[00:00:00] Welcome to the Health Policy Podcast. I'm Brian Hyde, and my guest today is Ross Marchand. He is with the Taxpayers Protection Alliance. And Ross, it's great to have you on the program. Before we go into the subject that we're going to discuss, tell me a little bit about yourself, about who you are and what you do. Sure. So I am a lawyer by trade. I'm also an economist by trade. Um, and that just leads me, as has me led many others to the conclusion that whenever you have these complicated laws and these outta control regulations, everyone loses. As a result, and over at the Taxpayers Protection Alliance where I'm executive director, we focus on the unintended consequences of these rules and taxes on taxpayers and customers, and how government intervention really ruins everything. All right. This sounds like a great place to start. Uh, we're gonna talk today about the three 40 B program, and I, [00:01:00] I admit, I am not well versed in, in this program, but could you give us kind of the background, how long has this been around and what is it intended to accomplish? Right. So the basic idea of the three 40 B program is that hospital programs are, in theory, supposed to have access, uh, to below cost artificially, below cost drugs, basically being able to buy drugs on the sheet. From drug companies and the idea here is a noble one, pass along the savings to patients and use those savings to, um, invest in more affordable care if only that were the case. What has actually been happening with the three 40 B program is it's being abused and that yes, the hospitals are taking these discounts from these drug companies, which is mandated. By the federal government, but instead of passing along those savings onto patients and investing in more affordable care, what they're [00:02:00] doing is they're charging full price or nearly full price, and they're pocketing the difference. So what you have is you have a program that has noble intentions, but is failing because of these unintended consequences, and patients lose and taxpayers lose as a result. So it's, it sounds like, uh, maybe this was well intended at first, but it ended up creating incentives that are now being taken advantage of. Is that safe to say? Exactly. And you say, look, whenever the controls are lax, and whenever you have a complicated government program, the people who are closest to the action, who are supposed to take center stage, they find out quickly how these rules can be abused and they steer it to their own benefit and then everyone else loses. So how, how big of a, let's talk numbers. How, how much money are we talking? Sure. So, and this number has grown a lot over time, but according to the most recent estimate from 2021, you [00:03:00] have drug spending. Over $40 billion, right? So these hospital systems are spending $40 billion more to procure these medications. And what happens is because they're not passing along these savings to patients and they're pocketing, uh, most of this money taxpayers are on the line. Because a lot of these hospital systems, in fact, virtually all of them are funded by taxpayers. So whenever you have a system where these rich healthcare entities, these hospitals, these insurers are getting richer. What they're doing is they're turning around and then pocketing. Payer money through programs like Medicare and Medicaid. So it's a, a crazy complicated revolving door, but taxpayers lose and customers and patients most definitely lose. So Ross, were, were, this probably I'm guessing wasn't the original intent of the three 40 B program. Has there been any kind of a meaningful move to, to reign in that, uh, taking [00:04:00] advantage of the taxpayers? Well, there's been talk about more closely monitoring the maximum amount that, uh, nonprofit hospital systems, which by the way is a misnomer because they absolutely are profiting in this case, how much they can pocket and how frequently audits are made of these pass throughs and, and how much money they are taking for themselves. But the simple truth of the matter is you could only do so much for reform such a deeply. Dysfunctional system. And look, uh, every year that this continues, um, without any accountability, taxpayers and patients are paying the price to the tune of billions of dollars. So does anybody have the, the backbone or the stomach to say, you know what, um, maybe reform isn't enough? Is is it time to pull this program up by the roots? Yes. Unfortunately, if a program is beyond repair. That [00:05:00] is the only solution at the end of the day. And if you have a system and you have a program where year after year it's just being abused, you just have to ultimately say, you know what? There are more productive ways to approach healthcare in this country, and just making the richest players even richer. So let's, let's talk for a moment, Ross, about, uh, what has happened that has allowed, um, healthcare and government to become so cozy with one another. I think we saw this quite a bit during COVID, but, but it was going on even before then. Uh, I'd love to get your take on, you know, are they strange bedfellows? And, and if so, why is that? Sure. Well, the government is responsible for the majority of healthcare spending in this country. So you have both Medicare, which is uh, mainly geared towards senior citizens, and then Medicaid, which is geared towards helping low income households. And these are both massive federal taxpayer funded programs. They cost [00:06:00] taxpayers at least a trillion dollars each per year, and they are so involved in the healthcare system. They exert such a massive influence over all these healthcare decisions that the government de facto just has majority control over the decisions being made. And what we see no matter what industry we're looking at, is whenever you have all this control and whenever you have all this regulation and all these, uh, all these rules coming from Washington, DC. The prices are gonna go up and the quality is going to stagnate, and then you just see a bunch of barriers to access, uh, plenty at the state and local level too. You have these, uh, laws called certificate of need laws, and whenever a hospital is trying to expand a wing or a hospital is trying to get going, they need to ask bureaucrats and often their competitors for permission. This is going to keep supply low and this is going to keep prices high for. Taxpayers and customers. Okay. I don't wanna sound like a conspiracy theorist, [00:07:00] but I have to ask, does the healthcare industry, uh, as a whole exert uh, greater influence over, uh, policy in Washington DC and at the state level than, than other, um, industries or other lobbying groups? Yes, because healthcare is the most heavily regulated industry in the United States. And once all these industry players and, and the biggest participants out there, once they know that all the rules are set in Washington DC and all the funding comes from Washington dc, guess what they do? They all come to Capitol Hill and they try to get their way and they try to take increasingly large. Percentage of that pie and they're trying to steer the game for themselves. And what we see now with the system is increasingly dictated by large insurance companies in particular because they know that they're going to get all of these, um, affordable Care Act, [00:08:00] Obamacare, subsid. That have just been increasing year over year. All of this, this