Op-Ed: Saul Anuzis: ACA subsidies distract from the real drivers of health care costs
Saul Anuzis takes on the real drivers of high health care costs in his latest op-ed.
In Washington, it’s easy to get distracted by the political fight of the moment. This week, that fight is over the Affordable Care Act’s (ACA) expanded subsidies — sold as a way to “lower health costs” for American families. But the truth is far different. Subsidizing insurance premiums does nothing to address the real forces driving health care spending, and Congress must stop pretending that simply throwing more taxpayer dollars at the problem is meaningful reform.
If policymakers are serious about lowering health care costs, they need to look at the facts — and the facts show clearly that prescription drugs, which always get scapegoated in hearings and campaign ads, are not the primary cost driver in the system.
In reality, medicine net prices have been essentially flat for six years, growing at or below inflation. Analysts expect net prices to actually decline 1–4 percent per year going forward. Prescription drugs remain just 14 percent of total health care spending, the exact same share they’ve held for a decade.
Rather than runaway drug prices, the increases we see in drug spending come primarily from greater utilization — more people gaining access to breakthrough therapies that prevent disease, treat chronic conditions, and reduce far more expensive medical interventions down the line. Examples are everywhere. In Delaware, officials found that even with surging use of GLP-1 obesity medications, these drugs were not a major cost driver because rebates and competition kept net prices stable. These therapies represented only about 6 percent of pharmacy spending.
This is part of a broader trend: innovative medicines routinely reduce overall spending. Hepatitis C cures are estimated to save Medicaid $43 billion by 2026. Medicare’s spending slowdown between 1999 and 2012 — one of the most significant in history — was driven in part by increased use of cardiovascular drugs that prevented costly complications and hospitalizations. When Medicare Part D launched, hospital admissions dropped 8 percent, inpatient payments fell 7 percent, and inpatient charges fell 12 percent. Better adherence alone is estimated to save up to $146 billion a year.
The most promising breakthrough today — GLP-1s for obesity — may be the next major opportunity to bend the cost curve. They reduce major cardiovascular risk by 44 percent and cut medical cost growth in half within two years. Expanding access could save Medicare $175 billion over 10 years, and potentially as much as $700 billion over 30 years. When chronic disease declines, productivity rises — these therapies could raise GDP by up to 1.3 percent, or $360 billion per year.
This is not the profile of an industry driving runaway inflation. In fact, many drugmakers already offer substantial discounts via Direct Purchase Programs, but millions of Americans in high-deductible plans are forced to pay the list price — while insurers and pharmacy benefit managers (PBMs) pocket the rebates.
That’s the real problem: the middlemen. PBMs are notorious for gaming formularies to steer patients toward drugs that maximize rebates rather than reduce out-of-pocket costs. The FTC’s 2024 complaint against the “Big Three” PBMs exposed how they excluded low-price insulin options in favor of high-rebate, high-list-price versions — hurting patients solely to preserve revenue. Since 2014, these PBMs have increased formulary exclusions by over 1,500 percent.
Layered on top of this distortion is the broken 340B program, which was designed to help vulnerable patients but has morphed into a profit engine for large, tax-exempt hospital systems. Hospitals buy medicines at deep discounts, then mark them up by 500–700 percent — sometimes adding more than $13,000 per claim. The Congressional Budget Office now acknowledges that this “spread” gives hospitals a financial incentive to choose higher-priced therapies.
Patients at 340B hospitals face outpatient drug costs twice as high as those elsewhere, and many of these systems use their profits to expand into wealthier areas, consolidating market power, and reducing competition.
Meanwhile, ACA subsidies simply mask these systemic failures. They hide the rising underlying costs of hospitals, insurers, and middlemen by shifting the bill to taxpayers. Subsidies don’t discipline pricing. They don’t improve competition. They don’t fix the perverse incentives in PBM contracting or the abuses in the 340B program. They certainly don’t help seniors trapped paying list prices while insurers collect rebates.
If Congress truly wants to make health care affordable, the path is clear:
• Rein in hospital monopolies and excessive markups.
• Reform the 340B program so patients — not institutions — benefit.
• Increase transparency and hold PBMs accountable for rebates, formulary manipulation, and discriminatory pricing.
• Ensure discounts reach patients at the pharmacy counter.
• Expand access to innovative therapies that reduce long-term costs.
The ACA subsidy fight may dominate the headlines, but it completely misses the real issue. America doesn’t have a “drug price” problem — we have a broken system problem. Focusing on subsidies while ignoring the underlying cost drivers is political theater, not serious policy.
It’s time to put patients first. It’s time to fix what’s really broken.
Saul Anuzis is the president of the 60 Plus Association and a Republican Party politician from the U.S. State of Michigan. He was chairman of the Michigan Republican Party from 2005–2009 and was also a candidate for national chairman of the Republican National Committee in 2009 and 2011 as well as a Member of the RNC from 2005-2012.