Over the weekend, President Biden called it quits and Democrats seemingly coalesced around Vice President Harris as the Party’s candidate for the White House. While speculation about her running mate swirls, the stakes for healthcare just got higher. Here’s why:
A GOP View of U.S. Healthcare
Republicans were mute on their plans for healthcare during last week’s nominating convention in Milwaukee. The RNC healthcare platform boils down to two aims: ‘protecting Medicare’ and ‘granting states oversight of abortion services. Promises to repeal and replace the Affordable Care Act, once the staple of GOP health policy, are long-gone as polls show the majority (even in Red states (like Texas and Florida) favor keeping it. The addition of Ohio Senator JD Vance to the ticket reinforces the party’s pro-capitalism, pro-competition, pro-states’ rights pitch.
To core Trump voters and right leaning Republicans, the healthcare industry is a juggernaut that’s over-regulated, wasteful and in need of discipline. Excesses in spending for illegal immigrant medical services ($8 billion in 2023), high priced drugs, lack of price transparency, increased out-of-pocket costs and insurer red tape stoke voter resentment. Healthcare, after all, is an industry that benefits from capitalism and market forces: its abuses and weaknesses should be corrected through private-sector innovation and pro-competition, pro-consumer policies.
A Dem View of Healthcare
By contrast, healthcare is more prominent in the Democrat’s platform as the party convenes for its convention in Chicago August 19. Women’s health and access to abortion, excess profitability by “corporate” drug manufacturers, hospitals and insurers, inadequate price transparency, uneven access and household affordability will be core themes in speeches and ads, with a promise to reverse the Dobb’s ruling by the Supreme Court punctuating every voter outreach.
Healthcare, to the Democratic-leaning voters is a right, not a privilege.
Its majority think it should be universally accessible, affordable, and comprehensive akin to Medicare. They believe the status quo isn’t working: the federal government should steward something better.
Here’s what we know for sure:
Foreign policy will be a secondary focus. The campaigns will credential their teams as world-savvy diplomats who seek peace and avoid conflicts. Nationalism vs. globalism will be key differentiator for the White House aspirants but domestic policies will be more important to most voters.
Healthcare reform will be a more significant theme in Campaign 2024 in races for the White House, U.S. Senate, U.S. House of Representatives and Governors. Dissatisfaction with the status quo and disappointment with its performance will be accentuated.
The White House campaigns will be hyper-negative and disinformation used widely (especially on healthcare issues). A prosecutorial tone is certain.
Given the consequence of the SCOTUS’ Chevron ruling limiting the role and scope of agency authority (HHS, CMS, FDA, CDC, et al), campaigns will feature proposed federal & state policy changes and potential Cabinet appointments in positioning their teams. Media speculation will swirl around ideologues mentioned as appointees while outside influencers will push for fresh faces and new ideas.
Consumer prices and inflation will be hot-button issues for pocketbook voters: the health industry, especially insurers, hospitals and drug companies, will be attacked for inattention to affordability.
Substantive changes in health policies and funding will be suspended until 2025 or later. Court decisions, Executive Orders from the White House/Governors, and appointments to Cabinet and health agency roles will be the stimuli for changes. Major legislative and regulatory policy shifts will become reality in 2026 and beyond. Temporary adjustments to physician pay, ‘blame and shame’ litigation and Congressional inquiries targeting high profile bad actors, excess executive compensation et al and state level referenda or executive actions (i.e. abortion coverage, price-containment councils, CON revisions et al) will increase.
Total healthcare spending, its role in the economy and a long-term vision for the entire system will not be discussed beneath platitudes and promises. Per the Congressional Budget Office, healthcare as a share of the U.S. GDP will increase from 17.6% today to 19.7% in 2032. Spending is forecast to increase 5.6% annually—higher than wages and overall inflation. But it’s too risky for most politicians to opine beyond acknowledgment that “they feel their pain.”
My take:
Regardless of the election outcome November 5, the U.S. healthcare industry will be under intense scrutiny in 2025 and beyond. It’s unavoidable.
Discontent is palpable. No sector in U.S. healthcare can afford complacency. And every stakeholder in the system faces threats that require new solutions and fresh voices.
UnitedHealth Group, the largest health insurance conglomerate by far, continues to show how rewarding it is for shareholders when corporate lawyers find loopholes in well-intentioned legislation – and game the Medicare Advantage program in ways most lawmakers and regulators didn’t anticipate and certainly didn’t intend – to boost profits.
UnitedHealth announced this morning that it made $15.8 billion in operating profits between the first of January and the end of June this year. That compares to $4.6 billion it made during the same period in 2014. One way the company is able to reward its shareholders so richly these days is by steering millions of people enrolled in its health plans to the tens of thousands of doctors it now employs and to the clinics and pharmacy operations it now owns.
This is the result of the hundreds of acquisitions UnitedHealth has made over the past 10 years in health care delivery as part of its aggressive “vertical integration” strategy.
The other big way the company has become so profitable is by rigging the Medicare Advantage program in a way that enables it to get more money from the federal government in a scheme – detailed in a big investigative report by the Wall Street Journal a few days ago – in which it claims its Medicare Advantage enrollees are sicker than they really are. The WSJ calculated that Medicare Advantage insurers bilked the government out of more than $50 billion in the three years ending in 2021 by engaging in this scheme, and it said UnitedHealth has grabbed the lion’s share of those billions. In many if not most instances, those enrollees were not treated for the conditions and illnesses UnitedHealth and other insurers claimed they had. As the newspaper reported:
Insurer-driven diagnoses by UnitedHealth for diseases that no doctor treated generated $8.7 billion in 2021 payments to the company, the Journal’s analysis showed. UnitedHealth’s net income that year was about $17 billion.
