Given U.S. regulatory agencies’ recent pivot toward more aggressive antitrust enforcement, the Justice Department’s launch of a probe into health insurance and service giant UnitedHealth Group should come as no surprise.
The probe is intended to uncover whether UnitedHealth’s business operations, management practices and acquisition of various doctors’ groups have harmed rivals and consumers.
While asking such questions is important, the DOJ must remain focused on the consumer and not take any enforcement actions without careful consideration. A failure to acknowledge possible repercussions could have unintended consequences for consumers and the healthcare market.
UnitedHealth Group is a major player in the health arena. The Minnesota-based company made $372 billion in revenue last year and owns a vast network of doctors’ groups, healthcare units, and major billing and analytics businesses.
Perhaps most troubling, UnitedHealth’s service arm, Optum, owns the nation’s third-largest Pharmacy Benefit Manager, Optum RX.
In recent years, PBMs — industry middlemen who negotiate drug prices and manage benefits on behalf of health insurers, employers and others — have rightly been criticized for leveraging information to extract excessive profits for themselves at the expense of everyone else. Research suggests that, through various shady business practices, PBMs are primarily responsible for escalating prescription drug prices.
For these reasons, there is likely a place for the DOJ and other regulatory agencies to ask questions regarding the relationship between UnitedHealth Group’s insurance arm and Optum, assuming these questions shed more light on PBM business practices and don’t result in overly broad regulatory intervention.
However, some of the questions the DOJ appears to be asking are more geared toward the company’s size and various acquisitions. For instance, investigators have inquired whether the ownership of insurers and physicians’ groups gives the company too much power. Questions like this are troubling since they may signal a willingness by the agency to scrutinize vertical consolidation and take enforcement action against a company simply because it is large.
While the DOJ’s probe appears to be primarily a fact-finding mission, it is not hard to imagine that changing. The DOJ is already investigating the UnitedHealth Group’s planned acquisition of Amedisys, which provides in-home services to patients. The agency has also previously attempted to block the acquisition of software and data analytics firm Change Healthcare based on concerns that the deal could harm rivals and competition in general.
These actions are consistent with the DOJ’s recent departure from traditional understandings of antitrust enforcement. Under the leadership of Jonathan Kanter, the DOJ has undergone a radical transformation in what it believes its regulatory role is. The DOJ increasingly believes that “big is bad” and that the consumer welfare standard — a consumer-centric approach to antitrust enforcement — is no longer adequate for guiding enforcement action.
While “big tech” companies like Amazon and Alphabet (Google’s parent company) have been the main targets of regulatory agencies in the past, large companies of any kind are increasingly susceptible to litigation. Research also suggests that regulatory agencies are filing more lawsuits than in the past, guided by a renewed focus on market concentration and structural presumptions.
Recent history suggests that the DOJ’s probe into UnitedHealth Group may evolve into something else. That is a potentially dangerous proposition, as the large size of a company alone is not evidence of consumer harm. Indeed, sometimes, a company’s large size allows it to take advantage of economies of scale that unlock benefits for consumers. The DOJ would do well to keep this in mind as it continues its investigation of UnitedHealth Group.
