Comment by NickC25
3 days ago
>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.
You just answered my question:
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 gets even better (quoting from ceejayoz down-thread):
>UHC is the largest single employer of doctors in the US.
https://news.ycombinator.com/item?id=42717812
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.
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Seems like it does. This is where the FTC needs to act.