Hayden Rooke-Ley et al. write in the The New England Journal of Medicine about the dangers of a corporate health insurer takeover of Medicare. Medicare Advantage, which is administered by corporate health insurers, is growing like wildflowers. Unless the government ends overpayments to Medicare Advantage plans, a future of UnitedHealth for everyone with Medicare is not unlikely–undermining competition, driving up costs, and putting patient health at risk.
UnitedHealth is the largest health insurer in the US. In part thanks to the billions of dollars of fixed upfront (capitated) payments it receives from the government to offer Medicare Advantage plans, UnitedHealth is acquiring physician practices and clinics. Indeed, UnitedHealth is the largest employer of physicians in the nation. It also owns the third largest Pharmacy Benefit Manager, OptumRx. And it even owns an enormous provider payment system.
The government’s payment system for Medicare Advantage, through upfront capitated payments to insurers who bear the full risk of providing Medicare benefits, creates powerful financial disincentives for corporate insurers to withhold patient care and reimbursements to providers every way they can. In sharp contrast, Traditional Medicare, which is administered directly by the government, has a fee-for-service payment system that incentivizes providers to deliver health care.
Recently, UnitedHealth’s payment system, Change Healthcare, was hacked. As a result, UnitedHealth held up reimbursements to hospitals, physicians and pharmacies. In turn, many of these providers were unable to meet payroll and to deliver care as needed.
Corporate control of health care is a threat to our health care system. Change Healthcare processes payments in Traditional Medicare as well as in Medicare Advantage. After the Change hack, while UnitedHealth left providers in Medicare Advantage with long waits for reimbursements, the Centers for Medicare and Medicaid Services stepped in on behalf of providers in Traditional Medicare to ensure they were paid. Unlike UnitedHealth, the federal government was most concerned about ensuring providers were paid.
Humana and CVS are not as large as UnitedHealth, but they too are building enormous positions in senior care, post-acute care, and in-home services. Cigna, Centene and Elevance are also buying up health care businesses.
This vertical integration in the corporate health insurance sector comes with serious risks. It undermines competition and drives up costs. It can also bankrupt physicians and hospitals and endanger patient care.
Some argue that corporate control and consolidation in the health care sector delivers efficiencies that can save money and improve care. For example, insurers have an incentive to keep people from going to the ER because they are paid a fixed amount and can pocket what they don’t spend on care. They also have an incentive to keep members healthy so they spend less on their care.
But, insurers have a financial incentive to keep people from going to the ER and getting other costly care when they need it. The Office of the Inspector General has found that they engage in widespread inappropriate delays and denials of care. So, whatever the benefits of consolidation, the risks are costly and dangerous.
Insurers also game the Medicare payment system to reap billions of dollars in additional revenue. Last year, they received $83 billion in overpayments, according to the Medicare Payment Advisory Commission.
The notion that insurers’ employment of physicians eases physicians’ administrative burden is misplaced. Insurers control staffing and scheduling, burdening physicians with a large caseload. In fact, insurers can keep physicians from putting the health of their patients first. Insurers can call the shots regarding the number of patients each clinician sees. And, insurers can incentivize providers to withhold care.
Insurers like UnitedHealth and CVS have so much money and power at this point that the Department of Justice and Federal Trade Commission have not been successful at blocking monopolistic acquisitions such as United’s purchase of Change Healthcare. UnitedHealth prevailed in court.
Theoretically, Congress could put an end to vertical consolidation by passing legislation that would prevent insurers from employing physicians and controlling our care-delivery system. Those reforms appear to be a pipe dream, given the gridlock in Congress.
For sure, Congress should eliminate insurer overpayments. That would cripple the insurers quickly. But, that’s equally unlikely, given the politics.
At the very least, Congress and the Administration should warn people with Medicare of the dangers they face in Medicare Advantage, instead of misleading them to think they will get the same benefits as in Traditional Medicare. While that might be the case in theory, Medicare Advantage enrollees do not get the same benefits as people in Traditional Medicare in practice. Medicare Advantage plans limit enrollees’ access to doctors and hospitals, impose administrative obstacles to care, and second-guess treating physicians, often inappropriately denying critical care.
Here’s more from Just Care:
- United Health now controls 1 in 10 physicians
- Medicare Advantage offers less care at greater cost
- Medicare Advantage insurers increasingly use step therapy for cancer drugs, delaying care
- Medicare Advantage enrollees denied post-acute care get better protections
- Five things to think about when choosing between traditional Medicare and a Medicare Advantage plan
