I think some critiques of American health insurance are simplistic, but this truly seems very bad. From the report:
> "Higher markups can also result in larger internal transfer payments from health plans to affiliated pharmacies, which may allow vertically integrated PBM-pharmacy-insurer entities to retain revenue and profits while formally satisfying the insurers' medical loss ratio ("MLR" ) requirements, but without providing the clinical care and quality improvements that the MLR rule seeks to promote. In
addition, higher markups can result in significant patient cost sharing requirements because
reimbursement rates are often correlated with point-of-sale prices, which can influence how
much patients are required to pay."
In other words. Health insurance firms have capped profits in the US. But in this case one conglomerate can own both an insurer and a PBM, so it can just overcharge consumers for insurance and then launder its profits through the PBM.
There is no complexity to the corruption and inefficiency of US healthcare. It has the highest costs and mediocre outcomes. It offers healthcare providers incentives to act even if they shouldn’t and allows insurers to profit directly from denying care.
It’s worse in practice than any system adopted by any peer nation regardless of the wide range of differing approaches to providing universal coverage.
Treating it as some uniquely complicated problem is deceptive. It’s broken because that keeps certain people wealthy and gives employers control over labor.
>In other words. Health insurance firms have capped profits in the US. But in this case one conglomerate can own both an insurer and a PBM, so it can just overcharge consumers for insurance and then launder its profits through the PBM.
Most insightful comment in this thread. THIS is the crux of the issue, and we've allowed the likes of UHC to buy PBMs and other pieces of the supply chain / customer lifecycle because UHC lobbyists claim it would reduce costs across the board and also improve efficiency. Load of absolute bullshit obviously but here we are.
Is it the case that UnitedHealth and Cigna each own (or control) one of the "big three" PBMs? If so, that is a just crazy - the control insurance premium pricing, benefit decisions, AND the pricing of covered medications?
yadaebo wrote below "Medical Loss Ratio (MLR) is capped at 85% in the US which means 85% of revenue must go to patients". Does controlling a big PBM allow an insurance company a loophole?
> It’s no secret that UnitedHealth is a colossus: It’s the country’s largest health insurer and the fourth-largest company of any type by revenue, just behind Apple. And thanks to a series of stealthy deals, almost 1 in 10 U.S. doctors — some 90,000 clinicians — now either work for UnitedHealth or are under its influence, more than any major clinic chain or hospital system.
>They purchase physician groups... and then pay themselves higher rates.
> UnitedHealth Group is paying many of its own physician practices significantly more than it pays other doctor groups in the same markets for similar services, undermining competition and driving up costs for consumers and businesses, a STAT investigation reveals.
For better or worse, the incentives created by federal legislation since the 1940s make this healthcare industry consolidation and vertical integration inevitable. Payers (insurers) have been merging to gain more negotiating power over provider rates and hold down medical costs. So provider organizations have reacted by consolidating themselves to maintain their negotiating power and keep rates high. Increased costs to comply with federal and state rules around security and interoperability also drive provider consolidation to achieve economy of scale. Many areas are now dominated by only one or two large health systems. So, the logical next step is for payers to vertically integrate and bring more care in house where they can better control cost and quality.
UnitedHealth Group is hardly unique in this regard. They're the largest but all the major commercial payers (including the non-profit ones) are pursuing similar strategies. Essentially they're copying the existing Kaiser-Permanente model of having a payer and provider organization under one roof.
I'm not defending this system, just explaining why the current structure exists. Any major improvements will require an Act of Congress to better align the incentives with the interests of patients / consumers / taxpayers.
>the logical next step is for payers to vertically integrate and bring more care in house where they can better control cost and quality.
…except you skipped over the part where UHC billed at higher rates for the clinics they own so they could screw customers with premium hikes, take a bigger percentage of of the inflated bills, as well as profit from whatever costs they didn’t cover and people were forced to pay.
From a strict legal perspective it's not at all clear that UHG or any of the other large payers meets the definition of a trust. Any attempt to apply antitrust law would likely be tied up in the courts for many years, and even if UHG were eventually forced to divest some parts of their Optum business it wouldn't solve any of the systemic problems. If we want to bring down costs and improve access to care it will require a major realignment of incentives that impact all the participants.
Yes. I have been trying to figure out for years why the PBM system is so convoluted and seemingly so much more central to healthcare than it was, and this seems like it must be the reason.
Medical is a very technical field, and the costs are obfruscated from most people. I'm not surprised laymen can't give a technical breakdown of what exactly is wrong with the health insurance field.
> "Higher markups can also result in larger internal transfer payments from health plans to affiliated pharmacies, which may allow vertically integrated PBM-pharmacy-insurer entities to retain revenue and profits while formally satisfying the insurers' medical loss ratio ("MLR" ) requirements, but without providing the clinical care and quality improvements that the MLR rule seeks to promote. In addition, higher markups can result in significant patient cost sharing requirements because reimbursement rates are often correlated with point-of-sale prices, which can influence how much patients are required to pay."
In other words. Health insurance firms have capped profits in the US. But in this case one conglomerate can own both an insurer and a PBM, so it can just overcharge consumers for insurance and then launder its profits through the PBM.