By far, most of UnitedHealth’s health plan enrollment growth over the past 10 years has come from the Medicare Advantage program, and it now takes in nearly twice as much revenue from the 7.8 million people enrolled in that program as it does from the 29.6 million enrolled in its commercial insurance plans in the United States.
Since the second quarter of 2014, UnitedHealth’s commercial health plan enrollment has increased by 720,000 people. During that same time, enrollment in its Medicare Advantage plans has increased by 4.8 million.
UnitedHealth and other insurers that participate in the Medicare Advantage program know a cash cow when they see one.
As the Kaiser Family Foundation noted in a recent report, the highest gross margins among insurers come from Medicare Advantage, which, as Health Finance News reported, boasted gross margins per enrollee of $1,982 on average by the end of 2023, compared to $1,048 in the individual (commercial) market and $753 in the Medicaid managed care market.
UnitedHealth has significant enrollment in all of those areas. Enrollment in the Medicaid plans it administers in several states increased from 4.7 million at the end of the second quarter of 2014 to 7.4 million this past quarter.
In its disclosure today, UnitedHealth did not break out its health plan revenue as it has in past quarters, but you can see how public programs like Medicare Advantage and Medicaid have become so lucrative by comparing revenue reported by the company at the end of the second quarter of 2013 to the second quarter of 2023. Over that time, total revenues for commercial plans (employer and individual) increased by slightly more than $5.6 billion, from $11.1 billion in 2Q 2013 to $16.8 billion in 2Q 2023. Total revenues from Medicaid increased by $14.2 billion, from $4.5 billion to $18.7 billion, and total revenues from Medicare increased by $21.4 billion, from $11.1 billion to $32.4 billion.
Here’s another way of looking at this: At the end of 2Q 2013, UnitedHealth took in almost exactly the same revenue from its commercial business and its Medicare business ($11.053 from Medicare and $11.134 from its commercial plans.
At the end of 2Q 2023, the company took in nearly twice as much from its Medicare business ($32.4 billion from Medicare compared to $16.8 billion from its commercial plans.)
The change is even more stark when you add in Medicaid. At the end 2Q 2023, UnitedHealth’s Medicare and Medicaid (community and state) revenues totaled $51.1 billion; It’s commercial revenues, as noted, totaled $16.8 billion). It’s now getting three times as much revenue from taxpayer-supported programs as from its commercial business.
As impressive for shareholders as all of that is, growth in the company’s other big division, Optum, which encompasses its pharmacy benefit manager (Optum Rx) and the physician practices and clinics it owns) has been even more eye-popping. At the end of 2Q 2014, Optum contributed $11.7 billion to the company’s total revenues. At the end of 2Q 2024, it contributed $62.9 billion, an increase of $51.2 billion. At that rate of growth, it’s only a matter of a few quarters before Optum is both the biggest and most profitable division of the company.
And here’s the way the company benefits from that loophole in federal law I mentioned above. The Affordable Care Act requires insurers to spend 80%-85% of health plan revenue on patient care. UnitedHealth is consistently able to meet that threshold by paying itself, as HEALTH CARE un-coveredexplained in December. The billions UnitedHealthcare (the health plan division) pays Optum every quarter are categorized as “eliminations” in its quarterly reports. In 2Q 2024, 27.7% of the company’s revenues fell into that category.
The more it is able to steer its health plan enrollees into businesses it owns on the Optum side, the more it can defy Congressional intent – and profit greatly by it.
Wall Street loves how UnitedHealth has pulled all this off. It’s stock price jumped $33.50 to $548.87 a share during today’s trading at the New York Stock Exchange, an increase of 6.5% – in one day.
Last Friday, the Court of Appeals for the Fifth Circuit in New Orleans overturned a district court ruling that had nullified a requirement in the Affordable Care Act (ACA) that private insurers cover certain preventive care services without patient cost-sharing, although a nationwide injunction had kept the mandate in place while the case was appealed.
In a decision that the judges themselves described as a “mixed bag,” the circuit court ruled that the US Preventive Services Task Force (USPSTF) lacked constitutional authority to issue legally binding recommendations, as its expert volunteer members are not nominated by the president and confirmed by the Senate.
However, only the plaintiffs—two companies in Texas that argued covering contraceptives, HPV vaccinations, and HIV prevention medicines violated their religious beliefs—have been granted relief to disregard USPSTF recommendations, and all other companies must remain in compliance. The circuit court also declined to rule on the legality of ACA coverage recommendations for contraceptives and vaccines, which are issued by other advisory groups than the USPSTF, instead returning these matters to the original district court.
The Gist: Although this decision leaves the door open for further rulings and legal challenges, providers and patients can celebrate that preventive care services remain free of cost-sharing, for now.
The preventive care mandate is one of the ACA’s most popular provisions, and overturning it would be highly disruptive and harmful to patient health, especially given about half of US adults say it’s difficult to afford healthcare costs.
This ruling also suggests that a permanent resolution to legal questions surrounding the USPSTF’s authority may require Congressional action.
The Affordable Care Act turned 14 on March 23. It has done a lot of good for a lot of people, but big changes in the law are urgently needed to address some very big misses and consequences I don’t believe most proponents of the law intended or expected.
At the top of the list of needed reforms: restraining the power and influence of the rapidly growing corporations that are siphoning more and more money from federal and state governments – and our personal bank accounts – to enrich their executives and shareholders.
I was among many advocates who supported the ACA’s passage, despite the law’s ultimate shortcomings. It broadened access to health insurance, both through government subsidies to help people pay their premiums and by banning prevalent industry practices that had made it impossible for millions of American families to buy coverage at any price. It’s important to remember that before the ACA, insurers routinely refused to sell policies to a third or more applicants because of a long list of “preexisting conditions” – from acne and heart disease to simply being overweight – and frequently rescinded coverage when policyholders were diagnosed with cancer and other diseases.
