Search This Blog

Monday, July 6, 2026

Trump: Walmart to lower prices 'by a lot' at my request

 United States President Donald Trump announced that Walmart "will be lowering prices, by a lot" at his administration's request.

According to the American leader, the drop in prices will correspond with the celebrations marking the 250th anniversary of US independence. "Walmart will, in particular, be dropping the price for a pound of ground beef by almost 15%, among many other products. This is a huge deal for the many millions of Americans who, smartly, shop at Walmart, which is a truly patriotic Company who loves the U.S.A," he wrote on Truth Social.

Trump also declared that "oil prices are plummeting fast" just as he had promised, as are prescription drug prices, while promising that other retailers will follow Walmart's example.

https://breakingthenews.net/Article/Trump:-Walmart-to-lower-prices-'by-a-lot'-at-my-request/66641546

Trump admin maps out sweeping rollback of regulations in push to save $1.5T

 The Trump administration on Friday laid out a sweeping deregulatory plan to eliminate over 700 rules across federal agencies.

The Office of Information and Regulatory Affairs (OIRA) released its 2026 regulatory plan which covered 702 deregulatory actions, an increase from 482 in the 2025 regulatory plan released by the Trump administration.

OIRA is part of the White House's Office of Management and Budget (OMB), and the agency indicated this year's unified regulatory agenda aims to rollback rules impeding economic growth.

"The North Star of this Regulatory Plan is improving the lives of Americans. At its core, this document outlines how the Trump Administration is promoting economic growth, jobs, and affordability," said Mark Paoletta, general counsel performing the duties of the OIRA administrator.

Paoletta added that OIRA estimates the 2026 regulatory plan will lead to a significant increase in regulatory cost savings above the record set last year.

"The President's bold deregulatory efforts yielded $211.8 billion in cost savings for Americans in Fiscal Year 2025 – a level of regulatory savings never before achieved in American history," Paoletta explained. "Yet Fiscal Year 2026 will go far beyond even that number with a record-setting $1.5 trillion in projected cost savings."

The 2026 regulatory plan includes a wide range of rules changes across federal agencies. For example, the Environmental Protection Agency (EPA) signaled it will reconsider Biden-era pollution standards for light- and medium-duty vehicles, as well as repealing carbon pollution standards that affect power plants powered by fossil fuels.

The Department of Agriculture (USDA) said that it will propose a new rule covering the Supplemental Nutrition Assistance Program (SNAP) that includes new requirements for retailers aimed at deterring fraud and abuse within the program.

USDA also plans to revise work requirements for able-bodied adults enrolled in SNAP, along with revising the definition of eligible foods within the program to align with the administration's nutrition goals. Food safety inspections are also to be modernized under a proposed rule that would include the removal of outdated inspection procedures

The Commerce Department's Bureau of Industry and Security (BIS), which oversees export controls and looks to support national security and the defense industrial base, will implement a new framework for safely spreading U.S. artificial intelligence (AI) technology around the world.

BIS also plans to reduce export controls on drones that are provided to certain U.S. partners and allies, as well as including copper in the administration's national security tariff regime.

https://www.foxbusiness.com/economy/trump-admin-maps-out-sweeping-rollback-regulations-push-save-1-5t

On The War For The Soul Of Our Nation...

 by James Howard Kusntler,

Werewolves Of London

“To use language to obscure reality is to show ‘indifference regarding the truth’ - to lie to the public and cease to treat our fellow citizens as equals.”

 - Justice Clarence Thomas

Now that the grand 250th USA birthday party is over - the speeches, the shrieking warplanes, the dazzling fireworks, the speeches and strawberry shortcake - there is only one way this thing can go. What thing? The war for the soul of the nation. Some mysterious somebody is behind the surging “Democratic-Socialist” craze. Somebody is paying for it. It’s a last-ditch drive to marshal the disaffected, under-employed young voters, choking on their college loans, deranged by anomie, and get them marching in solidarity with X-million illegal aliens to act-out an election jihad so as to squeeze out House and Senate majorities and, ultimately, wreck the nation.

