ACA behind mergers, higher prices

When Democrats talk about healthcare, they can sound eerily like Luigi Mangione, who on Friday confessed to murdering UnitedHealthcare CEO Brian Thompson in cold blood in 2024 and pleaded guilty to two federal charges of stalking.

Prosecutors say Mr. Mangione wrote in a notebook that he was rebelling against "the deadly, greed fueled health insurance cartel." "Like the thousands of people who have reached out since this tragedy to share their own experiences, he believed that the system had failed him and destroyed his life," his lawyer said.

While Mr. Mangione suffered chronic back pain and had spinal fusion surgery, it remains unclear why he believed the system failed him. He might have made health insurers a scapegoat for his medical ailments, just as Democrats have for the dysfunctions wrought by ObamaCare.

Look no further than a recent white paper by Senate Democrats, which takes aim at "corporate greed" and "Big Insurance." The title page features a health insurance document with a red stamp "DENIED," an echo of the inscription on shell casings that Mr. Mangione left at the crime scene.

The report laments that "health care has become unaffordable for millions of Americans even when they have insurance." Wasn't the Affordable Care Act supposed to make healthcare affordableft

In reality, the law's regulations have driven up costs by fueling consolidation.

The Democratic report concedes as much: "Consolidation and vertical integration accelerated in the late 2010s as large for-profit insurers acquired providers, pharmacies, and PBMs" - pharmacy benefit managers. A major reason is ObamaCare's medical-loss ratio, which requires health plans to spend at least 80% to 85% of premium dollars on medical care. To get around this de facto profit cap, insurers have combined with PBMs and providers.

This allows insurers to increase payments and shift profits to affiliates.

Democrats acknowledge this perverse result: "Limiting profits based on a percentage of revenue and spending may have the effect of increasing incentives for insurance companies to raise their own costs" and "created unintended incentives for insurers to expand" into other markets "to maximize profits." Unintended, but completely foreseeable.

Democrats single out UnitedHealth Group, which owns "nearly 2,700 subsidiaries and employs over 90,000 doctors." (United says it employs 9,000 physicians directly and has "affiliations" with another 90,000.) This corporate structure "allows the company to generate significant revenue by paying itself, often at higher rates than they pay practices they do not own," and "to control which doctor a patient sees and where they fill their prescription." UnitedHealth is responding to the incentives that Democrats created.

At the same time, ObamaCare's Medicaid expansion has fueled hospital consolidation by making more hospitals eligible for the 340B federal drug program, which allows public and nonprofit hospitals that serve a large share of Medicaid patients to buy medications at steep discounts and sell them at markups, often four to five times the purchase price.

This drug subsidy amounted to nearly $80 billion last year - more than all Medicaid spending on prescription drugs. Hospitals can rake in more subsidies by expanding and treating more patients. Anthony DiGiorgio, a professor at the UCSF School of Medicine, calls the program a "billion-dollar subsidy for hospital consolidation." Studies have found that hospitals invest much of the subsidy money in financial assets and expanding their footprints and bureaucracy. Ninety-nine percent of metropolitan hospital markets are now considered highly concentrated based on Justice Department guidelines.

The University of California, Irvine, a major beneficiary of the 340B program, in 2024 acquired four hospitals and their associated outpatient clinics from the for-profit Tenet Healthcare. Last year UCI proudly opened the first "all-electric, zero-emission hospital in the country." No doubt solar panels on parking garages will soothe cancer patients.

ObamaCare also sought to limit competition to hospital conglomerates and teaching hospitals by effectively banning physician-owned hospitals from expanding. One result: Private-equity firms have been acquiring physician groups and outpatient facilities. Naturally, Democrats also complain about this in their report.

One consequence of all this consolidation is fewer physicians working in private practice - 42% in 2024, down from 60% in 2012. Another is less competition and higher prices, especially at hospitals. Since ObamaCare was enacted in 2010, hospital prices have increased at twice the rate of inflation and three times as fast as prescription drug prices have risen.

Executives at many nonprofit hospitals earn more than those at insurers. Eugene Woods, the CEO of North Carolina's Advocate Health, made about $25.8 million in 2024 - more than twice as much as the executive Mr.

Mangione assassinated.

Naturally, the Democratic antidote to the distortions they created is more government regulation, which will further increase prices, feed discontent with health insurers and fuel the political impetus for a single-payer system. Talk about a diabolical plot.