In an attempt secure healthcare supply chains and bring more manufacturing to the United States, the Centers for Medicare and Medicaid Services (CMS) is proposing to reward hospitals for buying more expensive, domestically produced products. At the same time, the Administration has imposed tariffs on personal protective equipment (PPE) and is considering expanding those tariffs to additional PPE and pharmaceuticals. More expensive medical bills do not make supply chains more secure. Unfortunately, CMS’ subsidies will only increase already high hospital costs, without meaningfully increasing domestic manufacturing.
CMS is proposing to create a list of hospitals that purchase a sufficient share of their PPE from U.S. companies and reward them with larger Medicare reimbursements. While CMS has yet to define what that share would be, it has proposed basing it on all PPE as well as on each individual product, which would drive hospital administration costs higher trying to track.
Supply Chain security doesn’t require producing everything domestically at any cost. A diversified supplier base ensure availability while maintaining price competition. Lower costs also make it easier for the federal government to build and maintain strategic reserves of essential PPE. Masks, gloves, and gowns are durable goods that can be stockpiled until needed.
Justin Leventhal is a Senior Policy Analyst for the American Consumer Institute, a nonprofit education and research organization that advocates for consumers through evidence-based analysis and data. Follow Justin on X @JustinLeventhal.