Big Insurance CEO Hearings: 5 Clips to Watch

One Republican lawmaker, Rep. Greg Murphy, said that he wished he could turn the health insurers “into dust.”

Last week, the U.S. House Energy and Commerce and Ways and Means Committees summoned five of the most powerful executives in the American health insurance industry to answer for their outsized roles in the U.S.-health ecosystem. And how their roles are leaving Americans increasingly sicker and poorer while they turn a profit.

For starters, let’s take a moment to acknowledge that the hearing was unprecedented. Even in the days leading to the passage of the Affordable Care Act (ACA), we didn’t see a panel of Big Insurance CEOs being hauled before Congress like we saw last week. Until recently, these executives (and the companies they lead) have largely dodged Congressional scrutiny and accountability.

But the hearings were proof of something more and more folks are beginning to realize: Big Insurance has monopolistic control of our health care system and enormous influence on American life. And Americans — and, increasingly and at long last, the lawmakers who represent them — have had it.

These grievances were made clear to the CEOs (UnitedHealth Group’s Stephen Hemsley, CVS Health’s David Joyner, Cigna’s David Cordani, Elevance’s Gail Boudreaux and Ascendiun’s [Blue Shield of California’s] Paul Markovich) live on C-SPAN last Thursday.

To save you some time – below are 5 moments from last week’s hearings that we think are worth watching.

1. The Chair’s non-rhetoricals

Ways and Means Chairman Jason Smith (R-Mo.) opened up his committee’s hearing by calling on the CEOs to acknowledge their companies grasp on the entire health care ecosystem – in addition to their health insurance arms – from the doctor’s office down the street, the pharmacy on the corner and the pharmacy benefit manager in the middle naming the prices on drugs.

Below is a transcription of Chairman Smith’s questioning:

Smith: By a show of hands: which of your companies own or control a health insurance division?

CEOs: *Raise hands*

Smith: Please keep your hand up if you also employ health care providers or own clinics, specialty pharmacies, or any other kind of medical practices or pharmacy.

CEOs: *Raise hands*

Smith: Please keep your hand up if you also own or control a pharmacy benefit manager.

CEOs: *Raise hands*

Smith: And please keep your hand up if you lead a publicly traded company at which you have a legal responsibility to maximize shareholder value.

CEOs: *Raise hands*

Smith: So, we’ve established – on the record – that the largest health companies are not just insurers. They are also medical providers and pharmacies – diagnosing and deciding treatment for patients. They are also PBMs – another form of middlemen managing drug benefits. They are increasingly controlling every aspect of our health care system (emphasis added).

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2. AOC vs. CVS

Rep. Alexandria Ocasio-Cortez (D-N.Y.) (with a smile) didn’t mince words, and she didn’t let CVS Health CEO David Joyner hide behind jargon. She zeroed in on the company’s vertically integrated maze of entities, which includes Aetna and the giant PBM Caremark. Joyner tried to dress up his company’s structure as “convenience” for patients and “coordination of care.”

Below is a transcription of Rep. Ocasio-Cortez’s questioning:

Ocasio-Cortez: Mr. Joyner, you are the CEO of CVS Health, correct?

Joyner: Correct.

Ocasio-Cortez: And, I actually don’t know how many Americans know this, but CVS Health owns Aetna, the health insurance company, correct?

Joyner: Correct.

Ocasio-Cortez: And CVS, which owns Aetna, also owns Oak Street Health medical clinics, correct?

Joyner: Yes it does.

Ocasio-Cortez: And in addition to that, they own, of course, CVS Pharmacies, and CVS Health also owns CVS Caremark, the pharmacy benefit manager which helps negotiate some of these rebates and prescription prices, correct?

Joyner: That’s correct.

Ocasio-Cortez: And CVS Caremark processes nearly 30% of all prescriptions in a given year. And so in other words, CVS Caremark helps determine the prices that patients pay for a third of all prescriptions in the U.S.

In fact, I was following one of CVS’ recent investor calls where they really laid out quite clearly what this means if you are a patient. This is what’s known as a “captive strategy.”

And CVS in the investor call used the example themselves of a patient known as Kate. Kate has an Aetna health insurance plan, right here and which is owned by CVS Health. She then goes to a CVS pharmacy. She’s connected to an Oak Street Health medical clinic. She sees a doctor at Oak Street Health who prescribes her medication. And then she goes to fill that prescription at the CVS Pharmacy.