That mysterious background “somebody” is not so mysterious. It just doesn’t self-identify under a banner, but you can easily tell who they are: the, the slippery closet-Marxist Barack Obama and, behind him, the American Deep State nomenklatura desperate to stay out of prison, along with the unelected EU Commission led by the grandmotherly sadist Ursula von der Leyen (plus the banksters behind her). Some call them “globalists.” They are a loose coalition of convenience against the populist threat of Mr. Trump in America and similar populist movements in Europe: AfD in Germany, the two parties of Nigel Farage and Rupert Lowe in the UK, and LePen’s Nationalist Rally in France.

The EU, with its front-men Macron, Merz, and whoever will replace Starmer this month, is currently preoccupied with its stupid effort to provoke Russia into a wider war, using their proxy, Ukraine. Mr. Putin, still advancing through the Donbas, refuses to get drawn-in deeper with the EU despite the drone and missile sorties lately banging-up his oil depots. Mr. Putin is actually a defender of Western Civ — yes, ironic, isn’t it, considering what his country escaped out of in 1991 — but it’s so. Russia has become our natural ally in this struggle as the EU goes all werewolf on both Russia and us. File under strange-but-true.

Contrary to Deep State propaganda, and the IRGC’s bullshit, Mr. Trump has the Iran situation in-hand. We have bigly reduced Iran’s capacity to make trouble in the world and our satellites watch everything they do now, so there will be no Iranian military re-build, no matter how the MOU talks go. They still do have the option of dropping their jihad fixation and acting like a normal nation, but we’ll just have to stand by on that.

What has to happen now in the USA is a summer of accountability. Perp walks. Indictments. Preparation for trials. Many of you are discouraged about this, I know, but please put those black pills back in the medicine chest. Accountability is coming. The mills of the law grind slowly, and its especially difficult since the Deep State has corrupted select precincts of the law, such as the US District Court for the District of Columbia, where rogue judges Boasberg, Chutkan, Sullivan, Howell, Meta, Reyes, Cooper, et al., have made an industry of paralyzing Mr. Trump’s executive branch.

Nevertheless, accountability might also be coming for Chief Justice John Roberts, who wrote the dodgy majority opinion on the SCOTUS’s June 30 “Birth Citizenship” decision (Trump v. Barbara), an epic fail for Justice Roberts (joined by Amy Coney Barrett and the three DEI gals). The 14th Amendment was written to mitigate the disruptions of the Civil War. Section One is clearly aimed at defining the full citizenship of former slaves, and that’s all, not the offspring of casual visitors and border-jumpers. There was considerable clarifying debate on the record about all that in June, 1866, with skeletons still being cleared off the battlefields. The 2026 decision looks like a debacle for reasons also obvious.

The Chief and his harem

What motivated Mr. Roberts to do such a harm? Perhaps he’s just an idiot, but there’s more lurking there.

It’s widely known that the Chief Justice made at least one week-long visit to Norm Eisen, after Eisen had been appointed Ambassador to Prague (2011) by his law school classmate, President Barack Obama. In these final years of Obama-in-office, Norm Eisen was busy plotting so-called Color Revolution in Europe, which climaxed in the 2014 Maidan operation in Ukraine. The purpose was to make Ukraine as a proxy to weaken Russia, and would come to entail massive money-laundering and the setting up of bio-weapons labs there. This was also the period when then-Veep Joe Biden was given the “Ukraine Portfolio” and was busiest with his own grifting enterprise, through son Hunter.

Norm Eisen went on to become the chief lawfare ninja coordinating against the Trump administration with his field captains: Marc Elias, Mary McCord, Andrew Weissmann, and others. All have been involved in suspiciously seditious activities through both Trump terms. What was the Chief Justice confabbing about with Norm Eisen in Prague then? About vagaries of US / EU legal cooperation? Or were they deliberating on tactics for dealing with Barack Obama’s as-then-undeclared successor? Or possibly on bringing color revolution to the US, if Barack Obama’s posterity declared it necessary?

