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Becker’s Healthcare Podcast
Payer Pressures and Federal Scrutiny Shaping Health Insurance with Jakob Emerson
00:17:51
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- [00:02]
A
This is where health insurance leadership comes together. Becker's 4th Annual Spring Payer Issues Roundtable brings together over 400 payer and health plan executives and more than 100 speakers to Chicago, April 13th and 14th. This year's event includes keynote conversations with the industry's top leaders and former President George W. Bush. For the full agenda and event details, visit Beckershospitalreview.com and click on the Events tab in the upper right. We're looking forward to hosting you here in Chicago.
- [00:34]
B
This is Scott Becker with the Becker's Healthcare Podcast. We're thrilled today to be joined by leading journalist and brilliant person Jacob Emerson. Jacob joins us regularly to talk to us about the issues in the peer world, the payer universe, what's happening with payers, whether United, Cigna, Aetna, Elevance and a ton more and across the ecosystem. Jacob, let me teed up ask you to take it away. What are a couple of stories that you're watching currently? Yeah.
- [01:06]
A
Hey, Scott, good to talk with you. Two stories I thought we could Talk about today. One just announced today, this morning, on January 14th, that UnitedHealthcare is launching an accelerated Medicare Advantage payment program for rural hospitals. So basically speeding up how quickly rural hospitals get paid in four states by their Medicare Advantage business. And then and another story that's kind of a wider trend is just the federal scrutiny that insurers have been facing these last few months, especially among the Republican Party, which I think is overall pretty new in terms of if you think the grand context and historical context of health care that President Trump and the wider Republican Party seems to be really focused on scrutinizing health insurers right now and the pricing of health care overall. So some really interesting developments there over the last few weeks.
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B
Thank you very, very much. And talk about this United issue with the rural hospitals and accelerating payment and so forth.
- [02:06]
A
Yeah. So UnitedHealthcare, they've launched a six month pilot program, as they say is aimed at cutting Medicare Advantage payment processing times from about a month to less than two weeks for participating hospitals in Oklahoma, Idaho, Minnesota and Missouri, all to basically provide more immediate cash flow relief to rural hospitals facing financial pressures. And you know, I think this is interesting on the face just because, you know, it's United Healthcare, it's the largest Medicare Advantage company. And we know from the hospital association in the past that rural hospitals especially do face a lot of financial pressures from the Medicare Advantage program. But what I also think is interesting is this all really falls into that, that recent trend or the trend we've been following for a few years here at Beckers of Health systems all over the country, dropping certain Medicare Advantage contracts, often either United Healthcare or Human, given that those are the largest ones, and citing slow payments, reimbursement issues, prior authorization issues, claims processing issues. So this seems to kind of fall right in the middle of that, that rural hospitals are often saying that they're having a lot of issues with Medicare Advantage. And then of course, that trend overall of slow payments from insurers of this program and United Healthcare coming right down the middle and saying, okay, we're going to try to speed up payments to those rural facilities. So I guess we'll see how it goes. You know, this is just a press release from UnitedHealthcare, and it is a program that just launched today. We have not heard of. You know, we don't know what facilities are participating in this and, and we don't know how it's going to go. But I do think it's, it seems to be an acknowledgment that there is a, there's a, there's a slow payment issue among ma, at least in these states and in these rural facilities.
- [03:53]
B
Fantastic. And fasting. We'll see how this goes. It always seems like a little bit of a SOP to try and help, but not necessarily that it will help enough, but we'll see if it actually has any real impact. And talk about the Republicans and the health insurers and what you're seeing there.
- [04:10]
A
Yeah, definitely. This is the one I wanted to dive into a little bit deeper with you, Scott, because I think there's just, there's so much going on, so much being said, and there's so much historical context, I think. But in terms of the actual, you know, hard recent news, President Trump said back in early January that he plans to meet with 14 insurance companies to pressure them to lower prices for Americans. And he was, he was speaking to the Republican, the House GOP caucus about this. And, and he called the insurance companies big fat cats. It's a direct quote. And of course, you know, the wider context of this is the, the, the shutdown last year over the enhanced ACA subsidies that expired at the end of last year, which has been a real quagmire in Congress given that no Democratic or Republican proposal on how to either extend those or come up with a sol has really materialized over these last few months. And so there's that issue. And then more concretely, because, you know, the, there's no insurance companies have said there's any meeting on the books there with the president. He has said that there is a call that he's going to make to these companies and he said 14 insurers, I don't know which insurers those are. There are only about six or seven actual large ones in the country. So unclear if that meeting's even going to happen. But what is more concrete is that House Republican and certain committee leaders have asked the CEOs of some of the largest health insurers to testify before Congress at the end of January as this scrutiny intensifies over rising healthcare costs and industry profits overall. And so at the end of the month on the 22nd, the CEOs of UnitedHealth, CVS, Elevance, Cigna and then Ascendian, which is a new parent holding company of Blue Shield of California. And they've also launched a few other health services businesses. So it's kind of like the UnitedHealth Optum setup. They're going to be appearing before a few House committees giving their their testimonies to lawmakers. And I, I, I do, I do have a few thoughts on this, Scott, but I'll, I'll turn it back to you really quickly in case you wanted to just react overall on seeing the president say he wants to talk with insurers directly, lawmakers summoning them to Washington. I think it's really interesting that Republicans are have really turned their eye directly to the insurance companies that I think in the past they were pretty friendly to.
