The shooting of its CEO has flung UnitedHealth Group (“UHG”) into the American zeitgeist, and there’s been no shortage of heated opinions on what to make of it. With the tragedy nearly two months behind us, perhaps we can now reflect, dispassionately, on the real diagnosis here: UHG has been monopolizing and “monopsonizing” American health care. Agreeing with that diagnosis would be Eric Bricker, M.D., who educates extensively about health care finance on his YouTube channel, AHealthcareZ. With its current market cap at nearly $500 billion—close to that of the rest of the top ten health care companies in America combined—Bricker concludes, “UnitedHealth Group essentially is health care in America.”
Indeed, UHG has gone well beyond its roots in health insurance to bill itself now as “a health care and well-being company.” UHG is the Amazon of American health care—like Amazon, it should be viewed as a multi-sided platform in the health care marketplace, where it dominates as operator, participant, and controller of the “pipes” through which much of health care flows. How so? And how to interpret this from an antitrust perspective? Let us count the ways.
UHG: The Operator
Let’s start with UHG’s roots as a health insurance company, UnitedHealthcare (“UHC”). UHC is in effect a financial middleman that operates a transactional network connecting suppliers with purchasers in the health care marketplace. The suppliers are physicians, hospitals, pharmacies, pharmaceutical companies, and the like. In America, the purchasers are largely the government (via Medicare and Medicaid) and employers, who sponsor health insurance for most of those not on Medicare or Medicaid.
As an intermediary, UHC benefits from what economists call “network effects”—the more suppliers and purchasers utilize its network, the more valuable its network becomes. After a series of horizontal mergers with other insurance companies over several decades, UHC now has the largest share (14%) of the highly concentrated commercial health insurance market. Its share is even greater (28%) of the also highly concentrated Medicare Advantage market, the market of private Medicare plans now accounting for over half of the Medicare market overall. UHC makes twice as much in this space as it does in employer-sponsored health insurance. Even in traditional Medicare, UHC dominates as AARP’s exclusive Medicare Supplement plan provider.
But UHC isn’t the only network-effect-exploiting middleman in UHG’s arsenal. Its other main subsidiary is Optum. Optum itself has three business branches: OptumRx, OptumHealth, and OptumInsight. Of the three branches, OptumRx is the cash cow: it is UHG’s pharmacy benefits manager (“PBM”). PBMs have been in the crosshairs of antitrust advocates for years now, and a whole antitrust-related post could be written on this subtopic alone. Suffice it to say here, OptumRx is the third largest of the three PBMs that control 80% of all prescriptions administered in America. And Bricker illustrates well how a PBM like OptumRx sits right in between purchasers and suppliers in prescription drug administration.
The trouble occurs when OptumRx serves two masters: (1) the employer/government who wants the PBM to negotiate the lowest price possible for a given drug; and (2) the drug manufacturer who pays the PBM various “fees,” aka kickbacks, for preferred placement on the PBM’s drug formulary—kickbacks that increase with increasing drug price. OptumRx also requires its PBM to use its own pharmacy for specialty medications, Optum Specialty Pharmacy. As a recent FTC study shows, those specialty medications are an increasingly growing profit center for OptumRx, with the markup on some of them exceeding 1,000 percent. Such conflicts of interest are endemic to the other major PBMs as well. When it comes to interacting with the powerful, concentrated PBMs, the conflicts of interest and restricted choices make for awfully poor quality. (Ask any physician who’s spent hours on the phone trying to get prior authorization for the PBM to cover a prescription, and you will get an earful of Kafkaesque misery.)
At any rate, UHG plays multiple sides of its multi-sided platform in other unique ways. In 2017, Optum acquired The Advisory Board Company and is now the third largest health care consulting firm in America. In this capacity, UHG now consults hospitals on how to get paid more—while its affiliate, UHC, negotiates with those very hospitals to get paid less. With its acquisition of Change Healthcare in 2022 (more on this below), UHG brought Change’s InterQual into its fold. InterQual is one of only two companies in America that control utilization management of hospital beds: how many paid “bed days” should be assigned to a hospitalized patient with a given diagnosis before the insurance payment is cut off. Conflict of interest strikes again, in a market that Bricker estimates at $400 billion per year in health care spend. That’s a huge market to have such concentration of economic power.
UHG: The Participant
We’re not done with UHG’s non-horizontal mergers. In the last decade, UHG has gone on a vertical-integration buying spree, specifically to occupy the health care marketplace not just as a platform middleman but also as a participant. As UHG’s participant arm, OptumHealth has entered the home health care space with its acquisition of the nation’s third largest home health provider (and also a large hospice provider), LHC Group, a merger that passed through initial scrutiny by the FTC. And OptumHealth now employs or is affiliated with the largest number of physicians in the country—90,000 and counting, or a tenth of all physicians in America.
UHG argues that its acquisition of physician practices aligns with so-called “value-based care,” whereby a health care entity bears risk through capitated payments from, say, the government as in Medicare Advantage plans; the entity then makes profits based not on volume of care but quality. But quality improvement may be more rhetoric than reality, as surfaced by local investigative reports of problems post-merger:
These investigative columns have uncovered the healthcare company’s oppressive physician employment contract; a disastrous phone system; urgent care upheaval; alleged double billing; copay confusion; a scathing internal survey; data privacy breaches; attorney general scrutiny; suspect COVID-19 testing charges; predatory marketing tactics; Medicare Advantage-related profiteering concerns; state lobbying efforts; a disconcerting doctor shortage; the troubling mix of healthcare with insurance services; the unethical banning of unwell patients; and the denial of patient medical records.
That’s a hairy list.
