If you want to understand what's ailing the American healthcare system, look no further than UnitedHealth Group.
As CEO Andrew Witty prepares to face Congress over the recent hack of UnitedHealth subsidiary Change Healthcare, Republicans have a golden opportunity to expose how this corporate giant's tentacles have strangled competition, stifled innovation, and left patients paying the price.
First, let's examine the data breach itself. The February cyberattack disrupted critical payment systems in Change Healthcare's network, which processes around 15 billion transactions each year and handles 1 in every 3 patient records. According to the American Medical Association, 80% of member physician practices surveyed lost revenue from unpaid claims due to the hack. It took weeks to get Change Healthcare's systems back online.
The hack — allegedly spearheaded by Russian cybercriminals — unsurprisingly pushed some physician practices to the brink of collapse. But UnitedHealth also owns many physician practices that rely on Change Healthcare for payment processing. It's worth asking whether the company prioritized payments to its own vendors during the chaos.
It gets worse.
Soon after the hack, UnitedHealth swooped in to acquire practices in Oregon and Massachusetts that seemingly couldn't survive the mayhem. The health conglomerate no doubt paid fire-sale prices — potentially benefiting directly from the attack. It seems UnitedHealth exploited a crisis it was responsible for allowing to happen to snap up struggling competitors.
Of course, the Change Healthcare debacle is just a symptom of a much larger disease: unchecked corporate growth and consolidation. UnitedHealth possesses not only the largest private health insurer in the United States, but it also owns Optum. Optum is a three-headed beast that owns a vast physician network, a billing and data analytics business, and one of the country's largest pharmacy benefit managers. This is a textbook case of vertical integration gone wrong, potentially enabling anticompetitive practices that drive up costs and choke off choices for patients.
The Justice Department seems to agree, as it's currently probing UnitedHealth for potential antitrust violations. And no wonder: With UnitedHealthcare's ability to funnel patients to its own 90,000-strong Optum physician network, the potential for abuse is clear.
But issues go even deeper than antitrust concerns. Just weeks before the Justice Department probe became public, UnitedHealth's chairman and three top executives dumped more than $100 million worth of stock. This suggests a clear likelihood of insider trading.
Then there's the way UnitedHealth allegedly has weaponized its deep ties to Democratic politicians and lobbyists to silence critics and avoid accountability. The company's close alliance with the lobbying group AARP is a concerning example. AARP takes a "royalty fee" on AARP-branded Medicare plans provided by UnitedHealth, effectively overcharging seniors to fund lobbying efforts. Since 2007, AARP has pocketed an estimated $6.7 billion, tax-free, from its partnership with UnitedHealth. In return, it appears AARP, a significant Democratic donor, mutes any criticism of UnitedHealth on Capitol Hill.
This cozy arrangement offers a glimpse into the Democrats' endgame: a quasi-single-payer system run by UnitedHealth, one that would funnel billions of taxpayer dollars into its coffers while leaving patients and small providers at its mercy. With the UnitedHealth web tightening around every corner of American healthcare, the company is perfectly positioned to exploit the government's growing role in the sector.
Republicans must seize the moment to demand answers from Witty.
Americans deserve to know how UnitedHealth prioritized payment processing during the hack and acquired struggling physician groups amid turmoil the company allegedly is responsible for creating. They should get the truth on the suspiciously timed stock sales. And they deserve clarity on UnitedHealth's cozy relationship with Democratic power brokers like AARP. The hearing offers a chance to expose one company's unchecked power and how it threatens our healthcare system.
By dragging UnitedHealth's seemingly opaque dealings and anticompetitive behavior into the light, Republicans can expose the perils of unchecked vertical integration in the healthcare industry — a path that leads to higher costs, less innovation, and a system rigged in favor of corporate Goliaths.
Drew Johnson is a government watchdog who serves as a budget, tech and energy policy expert at several free market think tanks. Read Drew Johnson's Reports — More Here.