- [06:35]
B
But it really is fascinating because you've got this incredible challenge in that we've got government subsidies that flow through the health care insurers. Ultimately, this has led to, in some ways it's a two sided problem. We need those subsidies for people to get insurance, particularly poor people, Medicaid people, people that don't make a good income. We need those subsidies. At the same time, I think it's increasingly recognized that this massive flow of subsidies through insurance companies, whether Medicare managed care or Medicaid managed care, ends up driving up inflation versus not in health care cost. Then it flows through to the whole health care ecosystem. And so in some ways it seems like the insurance companies are getting taken to task from something that's really a holy trinity between the government, state governments and the insurance companies versus something that's really just the doing of the insurance companies. It seems like there's multiple parties that have led to the problem that we have. And at the same time it's hard to get rid of subsidies because there are a lot of people that don't make a great income that absolutely need those subsidies. So I don't know how you deal with this.
- [07:53]
A
Yeah, I mean, just reacting to a few things you said, Scott. One, I don't think that lawmakers are going, going to be directing their ire at the right, at the right pieces of what's really going on here. Because if you look at what, why are these subsidies, why do they exist in the first place? It's because these plans are so expensive and it's because, you know, these plans ultimately have to cover claims that are very expensive. And so, you know, you look at who are some of the largest payers collectively in this country besides cms. And it's employers, it's self insured employers that's ultimately the client for these insurance companies commercially and, and insurers have to negotiate lower pricing or at least try to keep pricing down as much as possible for these employers. In theory, that's how it's supposed to work. I know there's a big asterisk to all that, but when you look at what self insured employers, you know, there's been surveys of them, thousands of them all over the country by employee benefits groups like Mercer, Aon, wtw, they're facing some of the steepest rises in costs for health benefits this year for their employees. Some putting average increases nationally at 10% for, for 2026 alone. But what they're attributing to these rising costs, it's not just insurers raising premiums willy nilly. It's because they have to cover really expensive chronic and high cost conditions like cancer therapies, gene therapies. There's a lot more of stop loss claims right now where you have a very small percentage of employees actually driving most of the costs with like million dollar claims. There's greater care utilization overall right now across the country. And then there's pharmacy spending is so expensive, especially when you talk about GLP1s, which we know are absolutely driving up the costs for everybody across, across insurance markets. So, so when you talk to employers, that's what's actually driving up the cost. It's not just insurers, you know, sitting around deciding to do it of their own volition. And I think that's kind of a bigger point I would want to make, Scott, is that insurers on their own don't really control pricing. And again, I know there's a lot of different stakeholders listening to this podcast, so I say that sentence with, with a huge asterisk. But I think this conversation, it depends on the insurance company you're talking about because there are a lot of nonprofit insurers out there, especially in the blues ecosystem. And of course, you know, the largest insurers these days are part of massive conglomerates, which is a trend that we know from research does drive up costs overall. But, but the, the profits themselves, they don't make the majority of their money from, from commercial health insurance. It's coming from the subsidiaries like Optum and the provider arm or Evernorth and Express Scripts at Cigna with, with drug pricing deals or the pharmacy side of CVS Aetna through the PBM and through the actual, you know, retail stores. And then I think the other things got that probably won't get brought up at these meetings is that, you know, the federal government in the States, they fund these companies directly through like what you mentioned, through Medicaid managed care contracts, through Medicare Advantage contracts that now make up more than half of the Medicare system. And then these, these insurance companies, they, they're the ones who have the products to offer on the ACA marketplaces. And so. And on top of that, these companies also administer health and pharmacy coverage for, for millions of federal, state and local employee employees all over the country. So I think, you know, this is an easy scapegoat. It's easy political points. But I can almost say with certainty that no lawmakers are going to go after the fact and expose the fact that our entire health care system is really a public, private, hybrid system where almost all the health care benefits, with the exception of perhaps traditional Medicare, they're managed by these private insurance companies. American health care and big insurance is one in the same. And I don't think you're really going to see accountability about that discussed in these kind of hearings.
- [11:45]
B
No, it's fascinating. You make so many, so many good points, and it is fascinating. What's fascinating too about the whole glp, one thing and so forth is, you know, it's if, you know, you get them through the insurance companies, it's 500,000amonth. And you get them through your insurance plan, you get them from the hymns and hers of the World, the Rose, Sparks of the World, the Other places world, it's 200 bucks a month. I mean, it's insane. How much arbitrage is going on in the whole pharmaceutical pricing system increasingly makes no sense to a lot of us. And I know that we've got Mark Cuban coming to speak at our Chief Pharmacy Summit in April, but there's so much to it. This just makes no sense. I mean in how costs get flowed through the insurance companies, but if you're buying them directly, they're so much cheaper. The whole thing seems insane to me.
