Thirteen million Americans are using GLP-1 drugs to lose weight. But while the country slims down, Uncle Sam keeps packing on the pounds. Congress needs a GLP-1 prescription for Washington’s health programs before they spiral further out of control.
Prosecuting grifters who exploit legacy safety net programs is certainly one piece to the puzzle. Recent reports out of Minnesota show swindlers bilking millions from Medicaid, and officials should continue cracking down. But in the broader landscape of federal health services, fraud enforcement alone is the equivalent of skipping one candy bar after consuming a dozen.
The real driver of Washington’s expanding waste line is built-in statutory escalators that inflate the size of programs year after year.
The Obamacare subsidy framework is a prime example. Most understand the basics: Americans who fall into a certain income bracket can access health insurance plans that are partially paid for by taxpayers. Setting aside the inherent issues of bureaucrats manipulating the healthcare market, the distribution method for subsidies is extremely problematic.
Government aid dollars flow directly to insurance companies, with the hope of cheaper premiums for eligible beneficiaries. In reality, the roundabout money trail keeps patients in the dark about the true cost of coverage—a disconnect that relieves incentives for insurers to negotiate better deals with providers. The result is more expensive insurance, and therefore a bigger appetite for subsidies, year after year.
When combined with climbing enrollment, the consequences have been staggering. Since Obamacare’s implementation, the cost to service the program has ballooned sevenfold—increasing from $18 billion in 2014 to $138 billion last year. Over that same period, economy-wide consumer prices rose only a small fraction as much.
Congress should restructure subsidies so assistance is deposited into individual tax advantaged health savings accounts instead of routed directly to insurers. Giving families greater control over healthcare dollars would strengthen market pressures to make insurance plans and medical providers think twice before raising prices.
Obamacare is not the only federal health initiative that stands to lose a few pounds. Republicans passed commonsense Medicaid reform last year that is moderating the program’s growth—preserving the lifeline of last resort for future generations. A similar GLP-1 dose should be administered to the federal 340B Drug Pricing Program.
Congress established the program in the 1990s to guarantee cheap drugs to hospitals serving low-income communities. But a lack of transparency and federal oversight has allowed medical facilities to game the system at the expense of patients. Hospitals have the opportunity to access medicines with average discounts of roughly 45 percent, but subsequently sell them at marked-up prices.
The chance to pocket the difference has proven irresistible to hospital executives. Since the program’s inception, the number of participating hospitals has scaled up by a factor of 60 and 340B drug purchases have exploded by $35 billion since 2010. The program has clearly gone off the rails and requires a serious congressional tune-up.
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A pilot program being floated by the Department of Health and Human Services offers a guiding light. It creates a system of after-the-fact rebates for 340B hospitals as opposed to up-front discounts. The proposed reporting framework compels hospitals to justify the need for charity medicines—an exercise that will cut down on program abuse and encourage transparency. Congress should codify the idea into law.
The U.S. has a responsibility to help low-income families access the miracles of modern medicine. But if Congress wants America’s health programs to survive, it must commit to a disciplined weight management plan now before the country is forced into a painful crash diet later.
Tom Price served as the 23rd U.S. Secretary of Health and Human Services and is a former member of Congress from Georgia.