Consider the strange situation that one Sheldon Snook was appointed Special Assistant to Roberts in 2014. Snook is married to lawfare ninja Mary McCord, who served as Acting Deputy Assistant Attorney General for the National Security Division, DOJ (2014–2016) and Assistant Attorney General for National Security, DOJ (2016–2017). She was involved in the initiation of the RussiaGate operation and in 2019 was appointed Special Counsel to Jerrold Nadler’s House Judiciary Committee during the 2019 impeachment inquiry into President Trump — the impeachment that was all about Ukraine. . . and what might have been going on there under Obama, especially Joe Biden shenanigans.

Consider, too, that a scandal has just emerged involving CJ Robert’s wife, Jane, and the enormous commissions she received working at the DC law firm Pillsbury Winthrop Shaw Pittman, and then the legal recruiting outfit Major, Lindsey & Africa (through 2019), and then legal another recruiting firm, Macrae, for placing eminent attorneys into law firms with active Supreme Court case practices. Her income from all this recruiting surpassed $10-million. CJ Roberts did not recuse himself from the cases involving these relationships. This is a still-developing story. . . .

And, of course, an investigation of California Governor Gavin Newsom begun, irony-of-ironies, by the Biden DOJ, has just blossomed into a florid scandal involving shell companies set up by Gov. Newsom’s busy wife, Jennifer, through which millions of dollars were laundered under various fake social and health service initiatives. Newsom appointee Alexis Podesta “wore a wire” during the period and is cooperating in the case. Buh-bye presidential hopes, Guv, and don’t let the cell door whack your ass on the way in.

These are just a few possible appetizers. The main course is coming up.

https://www.zerohedge.com/political/war-soul-our-nation

John Roberts’ Birthright Citizenship Hubris

 by Mark Pulliam

John Roberts wants to be remembered as the opposite of Roger Taney; instead, he will be compared to Harry Blackmun, the author of Roe v. Wade.

Thanks to Power Line and Real Clear Policy (here)!

Last week’s release of the final batch of SCOTUS decisions produced one blockbuster that dominated the conversation: Trump v. Barbara, dealing with birthright citizenship. The result was not a surprise to me; I had predicted that the Court would rule against President Trump’s executive order. But I was disappointed in the rationale that the majority, in an opinion written by Chief Justice John Roberts, chose to employ. The decision deserves sustained criticism, much in the way that Roe v. Wade deserved—and received—such criticism. The existence of sustained public outrage is necessary for the Court to re-visit a precedent. Our goal must be for a future Supreme Court to overrule Trump v. Barbara, just as Dobbs overruled Roe v. Wade. Only we can’t afford to wait nearly 50 years for that to happen!

But let’s not fall into the trap of blaming the current Court, or John Roberts personally, or Amy Coney Barrett (who provided the fifth vote) entirely for a decision we don’t like. All Roberts’ opinion did was follow a prior precedent, albeit an ancient one from 1898, interpreting the muddled language drafted by the 39th Congress, which framed the 14th Amendment. Until President Trump issued the executive order at issue, 128 years passed since the Court’s ruling in Wong Kim Ark (1898). In that time, as untold millions of babies were awarded citizenship despite their parents’ status as non-citizens, Congress did not lift a finger to fix birthright citizenship, no one successfully waged a campaign to amend the Constitution, and no President showed any initiative to do what President Trump did. There is plenty of blame to go around.

As a result of a century-plus of acquiescence, interrupted only by President Trump’s MAGA insistence that controlling the nation’s borders meant taking citizenship seriously, John Roberts mistook the moment as a replay of Dred Scott v. Sandford (1857)–which is correctly viewed by historians as a misstep that may have pushed the nation toward Civil War—and in melodramatic fashion made a show of demonstrating that he is not Roger Taney, the Chief Justice who succeeded John Marshall only to earn eternal ignominy as the author of the worst decision in SCOTUS history.

That’s how we got the decision in Trump v. Barbara. Justice Alito’s dissenting opinion began with these words:

This is one of the most important decisions in the history of the Court, and in my judgment, the Court has made a serious mistake.  

Let’s unpack it.  

What did Trump do, and why: The problem was misinterpretation of the poorly-drafted Citizenship Clause of the 14th Amendment, ratified in 1868. This problem did not arise overnight; it has been around for over a hundred years and will take sustained effort to fix.

