[00:00] Bryan Hyde: Welcome to the Health Policy Podcast. I'm Brian Hyde. Happy to welcome Ross Marchand back to the program. Ross is the executive director of the Taxpayers Protection Alliance. And Ross, it may not be your first time on the program, but for the sake of those hearing you for the first time, take a moment and tell us a little bit about who you are and what you do. [00:19] Ross Marchand: Sure. Well, my name is Ross Marchand. I'm the executive director of the Taxpayers Protection Alliance. We're a nonpartisan nonprofit organization dedicated to holding the government accountable, keeping bureaucrats honest at all levels of government. [00:34] Bryan Hyde: And that can cover a lot of different aspects of life. Today we have you on to talk about Universal Service Fund reforms, and I will confess, this is, this is something that I don't think I'm familiar with in the least. When we talk about Universal Service Fund, what exactly does that entail? [00:58] Ross Marchand: So this fund has been around since 1997, and it's managed by the Federal Communications Commission. And the goal is, it's supposed to be straightforward. It's supposed to aim towards increasing connectivity for all Americans, including especially Americans in areas where it's really difficult to connect to voice services, internet services. And that's where the majority of that money goes. But the government always says that they're gonna do something, and the end result is usually the exact opposite. And so, And you have this USF program or collection programs, it's spending $8 billion per year. And phone bill customers, which is pretty much all Americans, they're paying the price to the tune of almost 40% added to their bills. And that goes up each and every year. [01:46] Bryan Hyde: And this is the big leap for me. How do we connect this to healthcare? [01:54] Ross Marchand: That is a great question. So everyone's asking, we have declining contributions to this Universal Service Fund, how are we going to increase the flow of funds going into the USF? And one really prominent proposal that is extremely misguided in our opinion is expanding the reach of these taxes. They call them contributions, we call them taxes because that's exactly what they are. on tech services and broadband providers. So everything in the digital domain, if these guys get their way, is gonna be subjected to this out-of-control taxation. And that is going to hit healthcare therapeutic apps. Think video games, medicated video games, right, that have been authorized by the FDA. Think apps that control hypertension, that control diabetes, all these things, right? They're gonna be cast under the umbrella of this oppressive new tax regime. And that is what we're fighting against. [02:55] Bryan Hyde: Wow. You know, up until this moment, I wasn't sure if I was living in the future, but after hearing you describe that, I think I am. This, you know, I actually, I had just kind of, I guess I hadn't really taken into account how connected even our healthcare is, you know, to that digital world. [03:14] Ross Marchand: That's right. And, you know, as of now, the FDA has approved or authorized, authorized is a little bit lower of a bar depending on whether it's a therapeutic or whether it's characterized as a medical device. About 200, give or take, of these apps, these video games. Digital therapeutics is taking off in a really big way, and that depends entirely on light-touch regulation and taxation. If this Universal Service Fund boondoggle is expanded include tech contributions. I mean, all that could go by the wayside. [03:52] Bryan Hyde: So, um, how, how do these— it sounds, it sounds like, like these, uh, fees that you're describing are, are essentially taxes. I mean, are, are they just using different words to describe the same thing? [04:06] Ross Marchand: Yes, and the government is great at that. So they'll call it a contribution factor, um, and these taxes— because again, that's exactly what they are, taxes— have gone up significantly in recent years, and now we're almost at the 40% mark. Now, this is passed along to customers in the form of higher phone bills each and every month. But these policymakers who have proposed these terrible changes get their way, this will also be a tech tax, and we will see this reflected not only in diminished innovation, but also in higher prices for Virtually everything online, including game-changing healthcare technology. [04:45] Bryan Hyde: Talk to me about rural healthcare, because I often hear that, you know, these rural areas are underserved. And I'm just curious, do these digital technologies, these digital therapies for that matter, help bridge that gap of underserved communities, you know, in rural areas as far as their health? [05:05] Ross Marchand: Yes, absolutely. And that's a great question. So if you live in a rural