‘American health care is struggling’ – Assistant AG discusses morality, money and medicine

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The Big Healthcare platforms that have developed in recent years are ripe for government antitrust action, said the leader of the U.S. Justice Department’s (DOJ) Antitrust Division.

In a speech this week, Assistant Attorney General Jonathan Kanter offered his diagnosis of ills in the American health care system, and potential government interventions that could help restore competition, innovation, and patient health.

“The time has come to fundamentally redefine our approach to antitrust and competition policy for health care,” he said.

‘This is a moral problem’

Jonathan Kanter
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Around the nation, Kanter said almost every conversation he has with a concerned American eventually turns to health care – and not to describe cheery relations between patients and physicians. Instead, patients struggle to get needed medications as insurers insist on byzantine step processes for coverage. Doctors, nurses, pharmacists and caregivers describe burnout and disillusionment over battles with corporate middlemen to secure patient care. All the while, people must pay more money out of their own pockets, he said.

“Foremost, this is a moral problem,” Kanter said. “The wealthiest country in the world should not let short-term profiteering get in the way of caring for Americans experiencing illness.”

That is most clear in “the national failure to take care of older Americans,” with care at the mercy of algorithms or for-profit nursing homes, Kanter said. The same day, DOJ announced it sued to block UnitedHealth Group Inc.’s proposed $3.3 billion acquisition of Amedisys Inc., a rival home health and hospice services provider.

‘This is our money’

Meanwhile, health care as of 2022 was a $4.5 trillion sector of the American economy, with 40% of that spending on Medicare and Medicaid. Medicare Advantage has become more expensive than traditional Medicare, with insurers funneling money into their pockets by diagnosing patients with additional conditions, whether treated or not, Kanter said.

“This is our money. Money that comes out of our paychecks in the form of payroll taxes used to fund programs like Medicare, which is a huge source of profit for America’s insurers,” he said. “And unlike federal income taxes, every American pays for Medicare because it is deducted automatically from your paycheck.”

At the same time, employer-sponsored health insurance is climbing in cost, and workers pay, Kanter said.

‘Healthcare Tetris’

For years, competition policymakers played “Healthcare Tetris,” Kanter said, referring to the video game with the objective to line up dropping blocks to create horizontal or vertical lines. But that two-dimensional analysis ignored effects of vertical integration.

“America’s largest health care companies are no longer just health insurers or pharmacy benefit managers, and they are no longer just doctor groups or hospitals. They are all of the above,” Kanter said. “Meanwhile, consolidated health markets have failed to deliver on the promise of better care, lower prices, and increased access. Instead of increasing efficiency, health care platform integration and annexation has created perverse incentives, conflicts of interest and opportunities for self-preferencing.”

Now, the “platformization of health care” has characteristics familiar to the DOJ’s antitrust experts:

• Multi-level entry, or creating barriers that make it difficult for competitors to enter markets.
• Conflicts of interest, with firms in dominant positions favor their own health care businesses and exclude independent rivals.
• Regulatory gamesmanship, such as retaining wealth by paying more money to affiliates, despite rules that require minimum spending on medical care.

Pharmacy benefit managers are another example, Kanter said. Created as a counterweight to drug companies and Big Pharma, now three vertically integrated entities control 80% of the industry and engage in those anticompetitive practices, he said.

Lifeblood of the community

Kanter gave a nod to the loss of independent health care practitioners and how that loss hurts patients and communities.

“Independent physician practices, community nursing clinics and independent pharmacies are not subsistence entrepreneurs but harbingers of self-sustaining communities,” he said. “These small businesses, especially in small or rural communities, are the lifeblood of economically vibrant, healthy communities.”

The nation is at an inflection point, Kanter said, comparing health care to technology companies that seek to maintain dominance across multiple markets. “Once industries settle into such oligopolies, it can be hard to remedy the situation,” he said.

Kanter was advertised to speak Nov. 12 on “U.S. Healthcare at a Crossroads: Greater Competition or a Descent into Monopoly?” at the Heinz College of Information Systems and Public Policy at Carnegie Mellon University.