While insurance company executives were publicly critical of the law, they quickly took advantage of loopholes (many of which their lobbyists created) that would allow them to reap windfall profits in the years ahead – and they have, as you’ll see below.
I wrote and spoke frequently as an industry whistleblower about what I thought Congress should know and do, perhaps most memorably in an interview with Bill Moyers. During my Congressional testimony in the months leading up to the final passage of the bill in 2010, I told lawmakers that if they passed it without a public option and acquiesced to industry demands, they might as well call it “The Health Insurance Industry Profit Protection and Enhancement Act.”
A health plan similar to Medicare that could have been a more affordable option for many of us almost happened, but at the last minute, the Senate was forced to strip the public option out of the bill at the insistence of Sen. Joe Lieberman (I-Connecticut), who died on March 27, 2024. The Senate did not have a single vote to spare as the final debate on the bill was approaching, and insurance industry lobbyists knew they could kill the public option if they could get just one of the bill’s supporters to oppose it. So they turned to Lieberman, a former Democrat who was Vice President Al Gore’s running mate in 2000 and who continued to caucus with Democrats. It worked. Lieberman wouldn’t even allow a vote on the bill if it created a public option. Among Lieberman’s constituents and campaign funders were insurance company executives who lived in or around Hartford, the insurance capital of the world. Lieberman would go on to be the founding chair of a political group called No Labels, which is trying to find someone to run as a third-party presidential candidate this year.
The work of Big Insurance and its army of lobbyists paid off as insurers had hoped. The demise of the public option was a driving force behind the record profits – and CEO pay – that we see in the industry today.
The good effects of the ACA:
Nearly 49 million U.S. residents (or 16%) were uninsured in 2010. The law has helped bring that down to 25.4 million, or 8.3% (although a large and growing number of Americans are now “functionally uninsured” because of unaffordable out-of-pocket requirements, which President Biden pledged to address in his recent State of the Union speech).
The ACA also made it illegal for insurers to refuse to sell coverage to people with preexisting conditions, which even included birth defects, or charge anyone more for their coverage based on their health status; it expanded Medicaid(in all but 10 states that still refuse to cover more low-income individuals and families); it allowed young people to stay on their families’ policies until they turn 26; and it required insurers to spend at least 80% of our premiums on the health care goods and services our doctors say we need (a well-intended provision of the law that insurers have figured out how to game).
The not-so-good effects of the ACA:
As taxpayers and health care consumers, we have paid a high price in many ways as health insurance companies have transformed themselves into massive money-making machines with tentacles reaching deep into health care delivery and taxpayers’ pockets.
To make policies affordable in the individual market, for example, the government agreed to subsidize premiums for the vast majority of people seeking coverage there, meaning billions of new dollars started flowing to private insurance companies. (It also allowed insurers to charge older Americans three times as much as they charge younger people for the same coverage.) Even more tax dollars have been sent to insurers as part of the Medicaid expansion. That’s because private insurers over the years have persuaded most states to turn their Medicaid programs over to them to administer.
We invite you to take a look at how the ascendency of health insurers over the past several years has made a few shareholders and executives much richer while the rest of us struggle despite – and in some cases because of – the Affordable Care Act.
BY THE NUMBERS
In 2010, we as a nation spent $2.6 trillion on health care. This year we will spend almost twice as much – an estimated $4.9 trillion, much of it out of our own pockets even with insurance.
In 2010, the average cost of a family health insurance policy through an employer was $13,710. Last year, the average was nearly $24,000, a 75% increase.
The ACA, to its credit, set an annual maximum on how much those of us with insurance have to pay before our coverage kicks in, but, at the insurance industry’s insistence, it goes up every year. When that limit went into effect in 2014, it was $12,700 for a family. This year, it has increased by 48%, to $18,900. That means insurers can get away with paying fewer claims than they once did, and many families have to empty their bank accounts when a family member gets sick or injured. Most people don’t reach that limit, but even a few hundred dollars is more than many families have on hand to cover deductibles and other out-of-pocket requirements. Now 100 million Americans – nearly one of every three of us – are mired in medical debt, even though almost 92% of us are presumably “covered.” The coverage just isn’t as adequate as it used to be or needs to be.
Meanwhile, insurance companies had a gangbuster 2023. The seven big for-profit U.S. health insurers’ revenues reached $1.39 trillion, and profits totaled a whopping $70.7 billion last year.
SWEEPING CHANGE, CONSOLIDATION–AND HUGE PROFITS FOR INVESTORS
Insurance company shareholders and executives have become much wealthier as the stock prices of the seven big for-profit corporations that control the health insurance market have skyrocketed.
NOTE: The Dow Jones Industrial Average is listed on this chart as a reference because it is a leading stock market index that tracks 30 of the largest publicly traded companies in the United States.
REVENUES collected by those seven companies have more than tripled (up 346%), increasing by more than $1 trillion in just the past ten years.
PROFITS (earnings from operations) have more than doubled (up 211%), increasing by more than $48 billion.
The CEOs of these companies are among the highest paid in the country. In 2022, the most recent year the companies have reported executive compensation, they collectively made $136.5 million.
U.S. HEALTH PLAN ENROLLMENT
Enrollment in the companies’ health plans is a mix of “commercial” policies they sell to individuals and families and that they manage for “plan sponsors” – primarily employers and unions – and government/enrollee-financed plans (Medicare, Medicaid, Tricare for military personnel and their dependents and the Federal Employee Health Benefits program).
