Most government support programs provide benefits directly to people, whether it’s SNAP (Supplemental Nutrition Assistance Program), TANF (Temporary Assistance for Needy Families), or housing voucher benefits. But when it comes to health care, our government provides health benefits by paying institutions, not patients. Shouldn’t funds follow the patient – ​​not the system?

An example of this unique approach are the discounts provided to hospitals rather than patients under the 340B drug discount program. The program, which requires manufacturer discounts on most outpatient drugs to help safety-net providers, is facing scrutiny in Congress.

All kinds of negative incentives arise because the healthcare system prioritizes middlemen over patients. In a recent piece published in the Journal of the American Medical Association, we argue that reform of the 340B program is a crucial step in the evolution of American health care toward a priority of funding patients rather than institutions. Our research echoes testimony one of us recently gave it to US lawmakers on the House Energy and Commerce Committee.

Under 340B, hospitals, or their contracted pharmacies, can purchase drugs at significant discounted prices. Insurers then reimburse these hospitals at full price, creating a significant source of spread revenue. The Legislature’s intent is that this revenue will increase the capacity of facilities serving a disproportionate number of at-risk patients.

There are no requirements on how hospitals spend this revenue, making the program vulnerable to exploitation. Unsurprisingly, 340 billion funds rarely meet their objectives. The program is ineffective, susceptible to manipulation, and creates disincentives that lead to many negative outcomes.

To begin with, due to loose surveillancea niche program intended to help a small number of institutions serving vulnerable patients, has become the second largest government drug reduction program. Since serving insured patients generates generous revenue, a program intended to serve the poor incentivizes hospitals to care for the rich. Several strategies allow this unexpected result to occur.

340B hospitals actively manage their operations to ensure they meet, but do not exceed, low-income service criteria. They develop satellite installations in wealthy and well-insured neighborhoods to increase their income by 340 billion. Of course, the target population does not live in wealthy and well-insured areas. The discount program also provides an additional reason for large hospital systems to purchase independent practices. This turns more drugs into higher-margin 340B prescriptions.

Perhaps worst of all for patients, these games inflate pharmaceutical prices, which is usually not the case. advantagelow prices of 340 billion and therefore pay higher costs for these drugs.

Hospitals say they need the funds generated by the 340B game to maintain normal clinical operations. However, much of the growth in operational costs is due to the growth of their administrative overloadwhich has been a long time growth beyond clinical care. These tax-exempt institutions already benefit from numerous subsidies. If they need another one, they should make that argument to lawmakers by opening their books and proving that the funds aren’t just for administrator salaries or other frivolous expenses (like acquiring recent by a 340 billion dollar institution of a movie studio). Don’t let these institutions operate a pharmacy benefits program that is supposed to benefit patients.

Funding patients directly will help reduce these problems. Offering patients a discount allows them to choose the provider that best meets their needs. This removes the opportunity for hospital conglomerates to game the system. Patients, empowered by this reduction, would face competing institutions to provide services tailored to their needs. Instead of caring for wealthy patients, these institutions would focus on providing services such as social work and transportation assistance to poorer people.