The Ways and Means Health Subcommittee also held a hearing last month to examine how and why healthcare costs have risen so much.
In his opening statement at the hearing, subcommittee Chairman Drew Ferguson (R-Ga.) said, “Today’s hearing will focus on the healthcare marketplace and how it’s become more consolidated and less competitive in recent years, leading to higher prices and fewer options for patients.
“There are many factors that contribute to this problem, and we need to work together and find bipartisan solutions.
- PBMs – the drug supply chain black box – warping patient costs at the pharmacy counter
- Insurers buying large PBMs [Pharmacy Benefit Managers] and pharmacies
- Insufficient site-neutrality in Medicare
- Large nonprofit hospitals buying everything in sight
- Or Obamacare’s prohibition on physician-owned hospitals
“We must address these systemic failures to help decrease costs and increase patient access to care.”
He pointed out that “… one of the worst examples of consolidation over the last few years is an increase in what some refer to as vertical integration.
“This most often occurs when an insurer, PBM and pharmacy merge, creating a huge monopoly, which decreases patient access and increases prices.
“While the FTC [Federal Trade Commission] allows these mergers to occur since they’re in different areas of health care, they’re no less problematic – they result in fewer options for patients and reduced competition.
“We can all agree that prescription drugs cost too much, but while generics account for 90 percent of the prescriptions filled each year, and three PBMs control about 80 percent of the market share, competition isn’t working how it should.
“Unfortunately, consolidation like this isn’t unique to insurers, PBMs, and pharmacies.
“Large hospital systems are moving into areas where they previously had no footprint, buying up smaller hospitals and independent practices in order to increase their size and stamp out competition.
“Hospital care accounts for nearly one-third of all health care spending each year – or over $1.3 trillion in 2021.
“This spending will only continue to increase if we don’t find ways to create more site-neutrality and increase competition in areas where one health system buys up – or drives out – all other providers.”
He then stated that some of the areas he believes Congress needs to examine are:
- reforming site-neutral payments;
- repealing the physician-owned hospital moratorium;
- slowing down the consolidation of hospital systems;
- and the practice of insurers teaming up with PBMs and pharmacies to stop the market distortions and bring real competition back to health care.
TSCL is pleased that Congress is examining these problems, and we will be looking forward to what legislation comes about because of these hearings. But we will be on guard to ensure those recommendations help seniors, not big healthcare businesses.