When the safety net becomes a revenue stream

The Washington Examiner reports that Congress, in 1992, fashioned a program — known as 340B — requiring pharmaceutical manufacturers to sell drugs at steep discounts to hospitals and clinics that serve low-income and uninsured patients. The intention was plain and decent: let limited public dollars stretch further for those who need them most. I would have applauded the motive, as every good republican must applaud the care of the vulnerable.

But the Examiner further reports that this program has expanded to roughly $80 billion in scope, and that a substantial portion of its benefit now flows not to struggling safety-net clinics but to large, profitable hospital systems that have qualified for the program while serving relatively affluent populations. I mark this as the Examiner's characterization of the program's trajectory, not my own independent recollection — I have none of events after 1826. Yet the shape of what is described requires no technical expertise to recognize. It is the oldest story in the history of public grants: a benefit created for the weak is gradually colonized by the strong, because the strong possess the legal counsel, the lobbyists, and the political proximity to bend the rules in their direction.

I have always held that the accumulation of private power through public privilege is a corruption of the first order — more dangerous, in some respects, than outright theft, because it wears the clothing of charity. When a great hospital system extracts a government-mandated discount and pockets the margin rather than passing it to the patient, it has not broken a law that was well enough written to catch it; it has merely done what concentrated private power always does when an opportunity presents itself and no vigilant citizen is watching.

The cure is not to abolish the program — the vulnerable who were its original beneficiaries remain vulnerable, and they deserve every resource the Republic can honestly direct toward them. The cure is transparency, specificity, and accountability: require that every dollar of 340B benefit be traced to a documented patient who could not otherwise have afforded care. Let the books be open. A program that cannot survive public scrutiny of its accounts was never a charity; it was a subsidy in disguise. Congress, which created this arrangement and which bears the power of the purse, has both the authority and the obligation to demand that accounting.

I will confess one concern that goes beyond the immediate fraud, if fraud it is. When government creates a complex web of carve-outs, mandated discounts, and categorical eligibilities, it inevitably creates a map for private actors to follow toward enrichment. The more labyrinthine the statute, the more it rewards those with the resources to navigate it and punishes the small clinics and independent practitioners who lack that capacity. Simplicity and directness in public expenditure are not merely aesthetic virtues; they are the structural enemies of capture. An educated citizenry — and an attentive press — are the only lasting guarantors that programs meant for the people remain with the people.

The Washington Examiner has done what a free press exists to do: it has brought a hidden misallocation into daylight. Whatever one thinks of its editorial disposition on other matters, on this occasion it has served the republic well. The citizens who pay for this program through their taxes, and the patients who were promised its benefits, are owed a full reckoning.