The Citizenship Clause is like one of the ink blots in a Rorschach test: “born in the United States and subject to the jurisdiction thereof” is an opaque formulation. The 14th Amendment was intended to “constitutionalize” the Civil Rights Act of 1866, which used a slightly different phrasing: The Civil Rights Act made citizens of “all persons born in the United States and not subject to any foreign power.” The Citizenship Clause means different things to different people, and the varied interpretations tell you something about the observers’ personalities—and priorities.

Based on an old case (United States v. Wong Kim Ark, 169 U. S. 649 [1898]), in Barbara the Supreme Court embraced an expansive reading of “subject to the jurisdiction thereof,” which conferred automatic citizenship on all those born on American soil. This included illegal aliens popping out “anchor babies” (at the rate of 250,000-300,000 per year) and birth tourists from China and elsewhere (CIS estimates 33,000 per year). Wong Kim Ark was controversial even in its day; Chief Justice Melville Fuller and Justice John Harlan (who also dissented in Plessy v. Ferguson in 1896) dissented. But eventually it was accepted as gospel, with only a few dissident legal scholars complaining. But this was before the era of mass migration and open borders.

In recent decades, with the advent of inter-continental air travel and mass illegal immigration, a growing body of scholars believed that birthright citizenship could and should be reined in. Legislation has been (unsuccessfully) proposed in Congress to deal with this going back 30 years or more, with bipartisan support. Sen. Harry Reid (D-NV) once sponsored such a bill. To no avail.

Critics believe that the 14th Amendment was intended only to overturn Dred Scott v. Sandford (1857) and grant citizenship and legal rights to the freed slaves.

Congress passed a statute, 8 U.S.C. section 1401(a), mirroring the Citizenship Clause, as interpreted by the Court. The statute was originally enacted in 1940 and re-adopted in 1952.

This was the pre-MAGA tableau. President Trump was the first President in my lifetime to take concrete action to fix this anomaly, via executive order. The executive order that was challenged is E.O. 14160, issued on January 20, 2025. (It was not limited to “birth tourism”; it went for the whole enchilada. Not that this would have made a difference, as some have contended.)

President Trump’s goal: Eliminate the broad reading to deny automatic citizenship “to persons born in the United States:  (1) when that person’s mother was unlawfully present in the United States and the father was not a United States citizen or lawful permanent resident at the time of said person’s birth [i.e., anchor babies], or (2) when that person’s mother’s presence in the United States at the time of said person’s birth was lawful but temporary (such as, but not limited to, visiting the United States under the auspices of the Visa Waiver Program or visiting on a student, work, or tourist visa) and the father was not a United States citizen or lawful permanent resident at the time of said person’s birth [i.e., birth tourism].”

The E.O. was facially challenged. The ACLU filed Barbara v. Trump asking the U.S District Court for the District of New Hampshire to grant a class-wide injunction covering those who would not qualify for birthright citizenship under the executive order. The representative plaintiff, Barbara, a Honduran citizen, is only known by her first name because she fears for her and her family’s safety.

In December 2025, the Supreme Court granted certiorari before judgment as permitted by its procedures “upon a showing that the case is of such imperative public importance as to justify deviation from normal appellate practice and to require immediate determination.”

The question to be decided was “whether the Executive Order complies on its face with the Citizenship Clause and with 8 U.S.C. § 1401(a), which codifies that Clause.”

Barbara was argued on April 1, 2026 and decided on June 30, 2026. The Court’s various decisions (majority, concurring, and dissenting) were almost 200 pages long!

Decision(s) in Trump v. Barbara:

The majority opinion was written by Chief Justice John Roberts. It is a major disappointment, in the alignment, holding, and reasoning. The Court could have ruled—as I had hoped–simply that Trump cannot alter a statute (8 U.S.C. section 1401) by executive order. Especially since this was a facial challenge with no factual record. This would have left a role for Congress, and possibly put pressure on Congress to act. Instead, the majority reached the merits—and botched them.

