Following the end of the government shutdown, Congress and the White House are preparing to negotiate a Fiscal Year 2026 spending bill. One of the key issues on the table will be whether to extend the so-called “temporary” Obamacare subsidies first passed as part of the 2021 Covid relief bill.
While many Republicans will publicly oppose the subsidies, few are willing to let premiums increase for their constituents in an election year. As Charles Sauer writes in RealClearMarkets, this creates a perfect opportunity for meaningful reform:
“Reformers should take advantage of the upcoming negotiations to ensure the final bill contains meaningful reforms that will give patients more control over their healthcare via tax credits and expanded Health Savings Accounts.”
Section 340B: A Program Gone Wrong
Sauer highlights Section 340B, a well-intentioned program that’s become a major driver of healthcare consolidation and higher drug prices.
“Created in 1992, Section 340B requires drug companies to provide discounts to ‘qualified entities,’ which are healthcare centers and hospitals that provide care to low-income Americans—many of whom lack insurance. The qualified entities can then bill providers like insurance companies, Medicaid, and Medicare for the full price of the drugs. In theory, the ‘qualified entities’ are supposed to use these savings to subsidize the costs of treating the uninsured. However, there is no legal mandate that they do so.”
Instead of serving patients, Section 340B has become a profit engine for large hospital systems. According to research cited by Sauer, 69% of hospitals participating in the program spend less on charity care than the average hospital, and prescription drug purchases by 340B entities have ballooned to more than $65 billion.
“Congress should include language in the spending bill requiring any facility benefiting from the program to use the savings to provide care to uninsured Americans. This would fulfill the program’s original goals and remove the incentives to engage in mergers and acquisitions.”
Site-Neutral Billing: Common Sense That Saves Billions
Sauer also calls on Congress to expand site-neutral billing, a straightforward reform that could save both taxpayers and patients billions.
“Site neutral billing is the common sense idea that Medicare should not provide different payments for the same procedure based on whether it was done in a physician’s office or in a hospital. The Medicare bureaucracy, like all government bureaucracies, refuses to use common sense.”
The result is a system that rewards consolidation and drives up costs. The Congressional Budget Office estimates expanding site neutrality could save $153 billion over ten years, while patients could save between $94 billion and $466 billion in premiums and cost-sharing.
“It is irresponsible, even by congressional standards, to refuse to make this simple common sense change to Medicare, when a spending bill extending the Covid-era Obamacare subsidies provides the perfect vehicle for this reform.”
A Chance for Real Reform
Medicare is one of the chief drivers of America’s $37 trillion and rising national debt, and its Hospital Trust Fund is projected to run out of money by 2033. Congress shouldn’t waste the opportunity presented by the upcoming spending negotiations.
“Congress and the White House should not pass the opportunity presented by the upcoming budget negotiations to reform Section 340B to ensure it benefits uninsured Americans—not large healthcare conglomerates—and mandate site neutrality for all health care facilities.”
Read the full article by Charles Sauer in RealClearMarkets