Enrollment in their commercial plans grew by just 7.65% over the 10 years and declined significantly at UnitedHealth, CVS/Aetna and Humana. Centene and Molina picked up commercial enrollees through their participation in several ACA (Obamacare) markets in which most enrollees qualify for federal premium subsidies paid directly to insurers.
While not growing substantially, commercial plans remain very profitable because insurers charge considerably more in premiums now than a decade ago.
(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS. (2) Humana announced last year it is exiting the commercial health insurance business. (3) Enrollment in the ACA’s marketplace plans account for all of Molina’s commercial business.
By contrast, enrollment in the government-financed Medicaid and Medicare Advantage programs has increased 197% and 167%, respectively, over the past 10 years.
(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS.
Of the 65.9 million people eligible for Medicare at the beginning of 2024, 33 million, slightly more than half, enrolled in a private Medicare Advantage plan operated by either a nonprofit or for-profit health insurer, but, increasingly, three of the big for-profits grabbed most new enrollees.
Of the 1.7 million new Medicare Advantage enrollees this year, 86% were captured by UnitedHealth, Humana and Aetna.
Those three companies are the leaders in the Medicare Advantage business among the for-profit companies, and, according to the health care consulting firm Chartis, are taking over the program “at breakneck speed.”
(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS. (2,3) Centene’s and Molina’s totals include Medicare Supplement; they do not break out enrollment in the two Medicare categories separately.
It is worth noting that although four companies saw growth in their Medicare Supplement enrollment over the decade, enrollment in Medicare Supplement policies has been declining in more recent years as insurers have attracted more seniors and disabled people into their Medicare Advantage plans.
OTHER FEDERAL PROGRAMS
In addition to the above categories, Humana and Centene have significant enrollment in Tricare, the government-financed program for the military. Humana reported 6 million military enrollees in 2023, up from 3.1 million in 2013. Centene reported 2.8 million in 2023. It did not report any military enrollment in 2013.
Elevance reported having 1.6 million enrollees in the Federal Employees Health Benefits Program in 2023, up from 1.5 million in 2013. That total is included in the commercial enrollment category above.
At Cigna, Express Scripts’ pharmacy operations now contribute more than 70% to the company’s total revenues. Caremark’s pharmacy operations contribute 33% to CVS/Aetna’s total revenues, and Optum Rx contributes 31% to UnitedHealth’s total revenues.
WHAT TO DO AND WHERE TO START
The official name of the ACA is the Patient Protection and Affordable Care Act. The law did indeed implement many important patient protections, and it made coverage more affordable for many Americans.
But there is much more Congress and regulators must do to close the loopholes and dismantle the barriers erected by big insurers that enable them to pad their bottom lines and reward shareholders while making health care increasingly unaffordable and inaccessible for many of us.
Several bipartisan bills have been introduced in Congress to change how big insurers do business. They include curbing insurers’ use of prior authorization, which often leads to denials and delays of care; requiring PBMs to be more “transparent” in how they do business and banning practices many PBMs use to boost profits, including spread pricing, which contributes to windfall profits; and overhauling the Medicare Advantage program by instituting a broad array of consumer and patient protections and eliminating the massive overpayments to insurers.
And as noted above, President Biden has asked Congress to broaden the recently enacted $2,000-a-year cap on prescription drugs to apply to people with private insurance, not just Medicare beneficiaries. That one policy change could save an untold number of lives and help keep millions of families out of medical debt. (A coalition of more than 70 organizations and businesses, which I lead, supports that, although we’re also calling on Congress to reduce the current overall annual out-of-pocket maximum to no more than $5,000.)
I encourage you to tell your members of Congress and the Biden administration that you support these reforms as well as improving, strengthening and expanding traditional Medicare. You can be certain the insurance industry and its allies are trying to keep any reforms that might shrink profit margins from becoming law.
The rebates that will be issued later this year will be larger than those issued in most prior years, the analysis found.
Health insurers are projected to pay about $1.1 billion in Affordable Care Act medical loss ratio rebates this year, a new KFF report finds.
The medical loss ratio (MLR) provision of the ACA limits the amount of premium income that insurers can keep for administration, marketing and profits. Insurers that fail to meet the applicable MLR threshold are required to pay back excess profits or margins in the form of rebates to individuals and employers that purchased coverage.
The $1.1 billion in estimated total rebates across commercial markets are similar to the $1 billion in total rebates issued in 2022, and the $950 million issued in 2023. Last year, rebates were issued to 1.7 million people with individual coverage and 4.1 million people with employer coverage. In the individual market, the 2023 average rebate per person was $196, while the average rebates per person for the small group market and the large group market were $201 and $104, respectively.
The rebates, to be issued later this year, will be larger than those issued in most prior years, the analysis found, but they’ll fall short of the recent rebate totals of $2.5 billion issued in 2020 and $2 billion issued in 2021, which coincided with the onset of the COVID-19 pandemic.
WHAT’S THE IMPACT?
In the individual and small group markets, insurers are required to spend at least 80% of their premium income on healthcare claims and quality improvement efforts, leaving the remaining 20% for administration, marketing expenses and profit.
The MLR threshold is higher for large group insurers, which have to spend at least 85% of their premium income on healthcare claims and quality-improvement efforts.
MLR rebates are based on a three-year average, meaning that rebates issued in 2024 will be calculated using insurers’ financial data in 2021, 2022 and 2023, and will go to people and businesses who bought health coverage in 2023.
In 2023, the average individual market simple loss ratio – meaning there’s no adjustment for quality improvement expenses or taxes, and doesn’t align perfectly with ACA MLR thresholds – was 84%. That shows insurers spent an average of 84% of their premium income in the form of health claims in 2023, according to KFF data.
