The Next Lever: How Alternative Funding Programs Threaten Public Workers and the HIV Safety Net

Residents of Pennsylvania's Dauphin County opened their December 2024 tax bills to a 22% property tax increase, the first in two decades. A year later, county officials did it again, raising taxes almost 10% for 2026. The reason was not extravagance. Over 20 years, even as the county cut its workforce by 19%, its per-employee health care costs tripled. Board chairman Justin Douglas put it plainly: "This level of increase, if it continues to go up, it's going to bankrupt businesses, counties, and municipalities."

Dauphin County is not an outlier. Governments employ roughly 1 in 7 U.S. workers, and public plans across Arkansas, California, Colorado, Missouri, and Nevada are absorbing double-digit premium growth, with New Jersey school workers facing 34% hikes. Public employers cannot raise the price of a product to cover the gap. They answer to fixed tax budgets and unionized workforces that traded higher salaries for reliable benefits. Bob Herman's reporting for STATdocuments this vise in detail. What it leaves out is the tool employers increasingly reach for when taxes and benefit cuts both become untenable: alternative funding programs (AFPs).

What AFPs Do

An alternative funding program is a for-profit vendor that contracts with a self-insured employer to strip high-cost specialty drugs out of the plan and redirect covered workers into outside assistance. The maneuver depends on a regulatory seam. Self-insured plans, which cover 63% of workers with employer coverage according to KFF data cited by NASTAD, are governed by ERISA and exempt from the Affordable Care Act's requirement to cover Essential Health Benefits. An AFP advises the plan to reclassify a specialty drug as non-essential. Once carved out, the drug carries no coverage, the worker appears underinsured, and the vendor applies on their behalf (or forces them to apply themselves) to manufacturer patient assistance programs (PAPs), charitable foundations, or public safety-net programs such as state AIDS Drug Assistance Programs (ADAPs), resources built for people who are uninsured or cannot otherwise afford their medications.

The design targets a real cost concentration. Specialty drugs represent 2-3% of drug utilization but 51-60% of drug spending, so a single high-cost therapy can tilt a plan's budget. The National Alliance of Healthcare Purchaser Coalitions describes the model bluntly as "tapping charity care funds to cover an employer's specialty drug costs". There is a further catch for the worker: when a drug is reclassified as non-essential, any out-of-pocket spending on it stops counting toward the deductible or out-of-pocket maximum. The cost-sharing protection the ACA built simply switches off.

What the Budget Actually Buys

The trap for policymakers sits in the fine print. State and local officials who approve an employee health plan believe they are buying coverage for their workforce. What they often approve is a plan that carves specialty medications out through an alternative funding vendor, qualified by an asterisk that lets a for-profit middleman strip the most expensive drugs and route employees to outside assistance.

Iowa shows where that leads. Brittany Kuehl, the state's Ryan White Benefits Coordinator, reported that of roughly 175 ADAP clients with employer coverage, 20 to 25 worked in meatpacking under plans that exclude antiretrovirals, forcing the state ADAP to cover them. Her assessment was direct: "These programs are shifting the burden of accessing lifesaving treatment onto programs like state ADAPs and vulnerable people. It's unnecessary and dangerous." The employers there are private, but the mechanism transfers cleanly to any public self-insured plan that adopts the same carve-out.

Follow the money through that transfer. When the outside assistance is a manufacturer's charity, the plan offloads the cost to the manufacturer. When it is a state ADAP or Ryan White, the same government that funds the payroll absorbs the drug cost through a different appropriation, the one built for people with nowhere else to turn. In that case the state has not saved money on those employees. It has moved their drug costs from one public account to another, drained a safety net it also funds, and paid the AFP's fee on top. The savings the vendor advertises are, for those patients, a cost the state pays twice and a middleman it pays a fee for the “savings.” Every dollar an AFP redirects to ADAP is also a dollar unavailable to someone with no coverage at all.

The savings the vendor advertises are, for those patients, a cost the state pays twice and a middleman it pays a fee for the 'savings.'

The Pattern in CANN's Home State

This is not hypothetical in Louisiana. On May 5, 2022, the East Baton Rouge Parish School Board approved a pharmacy contract that included, in its own words, "the implementation of alternative funding solutions for specialty medications." The measure passed as one line in a routine benefits package, grouped with dental and life insurance changes. The district's 2025 and 2026 benefit guides later named the vendor, telling employees their specialty medications "may be available through Payer Matrix alternative funding," with Payer Matrix reaching out to those who qualify. Payer Matrix is the same AFP AbbVie sued in 2023. A public employer serving roughly 40,000 students had routed its teachers and staff with the most expensive, and often most essential, prescriptions through a for-profit carve-out vendor.

The Weight Patients Carry, and the Courts' Response

The people routed through these programs bear the burden in time and risk. A Vanderbilt study of 260 patients released in October 2025 found AFP users waited an average of 41 days for their medications, compared with 15 days for others. For people living with HIV, interruptions in antiretroviral therapy raise the risk of drug resistance, while enrollment requires disclosing HIV status to multiple third parties and fragments pharmacist coordination.

The risk sharpens when an AFP sources medication abroad. A Maryland patient living with HIV received Gilead's Biktarvy shipped from Turkey, the bottle labeled in Turkish, traced to the AFP Rx Valet. The detail that should trouble policymakers is that Biktarvy is fully covered in the U.S. for patients with insurance. The importation did not solve an access problem. It manufactured one. Gilead sued, and in August 2026 the Fourth Circuit affirmed a preliminary injunction barring the defendants from importing its medicines, a decision patient groups say could force some AFPs to scale back or close. The court ruled on trademark grounds rather than declaring importation categorically illegal, so the law remains unsettled.

What We Can Do

Louisiana lawmakers had a chance to limit this and did not take it. In 2024, House Bill 509, by Representative Chad Brown, would have barred insurers and third-party administrators from conditioning plan terms on the availability of financial assistance for a prescription drug, the exact maneuver an AFP relies on. It was heard in the House Insurance Committee on April 16, 2024 and did not advance before the session ended. Ashley Castello, a Louisiana parent whose son lives with severe hemophilia A, wrote at the time that if an AFP entered their plan, her son "could lose access to the treatment plan that works for him."

That fix should return, and other states should pass their own. Public plan administrators can prohibit specialty-drug carve-outs in employee contracts and require that every covered drug count toward the deductible and out-of-pocket maximum. Procurement officers can read past the asterisk and treat AFP contracts as the fiduciary and compliance risks they are, weighing long-term liability against advertised first-year savings. Ryan White providers and ADAP case managers can document AFP-driven cost-shifting to build the record state advocacy needs.

Protecting ADAP and Ryan White is inseparable from Ending the HIV Epidemic. A public plan that carves out a worker's medication to spare its budget does not erase the cost. It moves the bill to a safety net the same taxpayers fund, and moves the risk onto the worker the plan exists to cover. The tools to prevent this are in reach. What remains is the will to use them.