gigantic pot of taxpayer money is all going to these very, very large insurance companies. And the result is predictable premiums are climbing higher and higher, and again, taxpayers and customers are paying the price. Let's make the case for, for why the free market would be a better approach than, uh, the government intervention approach, which is currently being used. Sure. So in industries where government mostly stays out of the way, costs go down and quality increases over time. So for example, cell phones. Cell phones in the eighties and nineties. I mean, it used to just be a luxury for the lucky few and used to be able to, I don't know, maybe one. One thing, maybe two things tops with your cell phones. And they used to be really, really massive. As anyone who's seen the movie Wall Street, uh, I can tell you, but now everyone has cell phones. And cell phones are these, uh, these computers you could put in your pocket. And day by day there's technological advancements. Now, [00:09:00] of course, every industry, including the cell phone market. Some sort of government involvement that you could see in industries like that where the government is not dictating every last thing. Unlike healthcare, again, the cost is going down. Over time, quality and options are improving for customers. So it sounds like the, it's the, the poor, ostensibly, the people that th three 40 B is supposed to help, um, they're the ones who are being left out in the cold. Um, what's, where's a good starting point to, to reign this in? So I think the most important thing is to increase, uh, choice and competition. And you could end these wasteful programs. I mean, that is step one, right? Just take an acts at the three 40 B program, and when you're talking about Obamacare and you're talking about all these really, um, large and growing subsidies to insure. Make sure that, for example, subsidies that just expired the end of last year, that are already trying to bring back to pad the pockets of these insurers. Let's make sure that those go [00:10:00] away for good. And then once you stop making the problem worse, then you could focus on things like expanding options for patient. And making sure that more dollars that patients are putting away for healthcare are not taxed by the government. So expand health savings accounts, and for example, if physicians want to ban together and open up a hospital, that should be allowed. Unfortunately, under Obamacare, that's not allowed and there is never a good reason given for that. So if you could let more types of doctor's offices and hospitals take root, and you could let patients save more of their hard-earned money. Put it towards healthcare, then I think you'll see in healthcare what you have seen for other industries, and that cost goes down, quality goes up, and you could save more lives that way. It seems we saw a lot of, uh, drama there toward the end of 2025, particularly with the government shutdown down. And, uh, the expiration of certain subsidies under the Affordable Care Act, uh, that were going to go away is, is there more to Obamacare that needs to be repealed and, and is that a [00:11:00] possibility in today's political climate? Sure what Obamacare did, which really increased cost more than anything else. It made it impossible to buy no frills, low cost, affordable insurance. It said, look, these are the essential. Benefits that need to be a part of your insurance plan. And if you don't agree with us that this is not essential, then guess what? You cannot buy this insurance plan. So if you make affordable health insurance illegal, guess what? No one is gonna be able to buy affordable insurance, and prices are going to go up over time. So you need to be able to legalize affordable insurance. You need to, as I said before, you need to end the cap on physician owned hospitals, let more hospitals be built, take root and expand and serve customers, and you also need to end these out of control. Subsidies to insurers. Insurers will claim, oh, we need this. Uh, we need to further, you know, pad our pockets, increase profits. [00:12:00] But the reality is that's just going towards increased premiums. You need to end this vicious cycle of more subsidies coming from the government, coming from taxpayers that are just leading to higher and higher costs for every. Given some of the efforts starting with Doge, you know, at the beginning of, of President Trump's, uh, latest term, um, and continuing with some of the budget battles that are being fought right now in, in the federal government, um, is it likely that, that those spending costs can, can be brought down? Or is this one of those things that is considered a sacred cow by, by those in power, uh, because maybe they benefit from, I don't know, you know, campaign contributions from the healthcare industry or the insurance industry? Look, it is definitely a sacred cow, and you talk about Medicare reform, you talk about Medicaid reform and eyes roll immediately. But look, I am a cautious optimist and I think that people are starting to wake up to how bad this problem is. And now that people are waking up. They're looking around and they're saying, what are the solutions here? And the president [00:13:00] just today released a healthcare plan. Now, it is a flawed healthcare plan, but it shows that more and more people are paying attention and the house also took up healthcare reform last month. They'll continue to take it up. And again, we have a lot of qualms with how that's being handled, but it shows that people are waking up and trying to solve this problem. So I think that's a very good sign. Well, and and it sounds like from what you're describing, this is not just a partisan thing. Well, the Democrats want this, and the Republicans want this. There must be enough Republicans who agree on keeping those subsidies going, that uh, they, they appear to be part of the problem as well. Yeah, and it's a terrible hill to die on, and unfortunately a lot of people are prepared to do just that. But every time that these, um, extended, um, now expired, but they're trying to bring back Obamacare subsidies come up for a vote, we continue to sound the alarm and we say, look. These were counterproductive when they were around. They were costing taxpayers $30 billion a year. They're contributing to our $38 trillion national debt. These need to go away for good. So we will [00:14:00] continue to sound the alarm whenever this comes up for debate. Um, but unfortunately, yeah, it's a bipartisan mess and it will take a bipartisan effort to get out of that mess. Let's, let's talk about, uh, if, if our listener takes away nothing else from this conversation. What is the one essential principle that you want them to remember that, that we discussed today? The government is far too involved in healthcare, and unless government gets outta the way, costs will continue to climb and quality will continue to stagnate. Government must get outta the way for real serious healthcare reform. Again, we are talking with Ross Marchand. He's the Executive Director of Taxpayers Protection Alliance. How do people find your, your TPA, where, where can they, uh, become involved if, if, for instance, they want to support your efforts? Well, they can learn more by visiting our website@protectingtaxpayers.org. Alright. All right. Ross, thank you so much for joining us today on the Health Policy Podcast. [00:15:00] Thanks. Great to be on your show.