BLAZE NEWS | CHRIS ENLOE | NOVEMBER 27, 2023
IMAGE SOURCE | MICHAEL A. MCCOY | GETTY IMAGES
Sen. Elizabeth Warren (D-Mass.) is finally acknowledging some of the “unintended consequences” of Obamacare, according to the Wall Street Journal editorial board.
Last week, Warren and Sen. Mike Braun (R-Ind.) sent a letter to the Health and Human Services Department inspector general requesting an investigation into whether insurance companies are dodging the medical loss ratio, a key Obamacare rule, to consolidate control in the health care industry and generate sky-high profits.
The MLR requires health insurers to spend 80-85% of revenues on medical care and improving the quality of care. The statutory requirement is a “de facto cap on profits,” the WSJ noted, and the Obama administration promised it would benefit consumers.
But the rule, according to WSJ, has inspired insurance companies to buy, merge, or affiliate with pharmacy benefit managers, pharmacies, and other key links in the health care supply chain. The result — vertical integration of the drug market and health care industry — has allowed insurers to dodge the MLR by shifting revenues to other businesses in their conglomerate.
The result, Warren and Braun said, is that “[c]onsumers and taxpayers foot the bill for these games through higher insurance premiums and out-of-pocket costs.”
The letter goes on to explain:
Just a year after the MLR requirement was put in place, UnitedHealth Group formed Optum, which now includes a PBM and a specialty pharmacy, as well as over 70,000 physicians. Today, UnitedHealth Group sends 25 percent of its medical claim revenue to its Optum subsidiaries – in other words, to itself. Similarly, in 2019, CVS Health sent 13 percent of its profits to its own providers and pharmacies.
The calculation is simple. By owning every link in the chain, a conglomerate like UnitedHealth Group – which includes an insurer, a PBM, a pharmacy, and physician practices – can send inflated medical payments to its pharmacy. Then, by realizing those payments on the pharmacy side – the side that charges for care – rather than the insurance side, the insurance line of business appears to be in compliance with MLR requirements, while keeping more money for itself.
The Wall Street Journal described Warren’s complaints about the health care industry’s exploitation of the MLR as her “Obamacare epiphany.”
“It’s a familiar story: Big government intervention creates incentives and raises costs that help big business, and then politicians demand more government intervention to fix the distortions they caused,” the board wrote.
Last Updated on May 13, 2024 by Real KBrett