Vertical Consolidation in Health Care Leads to Big Profits for Insurers
By Consumers for Quality Care, on August 28, 2024
Health insurers are raking in big profits, not from their primary business, but rather from other services, like pharmacy benefit managers (PBMs), physician networks, health-service businesses, and consumer-wellness divisions, according to reporting by Axios.
Three of the largest health insurers, UnitedHealth Group, Cigna, and CVS Health – who also operate the three largest PBMs that control 80 percent of the prescription drug market – all showed sizable revenue increases in their latest earnings reports. This growth came from non-core products and services unrelated to simple health insurance. Vertical consolidation has allowed these health insurance behemoths to rake in massive profits, and both lawmakers and regulators are beginning to take note.
These health insurance companies now control nearly all aspects of the health care delivery system. This has made it possible to receive all medical care from just one company, potentially leading to monopolistic practices that hurt consumers. “It’ll be a terrible thing if this competition increases power and control in a few hands over health care consumers,” said Rob Andrews, CEO of the Health Transformation Alliance.
Earlier this year, the U.S. Department of Justice launched an investigation into UnitedHealth Group over alleged antitrust violations as the company continues to acquire multiple sectors of the health care system, manipulating consumer choice by keeping health care delivery services in-house and stifling competition in the process. Congress and the Federal Trade Commission (FTC) are also looking into these potential anti-consumer practices.
Decreased competition hurts consumers, often leading to fewer options for care and higher out-of-pocket costs. CQC urges regulators and lawmakers to scrutinize vertical consolidation in the health care system and work to ensure that consumers don’t foot the bill for anti-competitive practices.
