NCPA - National Center for Policy Analysis

How ObamaCare Hurts Cancer Patients

August 6, 2013

President Obama promised to mend the failings in the American health care system, and yet for cancer treatment, ObamaCare is taking a rotten feature of the old system and making it worse. The Affordable Care Act expands a program called 340B, which siphons money from drug makers and insurers to subsidize certain hospitals. The program has been expanded as a way to offset some of the cuts that the law imposes on hospitals. One significant side effect: 340B is increasing the cost of cancer care, and harming its quality, says Scott Gottlieb, a resident fellow at the American Enterprise Institute.

When the program began in 1992, its aim was to support hospitals that cared for many uninsured, indigent patients. Over the years, the program was radically broadened, gradually morphing into a government cash cow that hospitals of every description have learned to exploit.

  • Under 340B, eligible hospitals are allowed to buy drugs from drug companies at forced discounts of 25 percent to 50 percent.
  • The hospitals can then bill government and private insurers for the full cost of the drugs, pocketing the spread.
  • The arrangement gives 340B-qualified hospitals a big incentive to search for patients and prescribe lots of drugs.
  • The costlier the drugs, the bigger the spread. This makes expensive cancer drugs especially appealing.

The original legislation creating 340B envisioned that only about 90 hospitals that care for a "disproportionate share" of indigent patients would qualify. But remember, this is a well-intentioned government program handing out money, with the usual result: By 2011, 1,675 hospitals, or a third of all hospitals in the country, were 340B-qualified.

  • Now ObamaCare is encouraging even wider 340B abuses.
  • The new health care law expands 340B to cover cancer centers, new categories of hospitals and rural health centers.
  • Since one of the ways that hospitals qualify for 340B turns on how many Medicaid patients they serve, ObamaCare's Medicaid expansion will also increase the number of 340B-eligible entities.

If these trends continue, the majority of cancer care will soon be delivered by hospitals. When the practice of oncology shifts from a doctor's office to outpatient hospital clinics, the care is often less comfortable and convenient for cancer patients, and more costly.

Source: Scott Gottlieb, "How ObamaCare Hurts Patients," Wall Street Journal, July 30, 2013.


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