by Eric Payne, a long-time Virginia Democratic activist and leader based in Richmond
On April 30, the Senate Finance Committee convened to address the recent cyberattack on UnitedHealth Group’s subsidiary, Change Healthcare. While this breach will be under scrutiny, it’s imperative to acknowledge a larger issue at hand: UnitedHealth Group’s detrimental impact on healthcare affordability.
UnitedHealth Group (UHG), the world’s largest private health insurer, boasts staggering profits, reaching $8.5 billion in Q1 of 2024 alone. However, behind these astronomical figures lies a company wielding immense control over various sectors of healthcare. With subsidiaries spanning pharmacy benefit management (PBM), health technology, and more, UHG exercises monopolistic authority, dictating patient access and healthcare costs.
UHG’s Optum Rx unit, alongside competitors like CVS/Aetna and Cigna’s Express Scripts, controls 80% of the PBM market. This dominance translates to unchecked power in setting drug prices, exacerbating the financial burden on patients already struggling with exorbitant healthcare costs.
The exponential growth of UHG over the past decade further compounds these issues. Revenue has tripled, driven by aggressive expansion into health delivery and government programs. Optum Rx, the company’s flagship division, saw a staggering 445% increase in revenue, reaching $61.1 billion in the last quarter. Such rapid expansion consolidates UHG’s grip on healthcare, with repercussions for patients nationwide.
Patients bear the brunt of this market power, facing escalating out-of-pocket costs while UHG pockets substantial rebates meant for patients. This lack of accountability underscores the urgent need to hold UHG and other industry giants accountable for their role in driving up healthcare costs.
In Virginia, recent findings from a state-commissioned report on Medicaid revealed a startling reality: Pharmacy Benefit Managers (PBMs) are pocketing $29 million through spread pricing. This is in addition to incalculable excess profits due to their monopolistic market power. This revelation underscores the depth of the issue, with PBMs exploiting their position to siphon off significant sums intended for patient care. As in some states, the Virginia General Assembly has considered legislation to address these issues, but no meaningful action has passed.
Amidst this backdrop, U.S. Representative Abigail Spanberger (D-VA07)’s and Senator Tim Kaine’s bipartisan efforts, notably the DRUG Act (Delinking Revenue from Unfair Gouging), gain even greater significance. The DRUG Act, co-sponsored by Spanberger in the House and Kaine in the Senate, seeks to increase transparency and competition in the pharmaceutical market, effectively challenging the stranglehold that companies like UnitedHealth Group (UHG) maintain over drug prices. As discussions unfold in the Senate Finance Committee, it’s imperative to integrate initiatives like the DRUG Act into broader reforms, ensuring that the healthcare system serves the needs of patients, not corporate interests.
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