. The survey found no change in the number of people knowingly using illegal fentanyl at 0.3%.
- Forty-four million people had a substance use disorder last year. Among adults 18 and older, 54.6 million (almost 21%) had any mental illness.
he 2025 National Survey on Drug Use and Health https://www.samhsa.gov/data/sites/default/files/NSDUH-2025-Annual-
Population Health
US News “Healthiest States” Rankings: “U.S. News & World Report released its annual Best States rankings July 28, evaluating all 50 states on how they best serve their residents across eight categories: healthcare, education, economy, infrastructure, opportunity, fiscal stability, crime and corrections, and natural environment. Utah ranked No. 1 overall for the fourth consecutive year.
Healthcare accounts for 15.51% of each state’s overall Best States score, the second-highest weight of the eight categories, according to the methodology. U.S. News rankings in the healthcare category are based on data from the CDC, CMS and other sources reflecting healthcare access, healthcare quality and public health outcomes. Access metrics include health insurance enrollment, adult and child wellness visits, healthcare affordability and dental visits. Quality metrics include hospital quality, nursing home quality and Medicare quality. Public health metrics include obesity rate, smoking rate, infant mortality, suicide rate and mental health. Metrics ranged from child wellness visits to adult obesity rate. Results”
| Best for Healthcare | Worst for Healthcare |
| 1. Hawaii 2. Massachusetts 3. Connecticut 4. Rhode Island 5. Maryland 6. New Jersey 7. California 8. New York 9. New Hampshire 10. Colorado
|
1. Mississippi 2. West Virginia 3. Oklahoma 4. Arkansas 5. Kentucky 6. Louisiana 7. Alabama 8. Missouri 9. Nevada 10. Montana
|
Overall State Rankings https://www.usnews.com/news/best-states
Economist Report: Impact of GLP-1 Weight Loss: WHAT HAPPENS after you lose weight? Doctors tell patients to expect better mobility and less stress on their joints. Metabolic measures, such as blood sugar and cholesterol, improve. People report more energy and better sleep. But these health markers are just one part of what economists call the “obesity penalty”. Studies have long shown that people, especially women, who carry extra weight tend to finish their formal education sooner and are less likely to marry or work. The sudden weight loss experienced by millions of Americans with GLP-1 drugs offers a rare chance to study how much of that penalty disappears when people become slimmer.
Some 22% of American women and 14% of men have taken GLP-1s for weight loss or for chronic conditions such as diabetes….
Comparing their outcomes over 18 months reveals a stark divide. Among women who had been out of work, employment rates increased by 27 percentage points for those taking GLP-1s. That change is bigger than the employment gap between American women with a high-school diploma and those with a university degree. A similar penalty is found in the dating market. The chances of a single woman marrying or moving in with a partner increased by 29 percentage points relative to one who had not lost weight…”
How big is America’s “obesity penalty”?
EBRI study: ICHRA: The 2026 EBRI-Morgan Health Employer ICHRA Survey finds that just over one-third of employers are evaluating ICHRAs as a potential approach to providing health benefits, but broader adoption requires stronger education and market stability. Key findings:
- Employer awareness of ICHRAs varies. Nearly six in 10 employers reported being at least somewhat familiar with ICHRAs, with familiarity highest among large employers that currently offer health benefits. Awareness remains lower among small employers that do not currently offer health coverage.
- More than one-third of employers reported that they are actively planning or evaluating an ICHRA. However, only 11% said they are actively planning implementation, suggesting that many employers are still gathering information rather than preparing to make an immediate change.
- Employers currently offering health benefits show notable interest in possible future adoption.
2026 EBRI-Morgan Health Employer ICHRA Survey www.ebri.org.