In addition, Bricker presents a “fable” that illustrates the risk of vertical foreclosure. An insurance carrier buys a physician practice, which formerly used Vendor A for a particular patient service that charged $300 per patient per day. After the acquisition, the insurance carrier replaces Vendor A with Vendor I, which the carrier owns—and charges the patient $800 per day. Not only that, the insurance carrier and physician practice had agreed on an earnout in which the practice would earn payments based on future profits of the practice post-merger. Having forced the practice to use the more expensive Vendor I, the carrier decreases practice profits and therefore the earnout. Double win for the insurance carrier. Double loss for the physicians and the employers/other billed insurance carriers financing the health care costs, as those costs rise. Hmm…is this fable the real story of UHG?
Texas and many other states forbid the corporate practice of medicine. Yet UHG’s quiet but aggressive gobbling up of physician practices skirts around the prohibition. And while the OGs of the practices do well in the sellout, the rest may just have to deal with decreased earnouts, pay cuts, increased patient loads, layoffs, onerous do-not-competes—in short, to use Cory Doctorow’s word—the “enshittification” of health care. No wonder physicians are burning out in droves, as these vertical integrations curtail their power.
The curtailing of physician power turns into a classic case of monopsony power. At least one health care organization has filed a lawsuit against UHG in California, alleging that, among other things, UHG’s control of the local primary care physician market unlawfully restricted physicians from working for competing networks and taking their patients with them. And as UHG’s monopsony power (along with that of the other big carriers) to push take-it-or-leave-it insurance contracts with independent physicians has grown, many of those otherwise independent physicians have banded together to set up “management service organizations,” in an attempt to increase countervailing power and negotiate better contracts. It’s an arms race to determine who will get a bigger share of the health care pie. The net effect? Increasing prices and decreasing quality for those employers and their workers who seek health care.
UHG: The Pipes
UHG increasingly controls not just the operation and participants of American health care, but also its transmission lines. In 2022, UHG made a bid to acquire Change Healthcare, a company that electronically processed billing claims and remittances between myriad health insurance carriers and the vast majority of hospitals and doctors in America. Change also ran a quarter of another pipe in health care: the “switch” software connecting pharmacies with plan information from all the PBMs, as well as processing the coupons pharmaceutical companies can issue directly to the patient for prescriptions filled at the pharmacy. Around the time of the proposed acquisition, Change had only one percent of the revenue of already gargantuan UHG. What Change had, nevertheless, was the valuable data in all those billing claims and remittances: patient IDs, provider IDs, diagnosis codes, procedure codes, and billed and allowed amounts—for ALL carriers, no less. That data could give UHG an advantage, for example, in quoting lower prices on commercial plans for fully insured employers with healthier employees, targeting lower-risk Medicare Advantage pools, or carving out a few expensive outlier physicians from the insurance network.
The DOJ tried to block the UHG-Change merger but failed. In its defense, UHG pointed to longstanding strict firewalls between Optum’s data analytics and UHC’s insurance underwriting that prevented access and use of sensitive claims information from competitor carriers. That and divestiture of one of Change’s claims edit products, a horizontal competitor to Optum, were enough to convince the district court to approve the merger.
But not all has been well. The February 2024 ransomware attack against Change left thousands of medical practices, hospitals, and pharmacies without incoming cash flow once claims processing shut down. At least one large clinic in Oregon, already in talks to merge with UHG, had to apply for and ultimately get emergency approval for its buyout after running out of cash. How convenient for UHG: as one headline aptly put it, “UnitedHealth Exploits an ‘Emergency’ It Created.”
In any case, will UHG’s so-called firewalls hold up over time? Are the pipes of the health care infrastructure UHG now controls “essential facilities” that should invoke that discarded stepchild of antitrust doctrine? At the very least, UHG has foreclosed any defense that there can be no intra-enterprise conspiracy here. As one researcher lauded, the secret to UHG’s power is that it has set up Optum as a fully autonomous, separate business with its own processes, resources, and profit streams, distinct from the insurance business. That sounds like a disunity of economic interest—which means any collusion, express or tacit, between the Optum and UHC subsidiaries of UHG would implicate Section 1 of the Sherman Act.
Where Do We Go From Here?
The DOJ did not appeal the district court’s judgment on the UHG-Change merger. But it appears the DOJ wasn’t done with UHG. In October 2023, the DOJ reopened an antitrust investigation into UHG’s business practices. And in November 2024, the DOJ along with Maryland, Illinois, New Jersey, and New York sued under a horizontal merger theory to block UHG’s proposed acquisition of Amedisys, the country’s largest home health and hospice provider. It remains to be seen what the antitrust stances of the DOJ and FTC will now be with the upcoming change in administration.
Whatever that change will bring, UHG is the Amazon warrior of the health care marketplace in America. As health care’s increasingly expanding operator, participant, and pipes, UHG reigns supreme over the exploding Medicare Advantage market. As UHG and the others big carriers continue to siphon Medicare Advantage volume away from traditional participants like hospitals, Bricker predicts those hospitals will have their go-to response: demand higher unit prices from the carriers on the commercial side. Who will subsidize those higher prices? The American employer and worker. And who gets hurt the most from the concentration of economic power in health care? Patients who can least afford it.
Sadly, all the charged rhetoric surrounding the UHG CEO shooting has distracted attention away from the real diagnosis here. What ails the American health care system is structural. It has everything to do with antitrust. And the American health care system is increasingly the UnitedHealth Group system.
With the cultural shift toward populism—whether conservative or progressive in bent—let’s hope that we can unite together and make our health care system less United.
Venu Julapalli is a practicing gastroenterologist and recent graduate of the University of Houston Law Center.