When Democrats talk about healthcare, they can sound “eerily” like Luigi Mangione. Last Friday, Luigi confessed to murdering 2024 UnitedHealthcare CEO Brian Thompson in cold blood and pleaded guilty to two federal charges of stalking.
Mangione wrote in his notebook that he was rebelling against “the deadly, greed-fueled by the health insurance cartel.” According to Mangione’s lawyer, Lugi was acting like the thousands of people who have reached out since this tragedy to share their own experiences. “
Mangione believed the system had failed him and destroyed his life.
“Pass the Bill to Read What’s in It”
Still unclear, writes the WSJ’s Allysia Finley, is why Mangione believes the system failed him. Perhaps the answer lies in front of our eyes. Start first by reading Senate Democrats’ White Paper report, which takes aim at “corporate greed” and “Big Insurance.” There, on the title page, features a health insurance document with a red stamp “DENIED,” echoing the inscription on shell casings that Mr. Mangione left at the crime scene, reports Ms. Finley.
The White Paper report laments that “health care has become unaffordable for millions of Americans even when they have insurance.” Ms. Finley then asks, “Wasn’t the point of the Affordable Care Act? Wasn’t it supposed to make healthcare affordable?
In reality, the law’s regulations, according to Ms. Finley, have driven up costs by fueling consolidation.
The White Paper report concedes as much, continues Ms. Finley.
“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.
“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 also “created unintended incentives for insurers to expand” into other markets “to maximize profits.”
Unintended, but Completely Foreseeable.
Democrats have singled out UnitedHealth Group, which owns “nearly 2,700 subsidiaries and employs over 90,000 doctors.” This corporate structure, adds Ms. Finley, “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.
Obamacare’s Medicaid Expansion
Concurrently, more hospitals have been made 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. ObamaCare’s Medicaid expansion has fueled hospital consolidation.
This drug subsidy amounted to nearly $80 billion last year—more than all Medicaid spending on prescription drugs, reports Ms. Finley.
“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 expand their footprints and bureaucracy. Ninety-nine percent of metropolitan hospital markets are now considered highly concentrated based on Justice Department guidelines.”
For example, take the University of California, Irvine, a major beneficiary of the 340B program. In 2024, it acquired four hospitals and their associated outpatient clinics from the for-profit Tenet Healthcare.
Last year, continues Ms. Finley, UCI proudly opened the first “all-electric, zero-emission hospital in the country.”
No doubt, writes Finley, solar panels on parking garages will soothe cancer patients.
Obamacare’s limiting of competition to hospital conglomerates and teaching hospitals (effectively banning physician-owned hospitals from expanding) resulted in private-equity firms from acquiring physician groups and outpatient facilities.
“Naturally,” writes Ms. Finley, “Democrats also complain about this in their report.”
A consequence of this consolidation is fewer physicians working in private practice (42% in 2024, down from 60% in 2012), according to Ms. Finley. Another consequence 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.
A Diabolical Plot
Yes, indeed. Democrats do have a solution: More government regulation, which will further increase prices, feed discontent with health insurers, and fuel the political impetus for a single-payer system, suggests Ms. Finley. Talk about a diabolical plot.