area, and even some suburban areas, it's really, really hard to get in the car and go to a doctor. And a doctor would be 45 minutes away, right? And that's lowballing it. Now, to go to a hospital, I mean, typically that's even further. And the business models for these doctors' offices and for these hospitals, they're failing. It's very, very difficult to make it work. And lawmakers and state leaders and local officials, they've tried everything to make this work. They've tried throwing money at the problem to very little avail. But what we're seeing is technology is increasingly bridging the gap. That's where these apps, that's where these video games, that's where these virtual services and telehealth, that's where all these come into the mix. You have these wonderful technological advancements. It's bridging not only the digital divide, but also the healthcare gap. [06:05] Bryan Hyde: Interesting. I don't suppose that anybody's floated the idea of, hey, but what if we were to cut spending in other areas to offset the need for for increased funding in some of these more worthwhile areas? Or is that kind of a— is that a forbidden or radical idea within the DC machinery? [06:25] Ross Marchand: An unspeakable idea. So you have to look at both sides of the equation here. Extremely important. Not something that lawmakers or bureaucrats are really inclined to do, but that's something that you and I can do on this show. So over the past 15 years or so, contributions into the USF have halved. So the contribution side of the equation is absolutely not holding up. So the question that has gripped lawmakers is, how do we increase contributions? Read that as, how do we increase taxes? But no one has asked, how do we reduce spending? And the key components of USF, the biggest programs in there, high-cost program, for example, which is really focused on rural areas, it's not— there's no evidence that it's increasing connectivity or it's bridging the digital divide. So we need to do a better job in reducing that program spending and definitely more regular audits to see what is going wrong in that program. [07:25] Bryan Hyde: Well, and I've heard it said, and I believe this to be true, that, you know, if you want to encourage something, you subsidize it. If you want to discourage it, you tax it. Sounds like this would actually be providing some discouragement or disincentive for what's currently One of the brightest sectors of the economy. [07:43] Ross Marchand: Exactly. Government is great at killing promising technologies. If USF contributions are expanded to include tech, this is going to be a disaster for hundreds of millions of Americans, especially patients, and especially rural patients. This is something that the Taxpayers Protection Alliance is paying very, very close attention to. We've been hearing reports that At the end of the summer, so right about now, lawmakers are going to release a proposal to this effect. And it's so important with these developments to pay close attention because these proposals, they sneak up on DC, and before you know it, it's the law of the land. [08:24] Bryan Hyde: Does AI play into this equation as well? I know that it seems like, you know, AI has been around for a little bit, but it's still— we're still fairly new with the advent of how it's finding its place in our economy and in our society. I'm curious if, you know, they're looking for ways to tap into AI companies to likewise cough up some dough. [08:45] Ross Marchand: Yes, AI is a significant part of this equation. And look, as a new first-time dad, AI has been instrumental in answering all of my healthcare-related questions. So we're not going to take my newborn to the doctor every time we have a question. That is just not going to happen. happen. AI has bridged that gap tremendously and has done so in similar ways for millions of Americans, and not just parents, but patients who have a hard time going to the doctor all the time. And it's very expensive to pay all those copays and all those deductibles. So you use AI. But if these lawmakers get their way in increasing the scope of these USF contributions, Possibly no more, and all this innovation is going to come to a standstill. [09:36] Bryan Hyde: I know the FCC is a regulatory authority, but does it have the power to tax, or is that something that's left with lawmakers in Congress? [09:46] Ross Marchand: So as it stands, the delegation of authority to the FCC to administer USF and to determine these contributions, you know, in our opinion, it poses serious constitutional questions. The Supreme Court dealt with that question last year, and they unfortunately decide the other way. But taking that off to the side, just the existing contribution structure, increasing it to a whole new area, that's going to take an act of Congress. And that's why all of the questions about how USF