However, rebates issued in 2024 are based on a three-year average of insurers’ experience in 2021-2023. Consequently, even insurers with high loss ratios in 2023 may expect to owe rebates if they were highly profitable in the prior two years.
In the small and large group markets, 2023 average simple loss ratios were 84% and 88%, respectively. Only fully insured group plans are subject to the ACA MLR rule, while roughly two-thirds of covered workers are in self-funded plans, to which the MLR threshold doesn’t apply.
THE LARGER TREND
KFF cautioned that the rebate amounts are still preliminary. Rebates and notices are mailed out by the end of September, and the federal government will post a summary of the total amount owed by each issuer in each state later in the year.
Insurers in the individual market can either issue rebates in the form of a check or premium credit. For people with employer coverage, the rebate can be shared between the employer and the employee, depending on the way in which they share premium costs.
If the amount of the rebate is exceptionally small – less than $5 for individual rebates and less than $20 for group rebates – insurers are not required to process the rebate, as it may not warrant the administrative burden required to do so, KFF said.
“Incrementalism.” The word is perceived as the enemy of hope for universal health care in the United States.
Those who advocate for single-payer, expanded Medicare for all tend to be on the left side of the political spectrum, and we have advanced the movement while pushing back on incremental change. But the profit-taking health industry giants in what’s been called the medical-industrial complex are pursuing their own incremental agenda, designed to sustain the outrageously expensive and unfair status quo.
In recent years, as the financial sector of the U.S. economy has joined that unholy alliance, scholars have begun writing about the “financialization” of health care.
It has morphed into the medical-financial-industrial complex (MFIC) so vast and deeply entrenched in our economy that a single piece of legislation to achieve our goal–even with growing support in Congress–remains far short of enough votes to enact.
If we are to see the day when all Americans can access care without significant financial barriers, policy changes that move us closer to that goal must be pursued as aggressively as we fight against the changes that push universal health care into the distant future. Labeling all positive steps toward universal health care as unacceptable “incrementalism” could have the effect of aiding and abetting the MFIC and increase the chances of a worst-case scenario: Medicare Advantage for all, a goal of the giants in the private insurance business. But words matter. Instead of “incremental,” let’s call the essential positive steps forward as “foundational” and not undermine them.
The pandemic crisis exposed the weaknesses of our health system. When millions of emergencies in the form of COVID-19 infections overtook the system, most providers were ill-prepared and understaffed. More than 1.1 million U.S. citizens died of COVID-19-related illness, according to the Centers for Disease Control.
For years, the MFIC had been advancing its agenda, even as the U.S. was losing ground in life expectancy and major measures of health outcomes. While health care profits soared in the years leading up to and during the pandemic, those of us in the single-payer movement demanded improved, expanded Medicare for all. And we were right to do so. Progress came through almost every effort. The number of advocates grew, and more newly elected leaders supported a single-payer plan. Bernie Sanders’ 2016 presidential bid proved that millions of Americans were fed up with having to delay or avoid care altogether because it simply cost too much or because insurance companies refused to cover needed tests, treatments and medications.
But as the demand for systemic overhaul grew, the health care industry was making strategic political contributions and finding ways to gain even more control of health policy and the political process itself.
Over the years, many in the universal health care movement have opposed foundational change for strategic reasons. Some movement leaders believed that backing small changes or tweaks to the current system at best deflected from our ultimate goal. And when the Patient Protection and Affordable Care Act was passed, many on the left viewed it as a Band-Aid if not an outright gift to the MFIC. While many physicians in our movement knew that the law’s Medicaid expansion and the provisions making it illegal for insurers to refuse coverage to people with preexisting conditions would save many thousands of lives, they worried that the ACA would further empower big insurance companies. Both positions were valid.
After the passage of the ACA, more of us had insurance cards in our wallets and access to needed care for the first time, although high premiums and out-of-pocket costs have become insurmountable barriers for many. Meanwhile, industry profits soared.
The industry expanded its turf. Hospitals grew larger, stand-alone urgent care clinics, often owned by corporate conglomerates, opened on street corners in cities across the country, private insurance rolls grew, disease management schemes proliferated, and hospital and drug prices continued the march upward. The money flowing into the campaign coffers of political candidates made industry-favored incremental changes an easier lift.
To change this “system” would require an overhaul of the whole economy. Single-payer advocates must consider that herculean task as they continue their work. We must understand that the true system of universal health care we envision would also disrupt the financial industry – banks, collection agencies, investors – an often-forgotten but extraordinarily powerful segment of the corporate-run complex.
Even if the research and data show that improved, expanded Medicare for all would save money and lives (and they do show that), that is not motivating for the finance folks, who fear that without unfettered control of health care, they might profit less. Eliminating medical bills and debt would be marvelous for patients but not for a large segment of the financial community, including bankruptcy attorneys.
Following the money in U.S. health care means understanding how deep and far the tentacles of profit reach, and how embedded they are now.
We know the MFIC positioned itself to continue growing profits and building more capacity. The industry made steady, incremental progress toward that goal. There is no illusion that better overall health for Americans is the mission of the stockholders who drive this industry. No matter what the marketers tell us, patients are not their priority. If too many of us get healthier, we might not use as much care and generate as much money for the owners and providers. Private insurers want enough premiums and government perks to keep flowing their way to keep the C-Suite and Wall Street happy.
