Skip to content
Breaking News Alert Human Trafficking Czar Ignores Democrat-Invited Human Trafficking Over U.S. Border

Nationwide Ransomware Attack Exposes The Problem With Health Care Monopolies

The hacking of a UnitedHealth affiliate is a symptom of consolidation within the health care sector, and it’s likely to get even worse.

Share

In a bid to win reelection, the Biden administration keeps trying to sell the country on all the supposed benefits of Obamacare. Before continuing their sales campaign, they might want to check in with the doctors’ offices struggling to make payroll.

For over a month, the multitrillion-dollar health care sector has had to respond to a hack on a payment processor owned by UnitedHealthGroup, the nation’s largest insurer. Axios reported that hospitals, doctors, medical equipment suppliers, and pharmacies are collectively losing as much as $1 billion a day. The chaos is not only caused in no small part by the industry consolidation sparked by Obamacare, but it may make the problem even worse.

Too Big to Fail Redux?

Ignore for a moment the fact that Change Health Care, the UnitedHealth affiliate whose payment processing operations were attacked, reportedly paid $22 million to the ransomware group behind the hack — which will of course only encourage future efforts to target health care entities in cyberspace. The real issue comes via the size and breadth of the network being hacked.

Consider that Change processes 15 billion medical claims per year — the most by any organization in the country. In raw terms, that amounts to more than 41 million medical claims per day. When a company is processing what amounts to a medical claim for more than 1 in 10 Americans each and every day, that is bound to extend its reach far and wide in the health care system.

And so it has proved. Doctors and hospitals are struggling to manage cash flow without regular payments from insurers, as the system for processing payments remains clogged. Patients and pharmacists alike are struggling; pharmacists cannot process a patient’s insurance to determine the proper co-payment or co-insurance, and some patients are having to pay large sums out of pocket (that is, if they can afford to do so) and hope their insurance reimburses them eventually.

Encouraging More Consolidation

How did we get to this point? Why was the nation’s largest health insurer able to buy such a critically important payment processor? Good question.

For years, Obamacare has encouraged hospitals, insurers, and physician offices to merge and combine, part of a competition not to provide better care to patients — but to gain market share and leverage over other participants in the health sector. For instance, The Wall Street Journal noted just days after the Change hack began that UnitedHealth had come under the Justice Department’s scrutiny regarding potential antitrust violations.

But according to the Journal, the Justice Department investigation is examining UnitedHealth’s ownership of physician groups, and whether those physician groups are favoring UnitedHealth’s insurance products (and vice versa). Put another way, the antitrust concerns go well beyond the nation’s largest health insurer owning the nation’s largest health care payment processor, a transaction the Justice Department tried and failed to block in 2021-22.

Small Practices Hardest Hit

While the hack and its wide-ranging ramifications have given UnitedHealth its own set of political and legal headaches, the true cost will get borne by the small physician practices, those that have maintained their independence as industry Goliaths have grown up around them over the past decade-plus. Consider this excerpt from a Moody’s analysis of the hack’s effects:

Providers with small scale, a weak financial profile, who only use Change and have little headroom in meeting debt covenants stand to suffer the most from the disruption. … Larger providers with more resources are in a better position to weather cash flow difficulties.

Thinking about this type of mess with physicians not knowing whether they can make their practice’s payroll, and possibly having to take out personal loans to pay their employees, do you think it makes these independent doctors more or less likely to want to (or need to) sell their practices in the coming years? The answer seems obvious.

All this to say that, as much as the Change hack’s implications are a symptom of consolidation within the health care sector, the situation seems likely to get even worse. And the more health care grows and grows, the greater the calls for taxpayer-funded bailouts will rise the next time a crisis hits. Don’t say you haven’t been warned.


0
Access Commentsx
()
x