The growing thirst for health insurance trustbusting

State of play: Rep. Alexandria Ocasio-Cortez (D-N.Y.), several high-profile senators and entrepreneur Mark Cuban are all saying the same thing: Break them up.

• "The idea that a health insurer can own the [pharmacy benefit manager], can own the drug manufacturer, can now own the doctor's clinics — it is outrageous," Ocasio-Cortez recently said.
• "Time to break up big insurance," Senate Finance Committee Chairman Ron Wyden (D-Ore.) posted on social media this week.
• Sens. Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.) — unlikely bedfellows, to say the least — introduced a bill aptly titled the "Break Up Big Medicine Act" earlier this year that would do just that.

👀 Breaking up big insurance companies would cause costs to go down by 30% to 40%, Mark Cuban — who's been beating the "break them up" drum on social media lately — told me.

• Cuban, who started Cost Plus Drugs as an alternative to pharmacy benefit managers, said he's also tried to break into other parts of the health care system but the dominant companies have stopped him from being able to compete.
• Breaking up the companies would eliminate "all the money that's going to health insurance companies that isn't going to care itself," he added.

Between the lines: This new crowd of insurance trustbusters have strong name recognition and political power.

• Wyden is the top Democrat on a powerful Senate panel and has already launched an initiative exploring private insurance reforms, in the event control of the chamber flips.
• And, of course, a couple of those names are already being floated as potential 2028 candidates.

The big picture: "Vertical integration" is the official term for what's going on. It's what happens when multiple parts of the health care system — like health insurers, pharmacy benefit managers and providers like doctors and hospitals — are combined in one place.

• Vertical integration is simply a form of consolidation, and plenty of others exist within the health care system. But the potential for self-dealing and perverse incentives — especially when it comes to insurers owning the same entities they pay claims to — is certainly raising eyebrows.

What they're saying: The insurer trade group AHIP says health plans operate in fiercely competitive markets and represent the only health industry with a clear incentive to lower costs.

• "While hospital systems and provider groups relentlessly engage in anticompetitive consolidation to seize market power and raise prices on consumers, health plans work to negotiate the lowest possible prices with providers," said spokesperson Chris Bond.

Some big insurers' argument that owning other parts of the health care supply chain brings efficiencies may have validity, Brown University professor Christopher Whaley said. But it could also be that they're using their size to make more money.

• "I think a challenge with evaluating this market is we're still in the early days of seeing which one of those stories is true," Whaley added, saying there's currently evidence for "a little bit of both."

1 fun thing: When I wrote about Washington's anti-consolidation fervor almost two years ago, the story included this sentence:

• "Spoiler: I can't find anyone advocating for the [Federal Trade Commission] or the [Department of Justice] to swoop in and start engaging in early 20th century-style trustbusting, although some ideas could have the effect of breaking up large companies."

Times have changed, though the focus seems to be more on legislation than administrative action.

• But that's even worse for health insurance conglomerates, because it'd target the entire industry all at once instead of individual companies.
• While legislation is "a huge political mountain to climb, doing that is faster and more effective than going after one company at a time like we'd have to do with court cases," said Georgetown University public policy professor Linda Blumberg.

• "You could break up United, it could take you 30 years, and then you still have Aetna, Cigna and the Blues to deal with."

Insurer consolidation was a prime target when House Ways and Means Committee Chair Jason Smith (R-Mo.) called in the CEOs of large insurance companies earlier this year.

• When the CEOs testified at the House Energy and Commerce Committee, Ocasio-Cortez pointed out the subject's bipartisan appeal.
• "Whether you're a blue-blooded capitalist or a card-carrying democratic socialist, I think corporate monopolies are a problem. And this vertical integration is destroying people's ability to access care," she said after questioning CVS CEO David Joyner.

The latest: In a new letter calling for Republicans to bring insurance CEOs to the Senate as well, Wyden and Senate health committee ranking Democrat Bernie Sanders (Vt.) included vertical integration on their list of grievances.

• Using UnitedHealth Group as an example, Sanders and Wyden wrote that a patient could receive their insurance coverage from United, get a prescription from a United-owned pharmacy and have surgery at a United-owned facility.
• "At every step of the way, United can extract profit from patients, all while side-stepping rules that establish minimum standards for how much revenue from insurance premiums must be spent on actual patient care," they write.
• In recent congressional testimony, United defended its design, saying it incentivizes keeping the cost of care as low as possible.

Between the lines: There are ways to address the behaviors policymakers are criticizing while stopping short of breaking up any companies. Options include more transparency requirements telling consumers who owns what, and regulating how insurers pay providers that they own.

Yes, but: Breaking up big insurance companies could have unintended consequences.

• It could stunt any potential positive outcomes of having a patient's care coordinated all under the same roof, Whaley said.
• It also could drive more physicians into businesses owned by hospitals or private equity that research has shown raise costs, he said.

And trustbusting may not be the panacea lawmakers are looking for.

• "Breaking up the vertical integration is a necessary part of this, but it is not sufficient, because if you don't also stop the financial game playing between even the unaffiliated entities, you're not going to really solve the problem," Blumberg said.