So the price Kate pays for that medication is dictated by Aetna, CVS Caremark, and they also own the drug manufacturer, Cordavis. Mr. Joyner this is quite a bit of market concentration. Wouldn’t you agree?

Joyner: No I wouldn’t agree that it’s market concentration. I would suggest it’s a model that works really well for the consumer.

Ocasio-Cortez: Yeah. I think it works very well for CVS.

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3. Generic jargon

When Rep. David Kustoff (R-Tenn.) asked how money actually moves inside these sprawling health care empires and how it relates to patients at the pharmacy counter – especially when Americans can get medications much more affordably once they are generic, yet Big Insurance PBMs often only cover more costly alternatives in their formularies. Kustoff was met with evasion.

Below is a transcription of Rep. Kustoff’s questioning:

Kustoff: I don’t know that anybody who’s watching would understand what you said – so let me ask you a different way. Would you concede that charging $6,600 for a generic drug that can cost the consumer $55 per month is not logical?

Joyner: I completely agree. But I would just say that from a client contract standpoint we create a significant saving for the clients. And that is why – and that is what prompted the push towards now moving to consumer transparency – and again as a leader in that push, we believe we have actually solved the problem on behalf of the consumer and of the client.

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4. Dust to dust

Rep. Greg Murphy (R-N.C.) — himself a physician and a co-chair of the GOP Doctors Caucus – brought up a slew of issues he sees with Big Insurance, including Medicare Advantage and prior authorization. What does Rep. Murphy think? If it were up to him, he’d break the companies up.

Below is a transcription of Rep. Murphy’s statement:

“The vertical integration has destroyed competition in this country. And again, if I had it my way I’d turn all of you guys into dust. We’d start back from scratch. We’d have competition in the industry. We’d have association health plans. And we would have nonprofit hospitals rather than profits being put over patients.”

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5. Big Insurance as megadonors

Finally, Rep. Jay Obernolte (R-Calif.) pressed Paul Markovich, CEO of Ascendiun (the parent of Blue Shield), about a $500,000 donation to support what he called Gov. Gavin Newsom’s gerrymandering effort. Outside politics aside, Rep. Obernolte made the point that the big insurers are happy to buy good will from whichever political party or politician they think they can win over.

Below is a transcription of Rep. Obernolte’s questioning:

Obernolte: I was pretty astonished last year when I heard that Blue Shield had contributed half a million dollars to a committee supporting the passage of Prop 50 in California. Prop 50 was an effort to shift five congressional seats from Republican control to Democratic control…

I was astonished that a health insurance company would wade into a political debate in such an enormous way. Why on earth did you do that?

Markovich: Well, respectfully, congressman, we didn’t do that. We have a long history at Blue Shield of California contributing to candidates of both parties at the federal and state level – including Governors Schwarzenegger, Brown and Newsom. And we try to support candidates that we think will be thoughtful about health care policy. And this contribution to a fund (that did not have specified purpose) is something we committed to as part of that. After that contribution had happened, the governor then purposed those funds for Proposition 50. And our plan did not take a position on that.

Obernolte: To be clear though, these were two different checks for a quarter million dollars each to a ballot measure committee, not a candidate. We understand supporting candidates but this was to support a ballot measure. So if not Prop 50, what ballot measure did you think you were supporting.

Markovich: Oh, we didn’t know. Neither we nor the other health care companies.

Obernolte: You wrote a $500,000 check not knowing what ballot measure you were supporting?

Markovich: We and other companies, including other health care companies, all contributed to this account. And it’s not uncommon – particularly in California where there are lots of propositions – where candidates would prefer contributions to these types of accounts. As opposed to direct contributions to their campaign support.

Obernolte: Well, now knowing what you know, do you regret having made that contribution? Knowing Prop 50 was the only proposition that this committee supported.

Markovich: Well we did not support or oppose Proposition 50. We did not take a position on that. So that is a decision we consciously made going in, as did others, and did not have control of where it went afterwards.

Obernolte: Alright. Well you and your testimony said that you think that our health care system needs some tough love. Respectfully, I’d like to offer you some. When a health insurance company wades into such an obviously political topic like that, it not only erodes your ability to work with folks on the other side of an issue but also erodes consumers’ trust in the system as a whole. So please don’t do that again.