More than health insurers
Health insurers are far from the only rapidly expanding component of the MFIC. A recent documentary, “American Hospitals: Healing a Broken System,” for example, explores a segment of the U.S. health industry that is often overlooked by policymakers and the media. Though they were unprepared for the national health crisis, hospitals endured the pandemic in this country largely because the dedicated doctors, nurses and ancillary staff risked their own lives to keep caring for COVID-19 patients while everything from masks, gowns and gloves to thermometers and respirators were in short supply. But make no mistake, many hospitals were still making money through the pandemic. In fact, some boosted their already high profits, and private insurance companies had practically found profit-making nirvana. Patients put off everything from colonoscopies to knee replacements, physical therapy to MRIs. Procedures not done meant claims not submitted, while monthly insurance premiums kept right on coming and right on increasing.
The pandemic was a time of turmoil for most businesses and families, yet the MFIC took its share of profits. It was pure gold for many hospitals until staffing pressures and supply issues grew more dire, COVID patients were still in need of care, and more general patient care needs started to reemerge.
We might be forgiven for thinking there wasn’t much regulating or legislating done around health care during the pandemic years. We’d be wrong. There was a flurry of legislation at the state level as some states took on the abuses of the private insurance industry and hospital billing practices.
And the movement to improve and expand traditional Medicare to cover all of us stayed active, though somewhat muted. The bills before Congress that expanded access to Medicaid during the pandemic through a continuous enrollment provision offered access to care for millions of people. Yet as that COVID-era expansion ended, many of those patients were left without coverage or access to care. This might have been a chance to raise the issue loudly, but the social justice movement did not sufficiently activate national support for maintaining continuous enrollment in Medicaid. Is that the kind of foundational change worth fighting for? I would argue it most certainly is.
As those previously covered by Medicaid enter this “unwinding” phase, many will be unable to secure equivalent or adequate health insurance coverage. The money folks began to worry as coverage waned. After all, sick people will show up needing care and they will not be able to pay for it. As of this writing, patient advocacy groups are largely on the sidelines.
But Allina Health took action. The hospital chain announced it would no longer treat patients with medical debt. After days of negative press, the company did an about-face.
Throughout the country, even as the pandemic loomed, the universal, single-payer movement focused on explaining to candidates and elected officials why improving and expanding Medicare to cover all of us not only is a moral imperative but also makes economic sense. In many ways, the movement has been tremendously effective: More than 130 city and county governing bodies have passed resolutions in support of Medicare for all, including in Seattle, Denver, Cincinnati, Washington, D.C., Tampa, Sacramento, Los Angeles, St. Louis, Atlanta, Duluth, Baltimore, and Cook County (Chicago).
The Medicare for All Act, sponsored by Rep Pramila Jayapal (D-Wash.) and Sanders (I-Vt.) has 113 co-sponsors in the House and 14 in the Senate. Another bill allowing states to establish their own universal health care programs has been introduced in the House and will be introduced soon in the Senate.
Moving us closer
The late Dr. Quentin Young was a young Barack Obama’s doctor in Chicago. Young spoke to his president-in-the-making patient about universal health care and Obama, then a state legislator, famously answered that he would support a single-payer plan if we were starting from scratch. Many in the Medicare–for-all movement dismissed that statement as accepting corporate control of health care.
But Young would steadfastly advocate for single-payer health care for years to come and as one of the founding forces behind Physicians for a National Health Program. Once Dr. Young was asked if the movement should support incremental changes. He answered, “If a measure makes it easier and moves us closer to achieving health care for all of us, we should support that wholeheartedly. And if a measure makes it harder to get to single-payer, we need to oppose it and work to defeat that measure.” Many people liked that response. Others were not persuaded.
But in recent years, PHNP has become a national leader in a broad-based effort to halt the privatization of Medicare through so-called Medicare Advantage plans and other means. A case can be made that those are incremental/foundational but essential steps to achieving the ultimate goal.
We must fight incrementally sometimes, for instance when traditional Medicare is threatened with further privatization. Bit by painful bit, a program that has served this nation so well for more than 50 years will be carved up and given over to the private insurance industry unless the foundational steps taken by the industry are met with resistance and facts at every turn. We can achieve our goal by playing the short game as well as the long game. Foundational change can be and has been powerful. It just has to be focused on the health and well-being of every person.
The Affordable Care Act turned 14 on March 23. It has done a lot of good for a lot of people, but big changes in the law are urgently needed to address some very big misses and consequences I don’t believe most proponents of the law intended or expected.
At the top of the list of needed reforms: restraining the power and influence of the rapidly growing corporations that are siphoning more and more money from federal and state governments – and our personal bank accounts – to enrich their executives and shareholders.
I was among many advocates who supported the ACA’s passage, despite the law’s ultimate shortcomings. It broadened access to health insurance, both through government subsidies to help people pay their premiums and by banning prevalent industry practices that had made it impossible for millions of American families to buy coverage at any price. It’s important to remember that before the ACA, insurers routinely refused to sell policies to a third or more applicants because of a long list of “preexisting conditions” – from acne and heart disease to simply being overweight – and frequently rescinded coverage when policyholders were diagnosed with cancer and other diseases.
While insurance company executives were publicly critical of the law, they quickly took advantage of loopholes (many of which their lobbyists created) that would allow them to reap windfall profits in the years ahead – and they have, as you’ll see below.
I wrote and spoke frequently as an industry whistleblower about what I thought Congress should know and do, perhaps most memorably in an interview with Bill Moyers. During my Congressional testimony in the months leading up to the final passage of the bill in 2010, I told lawmakers that if they passed it without a public option and acquiesced to industry demands, they might as well call it “The Health Insurance Industry Profit Protection and Enhancement Act.”
