WTAS: The consequences of consolidation and vertical integration

As Congress continued investigating the cyberattack on UnitedHealth Group last week, the impact of aggressive consolidation and integration in health care was a central theme.

Three health care giants currently own the three largest Pharmacy Benefit Mangers (PBMs) and insurers. These conglomerates also own pharmacies and doctors' offices. In fact, UnitedHealth Group is the nation's largest employer of doctors. The three largest PBMs control 80% percent of the prescription drug market.

These companies have substantial, increasing control over patients and their healthcare. They control what medicines people can get, what they pay and even what pharmacy they can use. At the same time, middlemen, like insurers and PBMs, and others take more than half of every dollar spent on medicines.

Over the past several weeks, lawmakers, media and others have raised concerns about the impact consolidation is having on patients, health care costs and security of the system.

Profits ahead of patients.

• "Because UnitedHealth has bought up every link in the healthcare chain, you are now in a position to jack up prices, squeeze competitors, hide revenues, and pressure doctors to put profits ahead of patients. UnitedHealth is a monopoly on steroids. The opportunities for price gouging are everywhere," said Senator Elizabeth Warren (D-MA).
• "I have a fundamental problem with the direction of consolidation in our healthcare system. And I believe that it's increasing costs and reducing the quality of care... The reality is that the American people don't want to be told that less competition, more consolidation is a good thing. They want to get the best healthcare in the world, from a system that is clear, understandable, and affordable," said Representative Cathy McMorris Rodgers (R-WA).

Anticompetitive practices.

• "The Change hack is a dire warning about the consequences of too-big-to-fail megacorporations gobbling up larger and larger shares of the health-care system" said Senator Ron Wyden (D-OR).
• "One of my main focuses that I have set as my goal as a Member of Congress when I started 10 years ago was to address the vertical integration that exists in healthcare, specifically in drug pricing where the insurance company owns the PBM, that owns the group purchasing organization, that owns the pharmacy, that owns the doctor. And in your case, you're the largest for-profit domestic health insurance company in the country, as has been pointed out, with over 10,000 physicians, and your own pharmacy, and one of the largest PBMs in the country," said Representative Buddy Carter (R-GA).
• "This is just another thing that's happened with the massive vertical integration in our system that I believe personally is not in the best interest of the American people," said Representative Larry Bucshon (R-IN) in another recent House Energy and Commerce hearing on the cyberattack.

Security risks.

• "Not only have providers and hospitals been shortchanged reimbursement claims, not only has vulnerable patient data been leaked, possibly sold to a foreign adversary, not only were patients at least temporarily unable to access... their medications, but I've even received reports from utilities in my district that they are unable to bill and process payments because change was also their clearinghouse," said Representative Kim Schrier (D-WA).
• "With UnitedHealth's announcement last week that hackers may have accessed protected Health information for a substantial portion of people in America. Some of our worst fears are coming true. The sensitive health data of tens of millions of Americans is at risk," said Paul Tonko (D-NY).

It's not just Congress looking at this issue. The DOJ, FTC, and HHS are also investigating the effects of health care consolidation. If policymakers want to fix the system and help patients, they need to pass reforms that take on the middlemen, realign incentives in the market, strengthen competition and improve patients' access to care.

Public link

Please use the above public link if you want to share this noodl on another website.