Anti-competitive practices harm patients, providers, and the economy
In January, UnitedHealth Group (UHG) released
its 2023 financials in a new tab or
window. It paints a vivid picture -- not just of financial success
and wealth transfers -- but of a healthcare Goliath seemingly towering over and
controlling all the levers of the industry and perhaps even the government.
In
2023, UHG raked in a jaw-dropping $22.4 billion in profits opens in a
new tab or window, with $5.5 billion in the fourth quarter alone.
Revenue? It was up by 14.6% to an incredible $371.6 billion. To put that in
context, UHG's revenues are higher than the individual GDPs opens in a new tab or window of
Finland, the Czech Republic, Hong Kong, Greece, and another 132 regions or
countries worldwide.
Alongside
its year-end financial report, UHG announced it expects between $400 billion
and $403 billion in revenue in 2024.
Impressive?
Absolutely. But is UHG's empire good for the healthcare system, clinicians, and
patients? Here is where it gets interesting -- or concerning, depending on your
view.
This
financial windfall has come via rewriting healthcare industry practices through
vertical integration. With its healthcare services provider Optum and other
acquisitions, vertical integration has allowed UHG to essentially be a
value-chain monopoly, controlling everything from health insurance to medical
services to healthcare data to pharmaceuticals.
Vertical
integration might sound benign until you illustrate the result: questionable business practices opens
in a new tab or window; fewer insurance choices for providers,
employers, and patients; worse health outcomes and higher
costs opens in a new tab or window; and profits that could be put to
better use. It is a model that raises questions: Are we looking at healthcare
for many, or "Wealthcare" for shareholders and insurance executives?
UHG
is not alone. Five other big-name payers are highly vertically integrated and open in
a new tab or window: CVS Health, Cigna Healthcare, Humana, Elegance
Health, and Kaiser Permanente opens in a new tab
or window. UHG just happens to be the biggest.
Is
this the healthcare future we want? One where giants like UHG dictate terms of
employment for physicians (right now, the company employs 10 open in a new tab or window of
all U.S. physicians) and create dubious algorithms for patient care decisions?
(A class action suit opened in a new tab
or window filed last fall alleged UHG illegally used artificial
intelligence to deny rehabilitative care to Medicare Advantage patients. Other
similar lawsuits alleging denial of care have also been filed against Aetna opens in a new tab or window, Cigna opens in a new tab or window,
and Humana opens in a new tab or window.)
Where
have the regulators been, like the Federal Trade Commission, the Department of
Justice (DOJ), or the new HHS chief competition officer who is supposed to
coordinate, identify, and elevate opportunities to promote competition in
healthcare markets?
UHG
is projected to have more than $400 billion in revenue for 2024, and if its
profit margins continue to track with its revenues, its profits could top $26
billion. (To be clear, high revenues do not equal profits. There are many cases
where high-revenue companies make very little. While a 6.5% profit margin
sounds relatively low, it is the volume of money and the magnitude of money
that makes the potential impact and control staggering.)
In
a free-market economy, companies and their shareholders are obviously entitled
to their profits. (Whether entities like UHG could do good with their profits
is another story. Could they, for example, take some of the $5 billion they
made in the fourth quarter of 2023 to help pay off student debt for their
physicians? Could they improve innovation or reimbursement rates? Could they
reduce premium costs for their customers or costs for employers?) But UHG did
not become the giant it is today without distortions in the market, and this
should concern liberals and conservatives alike.
UHG
became the behemoth it is because it has been able to buy up companies like
Optum, DaVita Medical Group, and even The Advisory Board without so much as a
blink of an eye from regulators. Consider this fact: UHG lobbying expenses
ballooned more than 10-foldopens in a new tab
or window between 1998 and 2023. (It spent less than $1 million
on lobbying in 1998.) In just one year, from 2022 to 2023, its government
relations spending went from $6.4 million to almost $11 million.
Meanwhile,
regulators have blocked the mergers of hospitals opening in a new tab or
window and physician practices opening in a new tab or window because
of antitrust concerns.
It
appears, however, that after years of apparent somnolence, the DOJ may have
awakened, launching an antitrust investigation opens in a
new tab or window focused on the relationships between United
Healthcare's insurance unit and subsidiary Optum's healthcare services arm.
Depending on the findings, the implications for industry consolidation and
vertical integration could be significant.
Quite
simply: for diehard capitalists, what we are seeing in the insurance ecosystem
is not the free market. It's a guided or controlled market with growing market
distortions where years of policy have granted winners and losers. This is
why, for the good of patients, providers, and the economy as a whole,
Washington regulators need to wake up and enforce anti-competitive practices.
https://www.medpagetoday.com/opinion/prescriptionsforabrokensystem/109088