Technically 6-3, the decision was really 5-4, with only Barrett and the three liberals joining Roberts’ decision on the constitutionality. Kavanaugh agreed with the result, on narrow technical grounds, but indicated that in his view Congress could eliminate birthright citizenship by statute.

The majority opinion said that the Citizenship Clause of the 14th Amendment requires birthright citizenship, leaving no role for Congress. This was particularly inappropriate in a facial challenge.

So Roberts’ opinion (26 pages) was not only wrong, it was gratuitously—and ostentatiously—wrong. He reached issues that were unnecessary to address. He foreclosed a legislative solution, at least with the current composition of the Court. However, since the constitutional holding was 5-4, it would require only one seat to flip.

This should be a GOP priority.

What did the Court say? Roberts adopted the ancient English common law rule of jus soli—”right of the soil”—hook, line, and sinker. This rule derives from the monarchy in England, where people were regarded as “subjects” of the King, not self-governing citizens with inalienable rights who are sovereign. With the Declaration of Independence, 250 years ago we rejected the notion of being a “subject” of the King! “Subjects” are not the same as “citizens.” Roberts was so concerned to distance himself from Roger Taney’s opinion in Dred Scott (which he denounced as “odious”) that he took the extreme opposite position. Grooming himself for history, at the expense of the nation’s future. This is pure jurisprudential vanity, topping his Obamacare rescue.

What did the majority get wrong? The 39th Congress’s drafting of the 14th Amendment was messy, sloppy, and confusing. The Citizenship Clause could have been interpreted in a common-sense manner. Wong Kim Ark  could easily have been distinguished or overruled. The lengthy dissents by Justice Clarence Thomas (91 pages) and Justice Samuel Alito (39 pages) showed the way. If the Citizenship Clause commands jus soli, how do you explain the exclusion of American Indians from birthright citizenship following ratification of the 14th Amendment (fixed by statute in 1924)? Or the continued recognition of the “legal fiction” that other nations’ ambassadors and diplomatic corps based in the U.S. are not subject to jus soli? You can’t.

Ironically, Roberts enshrines English common law (jus soli) in our 14th Amendment even though, as Alito pointed out in dissent, “the United Kingdom has abandoned [it], as have other countries whose legal systems share the same pedigree.” Because common sense prevails elsewhere. Not in Roberts’ majority opinion, however.

Kavanaugh’s dissenting opinion (10 pages) stated that:

That decision [United States v. Wong Kim Ark, 169 U. S. 649] adopted a general rule of birthright citizenship for those born in the United States—with four disparate exceptions for “children of foreign sovereigns or their ministers, or born on foreign public ships, or of enemies within and during a hostile occupation of part of our territory” and “children of members of the Indian tribes.” Id., at 693.

Why these four exceptions? The Citizenship Clause does not contain any exceptions. Why only these four exceptions? As Kavanaugh pointed out, the Court could have updated the holding of Wong Kim Ark to reflect the changed circumstances in the U.S. since 1898, or entertained the possibility that Congress could do so. Kavanaugh said that

If Congress amends §1401(a) or otherwise enacts a statute creating new exceptions along the lines of the Executive Order for children born to foreign citizens unlawfully or temporarily in the country, such a statute, as I see it, would pass constitutional muster…. Consistent with the Fourteenth Amendment, Congress could amend §1401(a) or otherwise enact new legislation establishing exceptions to birthright citizenship for children born to foreign citizens unlawfully or temporarily in the country.  (Emphasis added.)

Instead, Roberts’ majority decision slammed the door shut. Roberts’ opinion holds that the 14th Amendment “put the ‘great question of citizenship’ ‘beyond the legislative power’ altogether, to settle the issue once and for all.” Thus, Congress is helpless to fix the problems of anchor babies and birth tourism. The door will remain shut absent constitutional amendment (nearly impossible) or until Trump v. Barbara is overruled. The dissents by Thomas, Alito, Kavanaugh, and Gorsuch point the way for a future majority to overrule Trump v. Barbara. As one non-MAGA legal scholar said, “In the end, an opinion meant to settle the debate over birthright citizenship may have instead kindled a new one.”

