U.S. pays billions, strings few

Covid cash for health firms raises cost-effectiveness doubts

WASHINGTON — The Trump administration has pumped billions of dollars into the health care industry during the covid-19 crisis, bolstering bottom lines at some of the country’s most profitable businesses even as millions of Americans have been left struggling with mounting medical bills.

And although taxpayer money has poured into drug makers, hospital systems and medical distributors, administration officials have put few requirements on the businesses that took public assistance.

“This was taxpayer money,” said Elizabeth Mitchell, president of the Pacific Business Group on Health, a consortium of large companies, including Boeing, Safeway, Walmart and Wells Fargo, that have worked to control health care costs.

“Any effective investor says we want to see something for our investment,” she said. “I’m very concerned that all we’ll get out of this is an even more expensive health care system than we had going into the pandemic.”

Overall, many large health care companies have been piling up profits during the pandemic.

The 25 biggest health care companies — including drug makers, health insurers, medical supply companies and hospitals — recorded more than $63 billion in profits in the first two quarters of 2020, according to a Los Angeles Times analysis of company data aggregated by FactSet, a financial analysis company.

Profits just for drug companies and medical distributors that received taxpayer assistance during covid top $24 billion through the first half of the year, The Times analysis found.

The government largesse for an industry that already costs Americans more than any health care system in the world contrasts sharply with the federal government’s strategy for rescuing automakers, banks and other financial institutions during the recession a decade ago.

During that crisis, recipients of taxpayer bailouts were subject to restrictions and requirements that public aid be recouped, which largely occurred.

The Trump administration’s lenient rules for corporate recipients of covid-19 aid also contrast with its approach to government programs for poor people, such as Medicaid or food stamps. Administration officials have repeatedly said these funds should be available only to low-income Americans who meet strict conditions, such as seeking work.

Few experts dispute the need for substantial public spending during the pandemic, which has taken a big toll on hospitals, clinics and physician practices, many of which were called on to treat a wave of infected patients at the same time that their other business dried up as patients stayed away.

“I applaud the government for getting money out the door as quickly as possible,” said

Kevin Holloran, who tracks nonprofit health systems for Fitch Ratings. “Hospitals really needed it.”

Holloran added, however: “There weren’t a lot of strings attached.”

The largest pot of federal aid to the health care industry — the $175-billion Provider Relief Fund — came with few restrictions, though providers were barred from billing covid patients at higher out-of-network prices.

Critics of the spending say the government missed an opportunity to use its leverage to rein in hospital prices and drive broader changes to the nation’s health care system, such as bolstering primary care.

“There’s no question that the federal response and the hundreds of billions made it more difficult to change the underlying economics of health care,” said Tom Banning, who heads the Texas Academy of Family Physicians.

Also unclear is whether taxpayers will get any price break from pharmaceutical companies that have received government aid to develop coronavirus vaccines and medications.

Since March, the federal government has committed more than $10 billion to help test and produce potential vaccines through the administration’s Operation Warp Speed.

Several companies receiving taxpayer help are among the most profitable in the health care industry.