340B – Another Shot Fired In The Healthcare Wars

Peter Roff Contributor
Font Size:

Things have been relatively quiet since the Patient Protection and Affordable Care Act became law. President Barack Obama’s signature achievement had the unexpected effect of creating a kind of political ceasefire in the healthcare wars that had raged ever since Bill Clinton first entered the White House.

Lately the fights have all been on the margins. Obamacare opponents have tried and failed repeatedly to get a bill repealing Obamacare to the president’s desk. It’s beginning to look like it cannot be repealed, at least in one large chunk nor can it be replaced except incrementally, bit by bit and piece by piece.

This is of course a judgment call. There is no programmatic or legal reason for delay; it’s simply that the forces backing repeal have not been able to muster the political army necessary to convince sixty senators and the president to follow the lead of the U.S. House of Representatives in tossing the thing out and starting again.

They’ll have another chance, probably starting this week if, as it is expected to, the United States Supreme Court rule that Congress did not approve the payment of subsidies to individuals purchasing their health insurance through the federal exchange at healthcare.gov. As a practical matter the elimination of those subsidies and the resulting spike in insurance premiums would also likely nullify both the employer and individual mandates necessary to the economic function of the ACA. Multiply that out over 34 states and it all goes bust.

There are plenty of ideas out there for fixing the American health care system and the insurance network that allows millions of citizens the opportunity to receive care at a level of quality they could not otherwise afford. The challenge moving forward, which is principally the GOP’s to deal with as the president and his friends would be more than happy to approve a law extending the subsidies to participants in the federal exchange, is to come up with ways to fix the problems while, as doctors are sworn to, first doing no harm.

Some will argue that this means, in the short term at least, that all subsidies must continue until a replacement system is in place. This would require the expenditure of billions in additional dollars and create an even larger market for a product that is now destined to be pulled from the shelves at the first opportunity.

There aren’t many places to go to find the sums necessary, which is why Medicare may once again find itself on the chopping block. It was already raided once during the creation of the ACA. Just this past week Congress attempted to raid it again, this time as a “pay for” for the Trade Adjustment Assistance legislation that was part of the effort to make it easier to submit trade agreements to Congress for ratification.

Raiding Medicare and Medicaid, the companion program that provides healthcare to the poor and indigent, is politically a stupid thing to do. The message mavens who write political advertising copy are just waiting for the GOP-led Congress to try and take another bite at that particular apple. It would be a wonderful arrow to have in their quiver come election time – and the congressional leadership looks ready to give them just what they want.

Right now some of America’s poorest hospitals are relying on a federal program called 340B, a program that allows uninsured and low income patients to receive from hospitals and pharmacies outpatient drugs at a deep discount.

It’s popular, and why wouldn’t it be, since it helps people get drugs they need and might not otherwise be able to afford. It’s expanded rapidly but remains, on the book sat least, revenue neutral. Yet some in Congress want to cut it back – which has provoked the ire of hospital and health system CEOs who are now lobbying to stop any changes to the program. More than 500 of them signed a letter to congressional leaders protesting the proposed changes to 340B Drug Topics reported in late May, and that’s just the start.

“In 2013, because we received vital medications from drug manufacturers at a discounted price, the Johns Hopkins Hospital was able to save $46 million, while Bayview saved about $7 million through these efforts,” Ronald Peterson, president of Johns Hopkins Hospital and Health System, Baltimore, Md., on a conference call covered by the website and hosted by an advocacy group set up for the purpose of fighting changes to 340B. “These savings enable The Johns Hopkins Hospital and other safety net hospitals to give back to their communities in a variety of ways, such as medication assistance programs and free medical care in certain low-income zip codes.”

These are not the kind of allegations proponents of ACA reform, repeal, or replacement need to be pushing back against while they are busy seeking their main goals. Closing hospitals, overtaxed healthcare systems, and images of the poor and elderly unable to get the drug they need to stay alive and maintain an appreciable quality of life will create the political pressure necessary to extend the life of the ACA, not end it.

The way to fix the broken healthcare system is to pull the government out slowly, and by its roots. This won’t be accomplished by fighting on every front at one time but only through carefully selected, well planned moves that expand choice for consumers and lower costs – probably first in the states and then at the federal level. The smart plan is to use the GOP majorities and governors in states without exchanges to implement the ideas that should be the bulwark of the federal system in the future – and to inundate the Obama administration asking for waivers where these ideas conflict with the terms of the ACA so these new ideas can be tried in the real world.

A nationwide effort, distinct from an effort to peel the new system apart layer by layer – and for the benefit of the big drug companies, the health maintenance organizations, and the big insurance companies, which is how it will play out politically even though they are some of the main beneficiaries of Obamacare, is the way to go forward towards 21st century healthcare. Picking apart federal programs like Medicare and Medicaid is unwise politically and probably bad policy to boot.

Peter Roff is a senior fellow at Frontiers of Freedom, an organization advocating for personal choice in the healthcare and other critical sectors of the American economy.