GOP letting Democrats own healthcare reform
by Robert Goldberg · The Washington TimesOPINION:
Healthcare affordability tops Americans’ list of concerns, according to recent polling, and voters are zeroing in on one culprit: insurers.
The political opportunity for reform is wide open. Democrats are the only ones seizing it. Progressives such as Sen. Elizabeth Warren, Massachusetts Democrat, have proposed cracking down on (and even breaking up) major insurance companies.
Republicans can’t sit by idly as Democrats ride voter frustration with insurers to victory this fall. Republicans must offer their own plan for tackling insurers’ excesses.
Fortunately, they have taken steps to rein in abuses within the insurance market, such as scrutinizing consolidation and demanding more transparency from middlemen. These efforts reflect a broader recognition that concentrated, opaque healthcare markets often work against patients.
Consider the Justice Department’s recent response to UnitedHealth Group’s acquisition of Amedisys, a home healthcare company. Regulators forced the divestiture of more than 100 home health and hospice locations to preserve competition in local markets.
The Trump administration is also examining whether UnitedHealth inflated patient diagnoses in Medicare Advantage to secure higher payments. The practice, known as “upcoding,” exploits the fact that insurers are paid more for covering patients deemed “sicker” and helps explain why the federal government spends 22% more on Medicare Advantage enrollees than on patients in traditional Medicare.
With Medicare Advantage now covering more than half of seniors, such distortions can translate into billions of dollars in excess federal spending. This money flows into insurers’ pockets.
These distortions are symptomatic of a system that rewards size and complexity over quality of care.
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The misalignment is perhaps most glaring in the actions of pharmacy benefit managers, which negotiate drug prices on behalf of insurers, determine which medications are covered and shape what patients pay. Just four pharmacy benefit managers control the vast majority of the market, and most are owned by the same insurers that sell coverage.
In theory, pharmacy benefit managers are supposed to lower drug costs. In practice, they drive up list prices and distort incentives, leaving patients to pay more.
Pharmacy benefit managers demand substantial rebates and discounts from drug manufacturers in exchange for prime placement on an insurer’s formulary. Drugmakers comply because formulary placement can make or break a medicine’s sales prospects.
Patients typically see little of those rebates or discounts. Most of that money goes to pharmacy benefit managers and insurers. Worse, insurers calculate patient cost-sharing obligations based on the pre-rebate, pre-discount list price. That is why patients’ out-of-pocket expenses on prescription drugs have continued to rise even as the value of pharmacy benefit manager rebates, discounts and other reductions surged past $300 billion in 2023.
Here, too, Republicans have taken meaningful action. A rule proposed by the Labor Department would require pharmacy benefit managers to disclose all forms of compensation, including rebates, fees and indirect payments. It is an important step toward restoring transparency in the market.
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Congressional Republicans should be loudly championing reforms such as these while advancing additional market-based solutions that expand competition and empower patients.
That starts with restoring insurance to its original purpose: protection against major, unexpected costs. Insurance should not be a costly middleman involved in every routine medical decision.
Expanding access to health savings accounts would give more patients control over their healthcare dollars and allow them to shop around for care as they do for any other service, comparing price and quality and keeping the savings when they choose wisely.
Pair that with enforceable, real-time price transparency — not hidden data files but understandable prices that patients can compare before receiving care. When patients can see prices, providers must compete for their business. When providers compete, costs come down.
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Lawmakers also should break down the barriers that prevent patients from bypassing insurers altogether. Direct primary care, cash-pay surgery centers and other consumer-driven models are already delivering care at lower prices, often at a fraction of what insured patients are charged.
Washington should be making these options easier to access.
Voters are right to be frustrated with a healthcare system that is expensive, opaque and stacked with middlemen. Democrats have tapped into that anger. Yet their answer is more control from Washington, expanding government rather than fixing the incentives driving costs.
Republicans have a better alternative: more competition, more transparency and more power for patients. If they make that case clearly and do it forcefully, then they won’t just compete in the healthcare debate. They can win it.
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• Robert Goldberg, Ph.D., is co-founder and vice president of the Center for Medicine in the Public Interest.