A health plan similar to Medicare that could have been a more affordable option for many of us almost happened, but at the last minute, the Senate was forced to strip the public option out of the bill at the insistence of Sen. Joe Lieberman (I-Connecticut), who died on March 27, 2024. The Senate did not have a single vote to spare as the final debate on the bill was approaching, and insurance industry lobbyists knew they could kill the public option if they could get just one of the bill’s supporters to oppose it. So they turned to Lieberman, a former Democrat who was Vice President Al Gore’s running mate in 2000 and who continued to caucus with Democrats. It worked. Lieberman wouldn’t even allow a vote on the bill if it created a public option. Among Lieberman’s constituents and campaign funders were insurance company executives who lived in or around Hartford, the insurance capital of the world. Lieberman would go on to be the founding chair of a political group called No Labels, which is trying to find someone to run as a third-party presidential candidate this year.
The work of Big Insurance and its army of lobbyists paid off as insurers had hoped. The demise of the public option was a driving force behind the record profits – and CEO pay – that we see in the industry today.
The good effects of the ACA:
Nearly 49 million U.S. residents (or 16%) were uninsured in 2010. The law has helped bring that down to 25.4 million, or 8.3% (although a large and growing number of Americans are now “functionally uninsured” because of unaffordable out-of-pocket requirements, which President Biden pledged to address in his recent State of the Union speech).
The ACA also made it illegal for insurers to refuse to sell coverage to people with preexisting conditions, which even included birth defects, or charge anyone more for their coverage based on their health status; it expanded Medicaid (in all but 10 states that still refuse to cover more low-income individuals and families); it allowed young people to stay on their families’ policies until they turn 26; and it required insurers to spend at least 80% of our premiums on the health care goods and services our doctors say we need (a well-intended provision of the law that insurers have figured out how to game).
The not-so-good effects of the ACA:
As taxpayers and health care consumers, we have paid a high price in many ways as health insurance companies have transformed themselves into massive money-making machines with tentacles reaching deep into health care delivery and taxpayers’ pockets.
To make policies affordable in the individual market, for example, the government agreed to subsidize premiums for the vast majority of people seeking coverage there, meaning billions of new dollars started flowing to private insurance companies. (It also allowed insurers to charge older Americans three times as much as they charge younger people for the same coverage.) Even more tax dollars have been sent to insurers as part of the Medicaid expansion. That’s because private insurers over the years have persuaded most states to turn their Medicaid programs over to them to administer.
We invite you to take a look at how the ascendency of health insurers over the past several years has made a few shareholders and executives much richer while the rest of us struggle despite – and in some cases because of – the Affordable Care Act.
BY THE NUMBERS
In 2010, we as a nation spent $2.6 trillion on health care. This year we will spend almost twice as much – an estimated $4.9 trillion, much of it out of our own pockets even with insurance.
In 2010, the average cost of a family health insurance policy through an employer was $13,710. Last year, the average was nearly $24,000, a 75% increase.
The ACA, to its credit, set an annual maximum on how much those of us with insurance have to pay before our coverage kicks in, but, at the insurance industry’s insistence, it goes up every year. When that limit went into effect in 2014, it was $12,700 for a family. This year, it has increased by 48%, to $18,900. That means insurers can get away with paying fewer claims than they once did, and many families have to empty their bank accounts when a family member gets sick or injured. Most people don’t reach that limit, but even a few hundred dollars is more than many families have on hand to cover deductibles and other out-of-pocket requirements.
Now 100 million Americans – nearly one of every three of us – are mired in medical debt, even though almost 92% of us are presumably “covered.” The coverage just isn’t as adequate as it used to be or needs to be.
Meanwhile, insurance companies had a gangbuster 2023. The seven big for-profit U.S. health insurers’ revenues reached $1.39 trillion, and profits totaled a whopping $70.7 billion last year.
SWEEPING CHANGE, CONSOLIDATION–AND HUGE PROFITS FOR INVESTORS
Insurance company shareholders and executives have become much wealthier as the stock prices of the seven big for-profit corporations that control the health insurance market have skyrocketed.
NOTE: The Dow Jones Industrial Average is listed on this chart as a reference because it is a leading stock market index that tracks 30 of the largest publicly traded companies in the United States.
REVENUES collected by those seven companies have more than tripled (up 346%), increasing by more than $1 trillion in just the past ten years.
PROFITS (earnings from operations) have more than doubled (up 211%), increasing by more than $48 billion.
The CEOs of these companies are among the highest paid in the country. In 2022, the most recent year the companies have reported executive compensation, they collectively made $136.5 million.
U.S. HEALTH PLAN ENROLLMENT
Enrollment in the companies’ health plans is a mix of “commercial” policies they sell to individuals and families and that they manage for “plan sponsors” – primarily employers and unions – and government/enrollee-financed plans (Medicare, Medicaid, Tricare for military personnel and their dependents and the Federal Employee Health Benefits program).
Enrollment in their commercial plans grew by just 7.65% over the 10 years and declined significantly at UnitedHealth, CVS/Aetna and Humana. Centene and Molina picked up commercial enrollees through their participation in several ACA (Obamacare) markets in which most enrollees qualify for federal premium subsidies paid directly to insurers.
While not growing substantially, commercial plans remain very profitable because insurers charge considerably more in premiums now than a decade ago.
(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS. (2) Humana announced last year it is exiting the commercial health insurance business. (3) Enrollment in the ACA’s marketplace plans account for all of Molina’s commercial business.
By contrast, enrollment in the government-financed Medicaid and Medicare Advantage programs has increased 197% and 167%, respectively, over the past 10 years.
(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS.
Of the 65.9 million people eligible for Medicare at the beginning of 2024, 33 million, slightly more than half, enrolled in a private Medicare Advantage plan operated by either a nonprofit or for-profit health insurer, but, increasingly, three of the big for-profits grabbed most new enrollees. Of the 1.7 million new Medicare Advantage enrollees this year, 86% were captured by UnitedHealth, Humana and Aetna. Those three companies are the leaders in the Medicare Advantage business among the for-profit companies, and, according to the health care consulting firm Chartis, are taking over the program “at breakneck speed.”
