Stephen Hemsley, chairman and CEO of UnitedHealth Group (NYSE:UNH), told lawmakers that rising hospital prices, consolidation, specialty services, and prescription drug costs—not insurers—are the primary forces pushing U.S. health care spending higher. He urged policy reforms to improve affordability and access.

Hemsley, alongside executives from Cigna Group (NYSE:CI), Elevance Health Inc. (NYSE:ELV), and CVS Health Corp. (NYSE:CVS), will be appearing before two House panels on Thursday.

Premium rates are based on two key factors: how much care is used and how much is charged for that care. When the price of care goes up, and care activity increases, the cost of health coverage necessarily follows, he added.

Background

A Senate Judiciary Committee investigation already found that UnitedHealth used aggressive strategies to collect diagnoses that increased federal payments under Medicare Advantage.

According to the Senate report, UnitedHealth transformed that payment adjustment process into a profit driver, a use that investigators said went beyond the program's original intent.

Hemsley said UnitedHealth serves nearly 10 million Medicare Advantage members, about one million Affordable Care Act exchange enrollees, and Medicaid beneficiaries across 32 states.

"Though UnitedHealthcare is a relatively small participant in the individual ACA market, we will voluntarily eliminate and rebate our profits this year for these coverages," Hemsley said in the prepared testimony.

The testimony didn't provide details on UnitedHealth's rebate plan or what the financial impacts may be.

Bloomberg highlighted that the decision from UnitedHealth, the largest U.S. health insurer, could neutralize accusations that it's unduly profiting from taxpayer-funded help.

Hemsley said UnitedHealth negotiated nearly $300 billion in discounts last year and saved about $35 billion through fraud and waste reduction.

He argued that value-based care and Medicare Advantage models deliver better outcomes at lower costs, citing fewer hospital admissions and improved chronic disease management.

Policy Changes

The CEO urged Congress to consider policy changes, including site-neutral payments, patent reform, limits on direct-to-consumer drug advertising, and expanded consumer choice in ACA plans, saying collaboration across the system is essential to making care more affordable.

Hemsley on Wednesday added that policymakers should also consider standardizing ACA broker compensation, as that creates incentives to steer patients toward plans that pay higher commissions. Standardization is the norm in Medicare Advantage, by comparison, he said.

"Standardizing compensation would better align broker incentives with consumer interests, promote more objective plan selection, and help consumers choose coverage based on value, affordability, and access to care rather than commission differentials," Hemsley said.

In January, UnitedHealth said it is launching a pilot program aimed at accelerating Medicare Advantage payments for rural hospitals.

UNH Price Action: UnitedHealth Group shares were down 0.50% at $346.00 during premarket trading on Thursday, according to Benzinga Pro data.

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