Thomas dismantled Roberts’ (and the majority’s) adoption of the feudal doctrine of jus soli. Thomas (and Gorsuch) reasoned that birthright citizenship requires more than geographic presence; it also requires allegiance to the U.S. in the form of domicile, which means the legal home of the parents. Foreign nationals—citizens of another country—cannot be deemed to be “domiciled” in a country they entered illegally or which they are only temporarily visiting. Illegal aliens and birth tourists would not qualify. Alito used a slightly different formulation, focusing on whether the non-citizen parents of a child born in the U.S. are “subject to a foreign power,” which entails an inquiry into the rules of citizenship in their home country. He said: “the Fourteenth Amendment confers citizenship on only those children who, at birth, owe allegiance solely to this country.” (Emphasis added.) In many cases, this would preclude citizenship for anchor babies and birth tourists.

Trump v. Barbara was a terrible blunder. Here are the follow-up questions and considerations:

(1) What should the Court have done? Roberts should have done what Kavanaugh did. With one more vote, the dissenters could have punted the decision to Congress with a strong suggestion that it codify the provisions of President Trump’s E.O.

(2) How bad is the majority decision? Worse than Roe v. Wade? Worse than Plessy v. Ferguson? Worse than Dred Scott? It was pretty bad, even though technically it did not change the law. Affirming Wong Kim Ark in 2026 amounts to turning the Constitution into a borderline “suicide pact.” I would compare it to Obergefell in terms of misguided sanctimony, but with far greater consequences. We need to stay mad about it, just as the pro-life community did with Roe v. Wade.

(3) It is appropriate to criticize Barbara as a mistake and an abomination, but we have to maintain some perspective. How has the conservative community reacted? Not with one voice, but generally with extreme disappointment. I don’t fault criticism of the decision itself, but it is wrong to condemn the justices (at least ACB) as a “mistake.” Every one of Trump’s appointments is better than other GOP appointment in my lifetime, excepting only Rehnquist, Scalia (who could be quirky: supported Chevron; held flag burning is protected speech), Thomas, and Alito. Judges aren’t robots.

(4) What are the potential solutions? Long-term: Amend the Constitution (not likely).

Are there any solutions short of constitutional amendment?

A later Court could overrule this with a single switched vote. John Roberts should retire and let President Trump appoint his successor. Future GOP nominees should face a litmus test: “Trump v. Barbara must act as a litmus test for every future conservative nominee.” Amen.

Congress could fix this by statute (per Kavanaugh dissent), but only if Trump v. Barbara is overruled. Section 5 of the 14th Amendment says that Congress “shall have power to enforce this article by appropriate legislation.” This is how American Indians were granted birthright citizenship in 1924.

In the meantime, we must continue with mass deportations (for the illegal aliens already here) and restrict entry for pregnant visitors to curb “birth tourism.” Administrative measures and enhanced enforcement could reduce or prevent abuse. But this will vary depending on who controls the executive branch.

Roberts botched it, but it is not the end of the world. In a self-governing republic, concerned citizens can unite to solve almost any problem. (Or at least Americans used to be able to do so.) Trump v. Barbara should be overruled, as soon as possible. All it would take is a single switched vote.

https://misruleoflaw.com/2026/07/05/john-roberts-birthright-citizenship-hubris/

The Headache of Hospital Pricing

 

Some of the most persistent problems in American healthcare can be traced to structural features that conceal economic realities from patients, providers, and policymakers. The tax preference for employer-sponsored insurance is one. Over-reliance on third-party payment is another. These features have dulled price sensitivity, inflated spending, and caused patients to disengage from the economic realities of the care they consume. Another such defect that deserves more attention is the extent to which we have normalized internal cross-subsidization across different services, particularly within the hospital context.

It sounds technical, but put simply, hospitals have come to depend on an internal financial arrangement in which some lines of business are reliably profitable while others are chronic money losers. For example, elective, specialized, and outpatient-oriented services such as orthopedics, cardiology, and imaging often generate substantial margins. By contrast, emergency care, psychiatric services, obstetrics, and pediatrics are often financially weak or negative. This arrangement is causing problems, especially for anyone trying to introduce competition, transparency, or lower prices into healthcare.

