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Hospitals in Rural and Urban Areas Could be Hit Hard by Trump Recommended Drug Subsidies Cuts

By Leah Richard

The American Hospital Association is hoping a lawsuit against the Trump administration will help save a drug subsidies program they say is designed to help hospitals treat lower-income patients. It’s a problem that could impact hospitals that serve large portions of the uninsured in big cities and small communities across the country.

The new administration proposed $1.6 billion in cuts to drug subsidies for some hospitals. The subsidy program, known as 340B, has been in place for two decades and now it could be going away — for good.

The drug subsidies were put in place to help hospitals with large numbers of uninsured patients. The way it works is that 340B lets hospitals that qualify buy drugs with a generous discount. Then the Medicare program pays hospitals a little more than the average sales price for the drugs — and the hospitals would get to keep the difference. The money is to be put towards uninsured patient costs and the community at large.

The problem of uninsured patients is not unique to urban areas. Many of the nation’s poorest communities are in rural areas that heavily voted for Trump in the last election. The hospitals that serve these voters could face huge costs — as would their urban counterparts — the next time any of them are sick or need the help of the ER.

Critics of the drug subsidies have said that hospitals might use more expensive drugs unnecessarily. Under the Trump administration, Medicare will cut what it pays hospitals starting in January.

The actual lawsuit itself is has been filed in U.S. District Court for the District of Columbia. It alleges the U.S. Department of Health and Human Services has “exceeded its authority” by moving to cut the drug subsidies program. The suit is hoping the courts will stop the cuts until the case is settled.

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