United Health's Stock Crash, with Rob Gelb | Last Month In Healthcare

This episode of "Last Month In Healthcare" provides a rapid-fire analysis of key healthcare and life sciences headlines from April 2025, featuring host Spencer and guest Rob Gelb. The discussion centers on market transparency, regulatory shifts, the increasing role of artificial intelligence, and major financial events impacting the payer landscape. The hosts begin by reviewing previous podcast episodes focused on healthcare cost transparency, bundled procedures, and the misaligned incentives within Pharmacy Benefit Managers (PBMs), noting that PBM conversations remain highly relevant due to widespread agreement that current incentive structures are "destroying the integrity" of the system.

A significant portion of the conversation focuses on the integration of AI into the life sciences and medical practice. The hosts analyze the FDA’s plan to phase out animal testing requirements for monoclonal antibodies and other drugs, replacing them with advanced computer simulations and lab-grown organs (organoids). This shift is viewed as a "win-win for public health and ethics," driven by the potential for AI-based computational models to be cheaper, faster, and offer better translational results for human impact than traditional animal testing. Furthermore, they discuss a study where 80% of patients considered answers from ChatGPT better than those from a physician, noting that AI scored nearly 10 times higher in perceived empathy (45% vs. 4.6%). This leads to a debate on whether AI will augment or replace doctors, with reference to Bill Gates' prediction that AI will replace doctors and teachers in 10 years, ushering in an "era of free intelligence."

The episode also delves into financial and regulatory pressures. The hosts dissect the UnitedHealth stock crash, which saw a 23% drop in two days after the company failed to account for a surge in Medicare Advantage patient utilization—twice the anticipated level—in Q1 2025. This event is interpreted as a "warning shot" and a potential "whiplash effect of COVID," suggesting that delayed diagnoses and higher utilization rates are accelerating, which will likely lead to a continued hardening of the stop-loss and commercial payer markets. Additionally, they cover the FTC lawsuit against major PBMs (Caremark, Express Scripts, Optum) concerning rebates and inflated drug prices, expressing skepticism about the timeline for resolution (noting the evidentiary hearing is set for early 2026). Finally, discussions on public health include RFK Jr.'s plan to ban artificial food dyes and the concerning prevalence of microplastics in the human brain, emphasizing the need for greater consumer literacy and regulatory oversight regarding food and packaging.

Detailed Key Takeaways

• AI in Drug Development and Regulatory Compliance: The FDA is actively moving to replace animal testing for monoclonal antibodies and other drugs with AI-based computational models and organoids (lab-grown organs). This presents a critical opportunity for life sciences firms to invest in AI platforms that streamline preclinical testing, reduce costs, and enhance ethical compliance, aligning with IntuitionLabs' regulatory focus.
• Physician Augmentation vs. Replacement: While Bill Gates predicts AI will replace doctors and teachers within a decade, the consensus among the hosts and industry physicians is that AI will primarily serve as an augmentation tool. AI's strength lies in assimilating and synthesizing large quantities of data to produce actionable information that humans must then interpret and apply.
• AI Empathy in Medical Q&A: Patients perceived AI (specifically ChatGPT) as significantly more empathetic (45% score) than human physicians (4.6% score) when answering medical questions. This suggests that AI can fill gaps in patient communication and support, highlighting a viable use case for LLM-powered medical information chatbots and patient engagement tools.
• PBM Transparency and Fiduciary Duty: The ongoing FTC lawsuit against major PBMs underscores the persistent issue of misaligned incentives and lack of transparency regarding drug costs and rebates. Employers and plan sponsors must demand greater accountability and act as true fiduciaries, utilizing advocates and reconciliation processes to verify actual drug costs versus charged prices.
• Medicare Advantage Utilization as a Market Indicator: The unexpected surge in Medicare Advantage utilization that triggered the UnitedHealth stock crash is a significant warning shot for the entire healthcare market. This suggests an acceleration of deferred care and late-stage diagnoses post-COVID, which will continue to drive up costs in the commercial and stop-loss markets for the foreseeable future.
• Cost Transparency is Foundational: The inability to know the actual cost of healthcare services (medical and pharmacy) prevents employers and employees from making intentional, cost-effective decisions. Solutions like bundled procedures and transparent PBM models are necessary to link health decisions with financial impact ("how your health is going to impact your wealth").
• Regulatory Focus on Food and Chemicals: Discussions on banning artificial food dyes and the presence of heavy metals (cadmium, lead) and microplastics in consumer products highlight a growing trend toward stricter regulatory scrutiny of chemicals and ingredients, which may eventually extend to pharmaceutical excipients and manufacturing processes.
• M&A Integration Strategy: When managing mergers and acquisitions, senior HR leaders (CHROs) must prioritize transparent, open communication to manage employee uncertainty. The speed of cultural adoption post-acquisition is heavily influenced by the strength of the incoming culture and the perceived value of being part of a larger entity.
• Employee Cost Reduction Strategies: Employees in fully insured plans, while unable to change premiums, can lower out-of-pocket costs by utilizing shopping services (e.g., Good Rx), maximizing HSA/HRA contributions, using telehealth solutions, and actively asking physicians for generic or cost-effective medication alternatives.
• The Hardening Stop-Loss Market: The increasing trend of high-cost claims (over $1 million), tracked by reports from carriers like QBE and Sunlife, indicates that the stop-loss market is hardening. This forces fully insured carriers to take "big corrective action" on pricing, reflecting the sustained upward trend in healthcare costs.
• Impact of Microplastics: The finding that the average human brain contains microplastics equivalent to an entire plastic spoon raises significant long-term public health concerns, reinforcing the need for life sciences research into the bio-impact of common environmental contaminants.

Key Concepts

• AI-Based Computational Models: Advanced computer simulations used in drug development and testing, particularly replacing animal models, offering a potentially cheaper and more ethically sound method for predicting drug efficacy and human impact.
• Organoids: Lab-grown organs that mimic human organs, used as synthetic testing environments for drugs and therapies, often alongside AI models.
• Fiduciary Responsibility (PBMs): The legal and ethical obligation of PBMs and plan sponsors to act in the best financial interest of the employer and employee plan members, ensuring efficient purchasing and transparent use of plan funds.
• COVID Whiplash Effect: The delayed but accelerating impact of missed or postponed diagnostic testing and preventative care during the pandemic, leading to higher utilization rates and more expensive late-stage diagnoses in subsequent years, particularly noted in the Medicare Advantage population.

Tools/Resources Mentioned

• Good Rx: Mentioned as a tool employees can use to shop for lower-cost medications.
• Chat GPT: Used in the Harvard study as the AI model answering medical questions for patients.