Rising Health Care Costs: The Impact of Hospital Consolidation and the 340B Drug Pricing Program

The rising cost of health care in America is putting a financial strain on many households, with out-of-pocket spending increasing by 10.4% in 2021 and health insurance premiums jumping by 6.5%. These numbers, released by the Centers for Medicare and Medicaid Services, are the highest seen in over three decades. And with inflation further squeezing budgets, the situation is becoming dire for many.

One factor contributing to these soaring costs is hospital consolidation. When a single health care system becomes a monopoly in a region, it can set prices at will, forcing patients to pay more for care or travel long distances for affordable services. This consolidation is often driven by the 340B Drug Pricing Program, a well-intended policy that has been exploited by hospitals for financial gain.

The 340B program requires drugmakers to provide discounts to health care facilities serving low-income and uninsured patients. However, many hospitals are not using these savings to benefit the intended population, leading to increased profits and further consolidation. As a result, the 10 largest health care systems in the US now control nearly one-quarter of all hospitals, driving up costs and limiting access to affordable care for those in need.

To address this issue, experts are calling for Congress to revise the 340B program, implementing safeguards to ensure that discounts are used appropriately and eligibility is limited to facilities serving low-income patients. Without these changes, the burden of rising health care costs will continue to fall on American households.

In the meantime, the need for reform is clear, as the current system is failing to fulfill its intended purpose and is only exacerbating the financial strain on patients. It is crucial for policymakers to take action to ensure that the 340B program serves those it was designed to help, rather than fueling the profits of hospital conglomerates.