is going to be structured going forward, that begins and ends on Capitol Hill. And that's where this fight is going to be focused. [10:28] Bryan Hyde: And I guess this is the question then for people who feel like, hey, I have a stake in the matter. Do they need to contact their elected lawmakers, their, you know, Congress members? Do they need to petition, you know, the FCC? I guess where would their efforts best be spent in trying to move the needle? [10:47] Ross Marchand: Definitely their efforts would best be spent focusing on Capitol Hill because that's where the next phase down, however USF is reformed, and I think we could all agree it needs to be reformed in some way, this needs to take place on Capitol Hill, and this is where we need to focus our efforts, focus our energies. [11:06] Bryan Hyde: And, and for that matter, let's, uh, let's make sure that those taxpayers that do want to weigh in are, are coming forward with good information. And so I'm going to ask you, if you want to, if you want to shamelessly promote the Taxpayers Protection Alliance, this would be a good opportunity. But where can they get solid ammunition with which to go to their, their representatives? [11:28] Ross Marchand: Sure, visit our website protectingtaxpayers.org. [11:30] Bryan Hyde: All right, and tell me a little bit more about, uh, you know, in, in terms of, of these kinds of, of technology issues, uh, I, I'm curious if, if is Congress looking at, at ways to, to impose— I, I'm going to use the word contributions, but I'm also using air quotes here. Um, it seems like everything that brings ease or happiness into our lives, someone is looking for a way to tax it, to create revenue from it. Are there other areas that we need to be aware of in terms of, you know, that digital realm where likewise, you know, people are looking and seeing dollar signs rather than letting the market play out? [12:17] Ross Marchand: Oh, absolutely. Right. It's on all fronts. And what we've been seeing is lawmakers, regulators, local officials, state officials, you name it, they've all been attacking tech. They like to call it big tech. It's really just successful tech. And why are these companies successful? Because they give people products that they want and that they need and in a lot of cases save their lives. We've been seeing these insane court verdicts, these payouts, and we've been seeing regulations really across all 50 states. And we've been seeing atrocious proposals on the federal level to regulate tech. And almost all of it, I mean, They don't even specify the problem that they're trying to solve. They just say, oh, it's scary. You have these really big tech companies, but to what end? What are they trying to solve? I have absolutely no idea, and I wish someone would tell me. And if any of these proposals come to fruition, everyone, all Americans will pay the price. [13:17] Bryan Hyde: So by way of review here, Let's talk about what needs to change in terms of the status quo, and then let's talk about, just so people can be aware of this moving forward, what do the proposed reforms actually claim that they will do? [13:36] Ross Marchand: Yeah, and we could start with that. What would the proposed reforms do? So what lawmakers seem to be focused on based on reporting is they're trying to increase the number of taxes going into USF, and that would mean a tech tax across the board, and it would probably also mean a tax on new broadband services, and virtually all Americans would foot the bill for that. What needs to actually happen is to not focus on expanding taxes and expanding out the contribution structure, but getting spending under control, because USF burns through $8 billion a year. That money can be better spent. It needs to be better spent. It's the right thing to do. It's a fair thing to do, and it's the only fiscally sustainable thing to do. [14:24] Bryan Hyde: Excellent. Again, we're talking with Ross Marchand. He is the executive director of the Taxpayers Protection Alliance. Ross, is there anything else as far as, uh, if someone is to have a takeaway from this conversation, what would you want them most to remember? [14:39] Ross Marchand: The most important thing is that we can support and usher in a new century of American innovation, and a lot of that has to do with how we treat the tech sector and these new and these innovative tech products. If we tax tax them to death, then America is going to kill the goose that laid the golden egg, and it's going to chill innovation, and all Americans will be worse off. [15:04] Bryan Hyde: Okay, so it really does pay to pay attention and, and hold your elected lawmakers accountable. Again, talking with Ross Marchand with the Taxpayers Protection Alliance. Ross, thank you so much for joining us on the Health Policy Podcast. [15:19] Ross Marchand: Thanks, great to be back on your show.