Insurance companies are too big and it's time to break them up

Over the summer, the Federal Trade Commission (FTC) filed a lawsuit against three pharmacy benefit managers (PBMs). The lawsuit states that the companies create a “perverse drug rebate system” artificially inflating the cost of insulin. The FTC’s lawsuit against PBMs doesn’t go far enough. Health insurance companies are too big, and we need to break them up.

UnitedHealth Group, for example, is the fourth largest company in the United States. It has a revenue of upwards $300 billion per year.

It owns a health services arm, Optum, which is the largest employer of physicians in the United States, employing 1 in 20 practicing physicians. Optum is quietly buying more physician groups without much scrutiny, saturating geographic markets with Optum-owned physicians.

In addition to hoarding the market share of insurance dollars and care providers, UnitedHealth Group also owns Change Healthcare, a data analytics company. The acquisition of Change Healthcare was challenged by the US Department of Justice (DOJ) in 2021; it was a direct competitor of UnitedHealth’s own data analytics firm, OptumInsights, and its work impacted the industry across multiple providers. The DOJ lost that case because, per the presiding judge, there wasn’t enough anticompetitive evidence against UnitedHealth Group.

Data analytic companies like Change Healthcare are supposed to work in favor of medical practices to get higher reimbursement from insurance companies by optimizing claims. Change Healthcare optimizes half of all claims in the United States, including those sent to Medicare and Medicaid, reviewing private information for millions of patients in the process.

Earlier this year, when Change Healthcare was attacked by an international ransomware group, the mere threat of a data leak shut down all claims processing, halting reimbursements to thousands of pharmacies, hospitals, medical practices, physical therapy offices, etc. Though reimbursement has recommenced, many practices even now have not recovered their payment.

In fact, after the ransomware attack, Optum rushed its acquisition of the Corvallis Clinic in Oregon. The practice was on the verge of bankruptcy after reimbursements were halted. Essentially, UnitedHealth Group rescued a practice that needed rescuing because of UnitedHealth Group.

Due to a lack of resources and personnel, antitrust enforcement agencies like the DOJ and the FTC haven’t had much success in challenging companies like UnitedHealth Group. These companies are not, per current popular economic theories, considered to be conflicts of interest or threats to competitive markets.

When one group owns a physician office, pharmacy and insurance company, it theoretically should drive down costs. Instead, insurance companies influence patients’ choice of doctor, pharmacy, medication, and pass costs on to patients in the process.

PBMs are a perfect example of this. These entities manage prescription drug benefits for insurance companies, and often pressure patients to switch from geographically convenient pharmacies to a PBM-based mail-order system by offering a significant discount. As a family physician, I have meticulously rewritten thousands of prescriptions to transfer them from neighborhood mom and pop pharmacies to PBMs like UnitedHealth Group’s OptumRx. The outcome is that local pharmacies struggle to survive, patients have limited choice, and clinicians have increased paperwork: all so insurance companies can keep their profits within their system.

In February, the DOJ launched an antitrust investigation into UnitedHealth Group. In May, in the wake of the Change Healthcare ransomware attack, Congress grilled the CEO of UnitedHealth Group on irresponsible cybersecurity practices. In a busy election season, this scrutiny, at least from Congress, has been inconsistent. UnitedHealth Group, afterall, has a multimillion dollar lobby group in Washington D.C., with multiple former legislators on payroll as lobbyists.

Simply put, UnitedHealth Group has a chokehold on the health care system, impacting local pharmacies, small practices, cybersecurity and drug prices. If consumers and patients want more choice and more access to health care services, the current landscape needs to change now. Choice in clinical services, innovation, and a healthy environment for small practices and pharmacies isn’t unreasonable–as long as our antitrust agencies are able to hold up their end of the bargain.