The Break Up Big Medicine Act Gets the Problem Wrong
American healthcare costs too much. That is not a disputed premise. A family of four on an employer-sponsored plan now faces average total healthcare costs exceeding $32,000 per year, according to the Milliman Medical Index — a figure that has more than tripled since 2001. The pressure is real, and the frustration driving legislation like the Break Up Big Medicine Act is legitimate.
The legislation itself is not.
Introduced in February 2026 by Senators Elizabeth Warren and Josh Hawley, the Break Up Big Medicine Act targets large health companies that own or control various parts of the healthcare supply chain, from the physician's office to the pharmacy to the pharmacy benefit manager. The bill would prohibit parent companies from simultaneously owning medical providers or management services organizations alongside PBMs or insurers, with violators facing automatic penalties — including profit disgorgement and forced asset sales — if they fail to comply within one year of enactment.
The stated goal is affordability. The likely outcome is disruption without relief — and in the communities that can afford disruption least.
What the Break Up Big Medicine Act Actually Does
The legislation's scope is broader than its sponsors acknowledge. By failing to define "insurance company" — while separately defining "health plans" — the bill's text, in its current form, may capture all common ownership of providers and health plans, including health systems and physician groups with subsidiary health plans. That ambiguity, flagged by legal analysts at Jones Day following the bill's introduction, means the legislation as written could force divestitures far beyond the insurance conglomerates it was designed to target, sweeping in longstanding integrated health systems that serve communities, including rural ones, that have no viable alternative.
Affected entities would have to choose, within one year of enactment, between owning a provider or management services organization, or owning an insurance company or pharmacy benefit manager. Failure to divest would trigger penalties including profit disgorgement and forced asset sales.
One year. For some of the most complex institutional restructurings in American business history.
Does Breaking Up Integrated Systems Lower Costs?
The research on this question is considerably more complicated than the bill's sponsors suggest, and the honest answer is that forced divestiture has no demonstrated track record of reducing healthcare costs for patients.
The legislative findings cite consolidation as the driver of high costs. The cited evidence, however, pertains to specific behaviors — self-dealing in prescription drug pricing, site-of-care shifting, PBM spread pricing — that are addressable through targeted regulatory intervention without dismantling entire enterprise structures.
RAND Corporation research on the economic effects of vertical integration found that how vertical integration affects the cost and quality of healthcare, and the healthcare market itself, is not fully understood, a finding that sits uncomfortably beneath legislation premised on structural certainty.
The research does identify a real problem: when hospital systems acquire physician practices under fee-for-service reimbursement models, physicians are pressured to change referral patterns, steering patients away from local facilities toward more expensive hospital settings. That is a reimbursement incentive problem. The fee-for-service structure, not ownership, creates the incentive. Restructuring ownership without reforming reimbursement leaves the underlying incentive intact.
The most effective path to breaking up the harmful aspects of integrated medicine is to stop financially rewarding those aspects, require producers to compete to prove their worth, and free consumers to choose, not to mandate divestitures that eliminate the infrastructure without changing the economics.
The Rural Access Problem the Bill Ignores
The Break Up Big Medicine Act was designed with large publicly traded conglomerates in mind. The communities most vulnerable to its consequences are the smallest.
A Chartis analysis found that 41.2% of all rural hospitals are currently operating in the red, and 417 are vulnerable to closure. These institutions survive, in many cases, precisely because integration with larger systems provides the financial backstop, technology infrastructure, and care coordination capacity that standalone rural facilities cannot afford. As smaller facilities are not part of a health system, rural hospitals and clinics do not get to access economies of scale and purchasing leverage that is more typical with urban facilities.
Forcing divestitures that sever those system relationships — within a one-year compliance window — does not restore competition in rural healthcare markets. Those markets, by definition, cannot sustain multiple competing systems. It eliminates the structural support that keeps rural care accessible at all.
Consolidation can allow hospitals to expand their services and offerings to meet the needs of their communities, and post-acquisition analysis shows that 38% of acquired hospitals have added at least one service. Those additions — obstetrics, behavioral health, specialty care — are not easily rebuilt once severed.
Where the Real Problem Lives — and What Fixes It
AGIF's position is straightforward: healthcare affordability is a genuine policy priority, and the conflicts of interest embedded in PBM spread pricing, MLR gaming, and insurer-controlled provider steering are real and warrant action. Targeted regulatory intervention — PBM transparency mandates, site-neutral payment reform, genuine enforcement against anticompetitive self-dealing — addresses those behaviors directly.
The Break Up Big Medicine Act does something different. It applies a structural solution to a behavioral problem, imposes a one-year compliance deadline on restructurings that would realistically require five to ten years, and — due to legislative drafting ambiguities — sweeps in integrated health systems that were never the bill's intended targets.
The right policy question is not "how do we break up large healthcare enterprises?" It is "how do we eliminate the specific incentives that allow any enterprise, large or small, to profit at patients' expense?" Those are different questions. They lead to different answers.
American healthcare needs better rules. The Break Up Big Medicine Act is the wrong rewrite.