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Insurance giant UnitedHealth recently came under fire for a new policy that could retroactively deny coverage for some emergency room visits.
The coronavirus proved kind to the American health care industry. Health insurers, despite initial concerns, ended up posting record-smashing profits throughout the duration of 2020, as hospitals swelled with coronavirus patients, causing policyholders to put off expensive elective and non-emergency procedures. Less utilization and fewer claims became a financial windfall for insurers basically without precedent, as they reaped sky-high premiums without having to provide much in the way of actual health care. For 2020, insurance giant Humana reported a profit of $4.6 billion, a 31 percent increase over the company’s 2019 numbers. Cigna, meanwhile, notched $8.5 billion in profits, up 67 percent year over year. And UnitedHealth Group, the country’s largest insurer, reported a stunning 2020 full-year profit of $15.4 billion, after putting up $13.8 billion in profit in a record-breaking 2019.
Pharmaceutical giants likewise reaped massive profits throughout the pandemic. Vaccine makers like Pfizer and Johnson & Johnson benefited greatly from vaccine development, and have investors salivating about the potential profitability of booster shots and global rollouts down the road. And even normal pharmaceutical sales proved extremely profitable, as companies hiked drug prices during 2020 even more aggressively than the year prior. According to GoodRX, 857 of the most popular brand-name and generic drugs in the U.S. saw their prices increase by an average of 6.8 percent from January 1 to June 30, 2020, with another 67 drugs getting an additional price hike in July 2020 of over 3 percent, a higher clip than the previous year.
Beyond the standout profit-reaping, both insurance and pharmaceutical companies have enjoyed a year of relatively fond feelings from the American public, a PR windfall that has taken some of the heat off of two fiercely maligned sectors of the economy. The pharmaceutical industry’s ability to produce multiple functional vaccines recast them in a heroic light, even though the federal government paid for the overwhelming majority of the research and distribution; the willingness of insurers to pay for COVID tests, treatments, and vaccines dropped them down the list of public enemies as well.
That burnished reputation has come in tandem with the Biden administration showing a total unwillingness to engage in even minor regulations of the private health care sector, dropping the public option from their legislative proposals entirely and signaling to congressional Democrats that they are happy to complete an infrastructure package without even narrow drug-pricing reform, despite it being a top priority for House Democrats for at least the past four years and extremely popular among voters on both sides of the aisle.
UnitedHealth Group, the country’s largest insurer, reported a stunning 2020 full-year profit of $15.4 billion.
Riding that wave of positive feelings and reformist abdication, the health care industry is now looking to lock in an even greater share of profits in flagrant fashion.
Last week, the FDA approved a new Alzheimer’s drug called Aduhelm, from a biotech firm called Biogen. Aduhelm represents the first new major Alzheimer’s drug in almost 20 years, which may sound promising. It would be, but for the fact that experts say that, despite the FDA’s approval, there’s not a lot of hard evidence that it actually works. In fact, three members of the advisory board who voted against approval resigned from the panel, after they were overruled and Aduhelm got the thumbs-up.
As alarming as Aduhelm’s dubious efficacy—which could give millions of families false hope that their loved ones will be freed from dementia—is the fact that Biogen can charge whatever it wants for the drug, because of the notoriously lax price controls that dominate the American health care experience. The number Biogen arrived at: $56,000 per year for a full treatment. And because Alzheimer’s is so common, and fully 80 percent of the country’s six million Alzheimer’s patients are on Medicare, that single drug alone—which, again, might not even work—could bankrupt the entire program.
“If 1 million Medicare beneficiaries receive Aduhelm, which may even be on the low end of Biogen’s expectations, spending on Aduhelm alone would exceed $57 billion” a year, reads an analysis from the Kaiser Family Foundation, “far surpassing spending on all other [Medicare] Part B-covered drugs combined.” If closer to one-third of American Alzheimer’s patients receive Aduhelm, medical spending would increase $112 billion in one year, more than the $90 billion Medicare spent on drugs for all 46 million people under its Part D program in 2020.
Those sorts of decisions are not subject to congressional votes or even any public debate. And because the Biden administration has signaled repeatedly that drug-pricing controls, like encouraging Medicare to more aggressively negotiate rates with pharmaceutical companies like Biogen, are of no interest, drugmakers have no reason not to charge astronomical prices, even if their one product could take down the entire public health care apparatus in this country.
Private health care is quickly seizing upon a perfect storm to profit-gouge on a whole new level.
Perhaps a more empowered and robust Food and Drug Administration could have prevented something like this from happening, but while private health care and pharma companies were showered with praise during the pandemic, the FDA, already operating in a weakened state like so many other public-health departments, was the subject of a year of vicious public attacks, spearheaded by the Trump administration. President Biden has not chosen a nominee to run the agency, nearly half a year into his presidency.
Meanwhile, not wanting to miss out on adding to its nearly $16 billion in annual profits, UnitedHealth announced a new policy on emergency room visits. It will now determine retroactively whether an ER trip was necessary; if not, it will not be paying for the trip at all. “Claims determined to be non-emergent will be subject to no coverage or limited coverage in accordance with the member’s Certificate of Coverage,” is how the new policy reads. If an ER visit doesn’t meet with UnitedHealth’s own standards for “emergency,” the patient will no longer be covered and thus will be responsible, out of pocket, for all costs incurred.
Remember that under the Emergency Medical Treatment and Active Labor Act (EMTALA), anyone who shows up at an emergency room, by law, must be cared for and cannot be denied treatment. The existence of this program has long served as a talking point for the private health care industry to excuse its more egregious excesses. Sure, the line goes, millions of Americans are uninsured, and millions more can’t even afford to use the insurance they have, but beneath all that cruelty and absurdity is an abiding commitment to treat people, no matter what, in times of distress.
Well, UnitedHealth doesn’t want to pay for that anymore. And that refused coverage will turn up as uncompensated care (eventually paid for by the federal government) or a flurry of bills on people who can’t get their ER visit covered. And if those UnitedHealth customers respond by avoiding the ER out of fear of sticker shock, it will lead to more untreated medical problems, sicknesses, and deaths.
The announcement triggered a public outcry, forcing UnitedHealth to pull back, but only slightly. It generously declared it would wait until after the pandemic is over to enact this change.
Already one of the most rapacious American industries, private health care is quickly seizing upon a perfect storm—positive public feelings in the wake of our year-and-a-half-long health crisis, and an inexplicably timid and enfeebled public sector, spearheaded by President Biden, unwilling to even hazard minimal reforms—to profit-gouge on a whole new level. After having survived the 2020 Democratic primary without the regulation-driven policies of the Bernie Sanders campaign on the Democratic platform, and the squelching of any talk of Medicare for All, these firms have emerged as emboldened as ever, knowing that the most powerful people in government will not tell them no.
There are a handful of House Democrats, worried as much about what another two years of failing to deliver on drug-pricing reforms will do for their re-election chances as industry price-gouging, who have continued to battle for some regulation to be tucked into whatever infrastructure bill is agreed upon. But the cost of Biden’s policy of nonengagement, and his fear of taking on the private health care industry, is already revealing itself. Doing nothing is much, much too expensive.
