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Health Care’s Invisible Crisis


By Grace-Marie Turner, Galen Institute 

The U.S. health system has been facing an extraordinary crisis for more than three weeks and, astonishingly, the story is only now making big news.

The nation’s largest processor of medical claims is embroiled in a ransomware cyberattack that has crippled payment systems across the country, with potential breaches of health records for millions of patients. 

The cyberattack target is Change Healthcare, a subsidiary of the huge health care conglomerate UnitedHealth Group, that half of the U.S. health sector relies on to process and get paid for medical claims.  Hospitals, doctors, medical equipment suppliers and pharmacies collectively are losing about $1 billion a day because payments can’t be processed.

Chip Kahn, who has run the Federation of American Hospitals for 23 years, said, “It’s sort of invisible…there’s not a fire or a hurricane, but it has the same kind of effect.”  Industry leaders call this the most significant incident of its kind in the U.S. health system’s history.

Health care entities, especially smaller practices and hospitals, are facing significant cash flow problems because much of their revenue streams stopped on Feb. 21 when the Change systems went offline.

The crisis was the subject of a White House meeting and virtual call with impacted systems on Tuesday. HHS Secretary Xavier Becerra earlier had said CMS would distribute some emergency funds via Medicare, but he called on insurers, especially UnitedHealth, to pay the providers now.

Even if the crisis were resolved immediately, it already has cost providers a huge amount of money as they have tried to create manual and paper-based workarounds.  And, in a Catch 22, the payers may deny the claims for procedures and tests providers have done over the last three weeks because they couldn’t submit them for prior authorization.

Many safety net providers, small physician practices, rural hospitals and others are struggling to make payroll and could be at risk of closing their doors, potentially endangering care for millions of patients. Members of Congress on both sides of the aisle are demanding answers and action.

We are all for private sector competition, but the Affordable Care Act enabled vast vertical integration in the health sector, throwing anti-trust concerns out the window.  United is now a behemoth that has shown how dangerous it is when the system becomes so heavily dependent on just a handful of enormous companies. 


Some recommendations for you from health policy colleagues, including three physician friends:

  • Brian Miller, M.D., of Johns Hopkins and AEI, offers specific recommendations for FDA reform. “As a practicing hospitalist who prescribes a lot of small molecule drugs and as a former FDA reviewer, I have long had detailed thoughts about how we can improve the efficiency and lower the cost of clinical trials and drug development.” 
    How government price controls are holding back small molecule innovation.”

The latest issue of Health Care News is out, with news and sharp perspectives you don’t find elsewhere.  


Grace-Marie founded the Galen Institute, a public policy research organization, in 1995 to promote an informed debate over free-market ideas for health reform.