Wednesday, March 6, 2024

Biden DOJ Tacitly Admits Obamacare Wrecked Health Care Competition

A recent Wall Street Journal story highlighting a new antitrust investigation against the nation’s largest health insurer represents a variation on a long-standing theme. In this instance, as in prior occurrences, the Justice Department and federal officials are trying to undo the harmful effects of a law — Obamacare — that has led industry giants throughout the health sector to consolidate.

Recall that, four election cycles ago, then-candidate Obama promised in 2008 that his health care plan would lower premiums by an average of $2,500 per family. That premiums continue to rise unabated shows the failure of Obamacare by Obama’s own standards — and the anti-competitive behavior the law has engendered explains why.

Insurer Acquiring Physician Groups

According to the Journal, the Justice Department’s antitrust division is looking at the nexus between UnitedHealthcare’s insurance business and its Optum subsidiary, which owns numerous physician practices:

The new Justice Department inquiry … is partly examining Optum’s acquisitions of doctor groups and how the ownership of physician and health plan units affects competition. … Investigators have asked whether UnitedHealthcare favored Optum-owned groups in its contracting practices, potentially squeezing rival physicians out of certain types of attractive payment arrangements.

Investigators have also explored whether Optum’s ownership of health care providers could present challenges to health insurers that are rivals to UnitedHealthcare. … And investigators have asked whether and how the tie-up between UnitedHealthcare and Optum medical groups might affect its compliance with federal rules that cap how much a health insurance company retains from the premiums it collects from insurers.

On the last count, the Justice Department is pursuing an issue highlighted by Sen. Elizabeth Warren, D-Mass., last November, when she and Sen. Mike Braun, R-Ind., wrote to the Department of Health and Human Services’ inspector general requesting an investigation examining, among other things, “the extent to which vertical integration allows insurers to evade, or use profit-shifting approaches, to undermine [medical loss ratio] requirements.”

Same Song, Different Verse

All of these issues are of the same piece. Warren and Braun wrote back in November about the effect of UnitedHealth’s insurance business and Optum’s physician practices, but they also discussed integration between pharmacies and pharmaceutical benefit managers (PBMs), who manage drug claims for insurance companies.

Likewise, just as antitrust investigators are examining UnitedHealth’s acquisition of physician practices, so too have hospitals continued to gobble each other up via acquisition over the past decade-plus. A separate Journal story back in 2018, cited in The Federalist nearly six years ago, provided clear visual evidence of how hospital mergers took off just after Obamacare’s enactment in 2010:

(The Wall Street Journal)

What did those mergers bring about? Anti-competitive provisions in contracts seeking to block transparency of information by employers and consumers. In its 2018 analysis, the Journal highlighted the fact that Walmart — one of the nation’s largest employers, and one that has become practically notorious for driving down prices from suppliers — could not even get a list of the poorest-performing providers in its network, let alone exclude them from Walmart’s insurance plan.

Yes, ‘Obamacare Sucks’

By turning most of health care into what amounts to regulated utilities, Obamacare forced these kinds of mergers and acquisitions within the sector. Insurers, hospitals, and drug companies keep buying up their competitors, attempting to gain leverage through sheer size. Health care companies also seek to acquire their competitors because they know that, when profit percentages are capped via regulation, they can only increase their profits by increasing their overall revenue base.

Democrats know all this, of course. As I noted late last year in these pages, Warren’s letter claimed that companies like UnitedHealth were “exploiting loopholes in the law” — while cleverly omitting the fact that Democrats created both the law and said loopholes entirely on their own.

But Warren gave away the plot by citing the title of a blog post in her letter: “How Obamacare Created Big Medicine.” It’s the perfect summation of why, as Donald Trump said in social media posts around the time of Warren’s letter, “Obamacare sucks.” And the Justice Department’s investigation into UnitedHealth provides an implicit admission that even President Biden and his administration agree.

This post was originally published at The Federalist.