Financial markets are weighing in with positive signals. Both stocks and interest rates are anticipating positive policy changes, a faster pace of growth and stronger earnings.
The policy changes have already begun. President Trump is using his vast executive powers to deregulate as much of the economy as he can. His cabinet appointments are also working to take the shackles off the economy. Deregulation alone can add hundreds of billions of dollars to real growth.
One of the most critical areas for deregulation is healthcare. The US healthcare system has devolved into Soviet style system where government controls the prices and shape of the product. This has led to healthcare costs that are two to three times what they would be under a free market.
The House GOP plan for reforming healthcare revolves around cuts to Medicaid. The worthwhile objective is to block-grant Medicaid funds to the states. They would then be responsible for reforming the system. The plan also promotes medical savings accounts, which hold the potential to control costs.
The major problem with the House plan is the government would continue to dictate what must be included in health insurance policies. This is the same approach that contributed to the explosive rise in insurance premiums before Obamacare and escalated the costs after Obamacare.
In contrast, true free-market reforms would give individuals the freedom to buy whatever type of insurance the free market comes up with from anyone anywhere in the world. Based on what has been accomplished in other countries, free market reforms would cut the cost of healthcare anywhere from 50% to 66%. Since the US will spend upwards of $3.5 trillion this year for healthcare, the potential savings would amount to roughly $2 trillion a year. Savings of this magnitude would make it much easier to solve the problem of those who are unable to take care of their own medical needs.