This is not the same type of cross-subsidization that you might have heard about in which private payers are said to subsidize public programs by paying more for the same healthcare services than payers such as Medicare and Medicaid. That issue is important, too, but somewhat murky. In that debate, the facts are hard to pin down, and nobody has access to all the data. Talk to a C-suite hospital person, and they will assure you that cross-subsidization between private and public payers is real. Check the literature from the academic health economists, and some of them will claim that it’s not.

The issue of internal cross-subsidies is different: it is about some hospital departments being used to prop up others. This situation holds back progress because once one part of the system starts to depend on hidden internal subsidies, every effort to introduce change through competition or lower prices in another high-profit area is met with outsized resistance. One service can be shown to be wildly overpriced, but the response is, “Yes, but that’s what keeps the emergency department open.”

How This Plays Out

Consider imaging, which is a service category that tends to be highly profitable, in part because Certificate-of-Need (CON) laws keep new competitors from moving in and bringing prices down. Free-market health policy advocates can push for repeal of CON laws, but part of what makes it possible for incumbents to push back is the argument that over at the big hospital in town, those big margins are often needed to support some other service, perhaps labor and delivery. Or take another profitable service: orthopedic surgery. Some of those expensive surgeries could be provided at lower prices in new direct-pay (i.e., cash-only) ambulatory centers, but legislative efforts that would allow the licensing of direct-pay facilities attract pushback from incumbent hospitals that, once again, need those profits to sustain other unprofitable parts of their mission.

In American twentieth-century history, airlines and railroads both went through phases of cross-subsidization. As Dwayne Banks et al. note, “First, airlines cross-subsidized shorter-haul and lower-density traffic with profits from longer-haul, higher-density traffic. Second, railroads (at least until the creation of Amtrak in 1971) cross-subsidized money-losing passenger service with profits from freight.” But these arrangements tend to be unstable over time. Once competition emerges, the cross-subsidy gets exposed and becomes harder to maintain. Incumbents need to become increasingly political in order to fend off competitors who want to break into certain market segments. This is how we get incumbents making allegations of “cream skimming.”

Cross-subsidization across hospital services is not what one would normally expect to see in a free and properly functioning market. In most industries, each product or service is expected to stand largely on its own. Usually when a business continually loses money on one service or product line, it responds by raising prices, cutting costs, finding a more efficient delivery model, or shutting down that product or service altogether.

Hospitals operate differently because our public policy choices have made them operate differently. The clearest example is emergency care. Under the Emergency Medical Treatment and Active Labor Act (EMTALA), hospitals must provide emergency care and stabilizing treatment regardless of a patient’s ability to pay. Whatever one thinks of that obligation, we have never paired it with a transparent financing mechanism. Instead, it basically functions as an unfunded mandate, which forces hospitals to figure out ways to recover the money elsewhere.

Another cause is the general reliance of hospitals on government payers that pay administered rates instead of actual market prices. Medicare’s Prospective Payment System (PPS) and Medicaid’s cost‑plus reimbursement formulas lock hospitals into fixed rates for inpatient and emergency services, while private insurers negotiate separately for high‑margin procedures. These formulas are decided on by a committee, not through a market process. As such, it is possible for public payment rates to bear little relationship to local supply, demand, or actual costs of delivering care, creating some “misses” that are high and some that are low.

Finally, as already mentioned, CON laws and other entry barriers protect incumbent hospitals from competition in many of their most profitable service lines. This helps preserve the profit pools that make internal cross-subsidization a workable kludge, but also sets up the tensions that emerge when reformers ask to expose those services to competition.

What Prices Tell Us

Prices convey important information. They tell producers where demand is strong, where efficiency gains are possible, and where resources should flow. High profits attract more suppliers, which has the effect of driving prices down in the long run. Low profits are often a signal that prices are too low; let prices rise, and more suppliers will eagerly provide that service. But in American healthcare, those signals get blurred and suppressed. If a knee replacement or MRI carries a large markup not because it is especially costly to provide, but because it is silently financing some worthy but underfunded activity elsewhere, then the posted price is not providing a useful market signal.