- [12:28]
A
Yeah, I would agree. And I that's what I would want to see at these hearings. I don't think lawmakers should really necessarily focus on the actual, you know, United healthcare parts of UnitedHealth Group. I want to know, you know, are the lawmakers going to ask them about how change healthcare data is being used in terms of how United can now owns the largest data processing company in the country and can and has the data of a lot of other health plans and providers around the country, or how the company operates in terms of Optum or UnitedHealthcare paying Optum and vice versa, and how these intercompany eliminations work and some tricky finance stuff that goes on from, from an antitrust perspective, I'm not alleging anything, but just I think that, you know, how these companies have been vertically integrated from what you just talked about, the PBM and the pharmacy part of all of this. Scott, I don't know if that's all going to be brought up in these hearings. I don't know if lawmakers and of the wider public, I don't think they really understand how sprawling these companies are anymore and where they have their arms in different parts of the system. I don't think there's a broad understanding of that. It's certainly not even.
- [13:34]
B
It's a great question as to what, what, what it really, what it really means and why. I mean, when you try and simplify healthcare and try and understand what's really going on, whether that's the real issue or not, is really United owning so many different companies? Is that the real issue or so much money flowing through the insurance companies? The issues and how do we sort of deal with some of the pricing issues on the other side of this? It seems like we've got so many people together on this. You know, it then this is what, what makes me crazy is if you buy something directly, there's a concept in business of using other people's money. And whenever using other people's money, costs tend to escalate because you're not watching the cost yourself. If you go and buy drugs through the insurance company, you don't really worry what the cost is unless you have a big co payment on it.
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A
Yep.
- [14:23]
B
If you could buy them directly from Hims and Hers or Roast Barks one of these other places, you care very much about what they cost and you're very price conscious. And we've developed this entire system around using other people's money in flow throughs and it's just a disaster. Yeah, just a disaster. And it's escalating cost and crazily. And you're absolutely right. I don't think, I don't think what your, your point is well taken. It's not united in a vacuum. It's, it's to go back to some of the old movies. The whole system is messed up. It's not, it's not, it's not, it's not united. It's not united. Healthcare is not the problem. There are one of many pieces of a puzzle that's led to a whole system built on other people's money. It just like the educational complex, and I don't mean to rant, has become so expensive because people are borrowing so much money to go to school. They don't think it's real money until they have to pay it back. You've got, you're paying for education with other people's money. Thus I talked to a plastic surgeon who came out of school with 500,000 in debt after school and med school, which is just insane. But wouldn't be the case if there wasn't all that debt there to flow through it and pay for it with other people's money to start with. But just a debacle. But I know I'm going off, but it really is. But when you say that they're. Because you're exactly right. They're going to interview or ask them to testify and they're going to be talking about a symptom of a much larger issue which you've got entire systems running other people's money versus the real, versus what they'll be talking about there at the testimony. So what did you know? How did UNITE raise rates? Well, we raised, we rose rates because we've got so many claims coming that are costing so much money and we can't make it work without that.
- [15:59]
A
Yeah, I think, last thing I would say, Scott, just if we're focused on United specifically and if lawmakers believe that they're the ones raising costs and that's such an oversimplification of this issue, then the federal government needs to look in the mirror and lawmakers need to look in the mirror and look at who has been giving UnitedHealth all the medic, you know, a majority of the Medicare Advantage contracts and the holding, the Medicaid contracts around the country and employers that choose United to be their health insurer and Optum who is allowed to purchase so many providers of all different kinds and companies in general around the country. I'm not saying that. I'm not. Again, I'm not alleging anything negative toward United right now, but I just think that that is probably not going to happen. Is a federal government looking in the mirror and realizing it created and oversees the system that has allowed these companies to become what they are.
- [16:51]
B
And unfortunately, it's almost impossible to change because you've got healthcare is reliant on massive government funding and it's just not changing anytime soon. When they talk about changing it at the edges, they do so. But to make real change would cause real harm temporarily or long term. And so essentially we've got to keep on working with the system we have, at least for the foreseeable future, is my sense. Because you're absolutely right. The government can't really start taking away subsidies and money from it without huge political outcry.
- [17:25]
A
Exactly. Exactly. So I mean to our, to our Everybody listening in January 22nd and 23rd in the morning newsletters we will have coverage up of of the fireworks we're expecting in that hearings.
- [17:38]
B
Jacob, as always a pleasure to visit with you. Thank you so much for joining us on the Beckers Healthcare podcast. Jacob's about the brightest person in the country covering this stuff. We really appreciate it. Thank you very much.
- [17:48]
A
Thank you very much, Scott.