We can't afford to let Democrats lead health care 'reform' | Opinion

Nearly 6 in 10 Americans encountered problems using their health insurance in 2024. A third cannot even figure out what their plan covers. Premiums are rising, choices are shrinking and patients increasingly find themselves battling insurers just to get care their doctors already approved.

Voters are angry, and they want someone to blame.

Democrats have noticed. They are positioning themselves as the party willing to confront “Big Insurance,” particularly the sprawling health care conglomerates that now combine insurance, pharmacy benefit management and physician practices under one corporate roof.

Republicans, meanwhile, have advanced market-based reforms to address vertical integration, but they need to make that case far more clearly. If Democrats seize the issue, they will default to their usual prescription: more regulation, more federal intervention and more government control over health care – the same approach that helped create this mess.

How Obamacare helped create Big Insurance

Today’s sprawling, vertically integrated insurance giants did not emerge by accident. Democratic policy, particularly Obamacare, created powerful incentives for insurers to grow larger, consolidate and control more of the health care system.

Obamacare’s architects believed American health care was too fragmented. Their answer was greater integration: bringing insurers, doctors and hospitals closer together in hopes of reducing waste, improving efficiency and delivering better outcomes.

Instead, it unleashed a wave of consolidation that reshaped the industry for the worse.

Obamacare’s medical loss ratio rules offer one clear example. By capping the share of premium revenue insurers could retain for administration and profit, the law aimed to protect consumers. But it also created a perverse incentive: When profits are tied to overall spending, insurers have every reason to expand the amount of spending flowing through their own corporate ecosystem.

One of the most effective ways to do that is by owning more of it directly, including physician groups, pharmacies and pharmacy benefit managers.

At the same time, Obamacare’s regulatory complexity favored large incumbents that could absorb compliance costs, navigate risk adjustment and compete at scale. Smaller insurers struggled to keep up and left the market. Bigger players grew bigger. As control over data, care delivery and reimbursement became more valuable, vertical integration became less of an option and more of a competitive necessity.

The law is confusing by design – something Obamacare adviser Jonathan Gruber called “a huge political advantage.”

The result is the system Americans increasingly distrust: A small number of massive corporations that do not simply pay for care but also deliver it, manage it and profit from nearly every step of the process.

Now Democrats want to “fix” the problem they created with the same instinct that helped produce it: more government.

Republicans must lead on health care reform

The good news is Republicans are already pursuing reforms aimed at lowering health care costs by restoring competition, increasing transparency and putting patients back in control.

For starters, the Trump administration is exposing billions in lost savings through a Department of Justice investigation into UnitedHealth Group and other mega-insurers. And the U.S. Department of Labor is advancing PBM reform regulations that could deliver real savings for American employers and workers.

Importantly, the Department of Justice and the Department of Health and Human Services are aggressively prosecuting health care fraud, helping to curb taxpayer dollars lost to abuse and scams.

Republicans have also expanded Health Savings Accounts and promoted association health plans, giving individuals and small businesses greater control over their coverage and spending. Likewise, price transparency rules implemented under the Trump administration can give patients and employers better information to shop more effectively for care.

The political battle over Big Insurance is only beginning. If Republicans fail to lead it while clearly championing the reforms, investigations and competitive solutions already underway, Democrats will seize the mantle instead. And Americans may once again be left with the same failed formula: more bureaucracy, more complexity and less control over their own health care.

Merrill Matthews is the Texas state chair of Our Republican Legacy.