That is not how most sectors of the economy work. In normal businesses, each department or service is roughly sustainable on its own terms. Walmart does not run a business model in which one of its product categories must earn extraordinary margins in order to offset permanent losses in another. It doesn’t “make bank” on sporting goods and lawn and garden while losing its shirt, so to speak, on home goods and health and beauty. Profitability may vary across departments, and occasionally a department might struggle and even make a temporary loss, but rare is the business that intentionally maintains or tolerates extreme cross-subsidization across basic lines of operation. And, crucially, businesses like Walmart don’t use cross-subsidization to justify getting politically involved in blocking new entrants and innovators. They just focus on competing.

Granted, hospitals face challenges and obligations that ordinary retailers do not. But we pay for those obligations dearly when we incentivize hospitals to go to great lengths to protect profitable service lines from competition. The hospital industry spends hundreds of millions of dollars on state and federal lobbying annually. A significant portion of this spending goes toward protecting highly profitable service lines, such as surgery, imaging, and oncology, from competitors like Ambulatory Surgery Centers (ASCs) and independent imaging centers. That makes all of healthcare a little less functional.

When you think about internal cross-subsidization alongside other generally recognized structural problems (e.g., the tax exclusion for employer-sponsored insurance and the overreliance on third-party payers), you can see some parallels. All three are features that impair price formation and sever the connection between value and payment. All three make healthcare less legible to ordinary people. And all three make reform harder because they create webs of dependency that defenders of the status quo can invoke whenever change is proposed. We do not need to pick which is the worst distortion. It is enough to think of all of them as things worth fixing.

Could Things Be Different?

None of this is intended to be an attack on these less profitable services as such. Emergency departments, psychiatric care, maternity wards, and other such services are all important parts of healthcare. It is possible for a service to be important and socially valuable but commercially unviable or just hard to keep afloat. For instance, emergency departments must be available 24/7 whether or not patients are coming in for care. Maintaining readiness is expensive. But for these categories of services, instead of camouflaging the subsidy the way we currently do in healthcare, we could at least have a more open and honest conversation about whether and how to make these services viable.

Reform could begin by insisting on clearer accounting and greater transparency around service lines. Patients receiving one service shouldn’t be unknowingly charged higher prices in order to finance other services, and the public should have a clearer picture of which service lines generate surpluses and which require support. To bring the highly profitable services back to a “normal” level of profit, we should repeal CON laws so that low-cost providers can enter any market where demand exists and drive prices down. As for bringing the current money-losing services into the black, greater transparency and honesty about the true cost of these services would provide justification and cover for these services to raise their prices, which might be what is needed in order to bring the system into balance. All of this happening simultaneously (i.e., price decreases for some services and price increases for other services) might mean that insurance premiums could actually stay level.

A separate reform idea is to revise the prospective payment system used by the Center for Medicare and Medicaid Services (CMS) to incorporate price signals from comparable private‑payer transactions. This could enable hospitals to get paid prices that are more market-like, although it should be emphasized that annually reviewing rates and changing them by a rulemaking process is not the same as following freely fluctuating market prices. Administrative pricing cannot fully replicate a market, but it can be improved.

In summary, a better healthcare system should have more respect for prices, profits, and losses. If American healthcare is ever to become more transparent and less resistant to change, we will need to confront the hidden structures that keep it so rigid. We can’t make tradeoffs disappear, but we can make them more visible, and if we’ve forced hospitals to take on unfunded mandates, we should be more open and honest about it so that the public isn’t left with the impression that it is getting a benefit without a cost. A first step in that direction is to recognize the tensions that cross-subsidization within hospitals presents. Then we can start approaching some reforms.

Jared Rhoads is the founder and executive director of the Center for Modern Health. He received his MPH degree from the Geisel School of Medicine at Dartmouth, and an MS degree from Bentley University. He also teaches health policy in the graduate public health program at Dartmouth, advising graduate students on their independent research projects. Before teaching, Rhoads worked in healthcare consulting in a role that handled policy and emerging practices.

https://lawliberty.org/the-headache-of-hospital-pricing/