Following a massive cyberattack on UnitedHealth Group subsidiary Change Healthcare last month, UHG CEO Andrew Witty is testifying to both Senate and House committees on Capitol Hill Wednesday. While speaking to lawmakers, he will no doubt apologize, brag about UHG’s resources and how Change benefited from being owned by the company, and otherwise attempt to explain away the ongoing repercussions of the February hack on the company’s little-known subsidiary.
The attack, which initially threatened to crash the American healthcare system and is still throwing roadblocks in the way of patient care and medical reimbursements, has led to 60 percent of the nation’s hospitals losing more than $1 million a day in revenue. The damage is still ongoing, with the most financially vulnerable hospitals and medical providers potentially being forced to close their doors or sell to a giant like UHG.
Accountability, almost always in short supply in American life, is desperately needed. Two months after the disastrous cyberattack, UHG continues to struggle to take responsibility or provide much-needed relief to providers, patients and pharmacies. But the hack also points to a bigger issue: we need a fundamental rethinking of how healthcare is structured in the United States. Just as we have banks that are “too big to fail,” we now also suffer from healthcare giants that are “too big to care.” It’s time for Congress to consider breaking them up.
Vertical integration in healthcare
UnitedHealth Group is not simply an insurer. Rather, it is a “vertically integrated” healthcare conglomerate that through its many subsidiaries owns mail-order and specialty pharmacies; a pharmacy benefit manager (PBM); provides healthcare consulting and IT services; and the largest employer of doctors in the country. And UHG is not alone: all the nation’s largest insurers are pursuing the same vertical integration strategy, consolidating key points throughout the healthcare ecosystem in response to sweeping changes in healthcare financing, inadequate program oversight, the growth of Medicare Advantage and, until recently, decades of weak antitrust enforcement.
These vertically integrated healthcare giants create and benefit financially from conflicts of interest that harm patients, providers and taxpayers. Owning physicians allows corporations like UHG to make patients look sicker so they can overcharge the government and taxpayers. Vertical consolidation also enables giants like UHG to steer patients into their own subsidiaries for care, squeezing out local providers like independent physician practices and community pharmacies. Further, UHG — as lawsuits have alleged — utilizes its insurance-side subsidiaries to pressure independent practices to sell to their provider-side subsidiaries, effectively “flipping” new patients to UHG-owned medical practices and insurance plans.
And then there is Change Healthcare, a claims processor, central claims clearinghouse and revenue cycle management company that processes about half of all health insurance claims filed, with a third going through Change’s clearinghouse — enough to put the entire American healthcare system at its mercy.
Federal action to address Healthcare Consolidation
The Federal Trade Commission and Department of Justice under the Biden administration have worked to tackle consolidation in healthcare by blocking a healthcare data merger, scrutinizing UnitedHealth’s home health acquisitions, recently investigating UnitedHealth for monopolization, and attempting to block the company’s acquisition of Change Healthcare. However, antitrust enforcement through litigation is a resource and time-intensive game of whack-a-mole. Congress needs to not only ask why insurance companies should be able to own provider services, physician practices and pharmacies, but also consider banning this sort of “payer-provider” or “payvidor” integration.
In 1933, Congress passed the Glass-Steagall Act, which prohibited banks from being both commercial and investment banks in response to the Great Depression. A Glass-Steagall for health care would recognize that the vertical consolidation of insurers and direct health providers creates inherent conflicts and risks — including cybersecurity — of one company being on both sides of this relationship. This proposal would ban insurers and PBMs from owning pharmacies, including mail-order and specialty pharmacies, ban insurers from owning medical providers, and ban insurers from owning intermediaries like Change.
UHG proves this point. The Change hack is just the latest example of the company prioritizing profits above all else. The company continues to prove it is “too big to care” with a growing list of abuses to patients and providers.
Congress could act right now to address the need for structural separation. Increasingly, elected officials are seeing the bigger picture. ln a recent House Energy and Commerce Committee hearing regarding the Change Healthcare hack, Rep. Diana Harshbarger (R-Tenn.) claimed “vertical integration has been a travesty,” while Rep. Larry Bucshon (R-Ind.) stated that “the massive vertical integration in our system … is not in the best interest of the American people.”
Much of the debate on Capitol Hill to fix the broken healthcare system takes on small pieces of it, like pharmacy benefit manager transparency, Medicare Advantage payment rates, the Physician Fee Schedule, or insulin price caps. It’s important, but it’s not enough. The Change hack demonstrates the increasing need for structural separation. Congress needs to enact a Glass-Steagall for healthcare, and protect patients, providers and taxpayers from the “too big to care” conglomerates.
Ashley Nowicki is a policy analyst at the American Economic Liberties Project.
Hayden Rooke-Ley is a senior fellow for healthcare the America Economic Liberties Project.
Copyright 2024 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