(1) The 2013 total for CVS/Aetna was reported by Aetna before its 2018 acquisition by CVS. (2,3) Centene’s and Molina’s totals include Medicare Supplement; they do not break out enrollment in the two Medicare categories separately.
It is worth noting that although four companies saw growth in their Medicare Supplement enrollment over the decade, enrollment in Medicare Supplement policies has been declining in more recent years as insurers have attracted more seniors and disabled people into their Medicare Advantage plans.
OTHER FEDERAL PROGRAMS
In addition to the above categories, Humana and Centene have significant enrollment in Tricare, the government-financed program for the military. Humana reported 6 million military enrollees in 2023, up from 3.1 million in 2013. Centene reported 2.8 million in 2023. It did not report any military enrollment in 2013.
Elevance reported having 1.6 million enrollees in the Federal Employees Health Benefits Program in 2023, up from 1.5 million in 2013. That total is included in the commercial enrollment category above.
At Cigna, Express Scripts’ pharmacy operations now contribute more than 70% to the company’s total revenues. Caremark’s pharmacy operations contribute 33% to CVS/Aetna’s total revenues, and Optum Rx contributes 31% to UnitedHealth’s total revenues.
WHAT TO DO AND WHERE TO START
The official name of the ACA is the Patient Protection and Affordable Care Act. The law did indeed implement many important patient protections, and it made coverage more affordable for many Americans. But there is much more Congress and regulators must do to close the loopholes and dismantle the barriers erected by big insurers that enable them to pad their bottom lines and reward shareholders while making health care increasingly unaffordable and inaccessible for many of us.
Several bipartisan bills have been introduced in Congress to change how big insurers do business.
And as noted above, President Biden has asked Congress to broaden the recently enacted $2,000-a-year cap on prescription drugs to apply to people with private insurance, not just Medicare beneficiaries. That one policy change could save an untold number of lives and help keep millions of families out of medical debt. (A coalition of more than 70 organizations and businesses, which I lead, supports that, although we’re also calling on Congress to reduce the current overall annual out-of-pocket maximum to no more than $5,000.)
I encourage you to tell your members of Congress and the Biden administration that you support these reforms as well as improving, strengthening and expanding traditional Medicare. You can be certain the insurance industry and its allies are trying to keep any reforms that might shrink profit margins from becoming law.
Mississippi, one of the country’s poorest and least healthy states, could soon become the next to expand Medicaid.
Why it matters:
It’s one of several GOP-dominated states that have seriously discussed Medicaid expansion this year, a sign that opposition to the Affordable Care Act coverage program may be softening among some holdouts 10 years after it became available.
A new House speaker who strongly backs expansion and growing fears that the state’s rural hospitals can’t survive without it have kept up momentum in Mississippi’s legislature this year.
As many as 200,000 low-income adults could gain coverage if lawmakers clinch a deal in the closing weeks of the Mississippi session.
State of play:
Mississippi’s House and Senate this week began hashing out differences between two very different plans passed by each chamber.
The House bill is the traditional ACA expansion, extending coverage to adults earning 138% of the federal poverty level, or about $21,000.
The Senate’s version, which leaders have dubbed “lite” expansion, covers people earning up to the poverty line and wouldn’t bring in the more generous federal support available for full expansion.
Both plans include a work requirement, but only the House version would still allow expansion to take effect without it. The Biden administration opposes work rules, but former President Trump could revive them in a second term.
Zoom out:
State lawmakers in Alabama and Georgia gave serious consideration to Medicaid expansion this year, though they ultimately dropped it. Kansas’ Gov. Laura Kelly, a Democrat, is trying again to expand Medicaid, but the GOP-run legislature remains opposed.
Shuttering rural hospitals and an acknowledgementthat the ACA is unlikely to be repealedhave made Republicans more willing to take a closer look at expansion, Politico reported earlier this year.
The fact that the extra federal funding from the ACA expansion could lift state budgets as pandemic aid dries up has also piqued states’ interest, said Joan Alker, executive director of the Georgetown University Center on Children and Families.
Zoom in:
Mississippi’s expansion effort has advanced further than other states this year largely becausenew House Speaker Jason White has made it a priority. Lt. Gov. Delbert Hosemann, who presides over the Senate, has also pushed the issue.
“We see an unhealthy population that’s uncovered. And we see this as the best way” to insure them, White told Mississippi Today this week.
“I just think it’s time for us to realize that there’s not something else coming down the pipe.”
The state’s crumbling health infrastructure has also made expansion more urgent, said Democratic state Sen. Rod Hickman. More than 40% of the state’s 74 rural hospitals are at risk of closing, a report last summer found.
“The dire need of our hospital systems and the state finally recognizing that Medicaid expansion could assist in those issues is what has kind of brought that to the forefront,” he told Axios.
Yes, but:
Republican Gov. Tate Reeves has reportedly pledged to oppose any Medicaid expansion deal that may emerge before the legislature adjourns in early May,so lawmakers would likely need a veto-proof majority to approve an expansion.
Austin Barbour, a Republican strategist who works in Mississippi politics, said he expects lawmakers will reach a deal.
But if they don’t, “I know this will be an issue that’ll pop right back up next session,” he said.
With the South Carolina Republican primary results in over the weekend, it seems a Biden-Trump re-match is inevitable. Given the legacies associated with Presidencies of the two and the healthcare platforms espoused by their political parties, the landscape for healthcare politics seems clear:
Healthcare Issue
Biden Policy
Trump Policy
Access to Abortion
‘It’s a basic right for women protected by the Federal Government’
‘It’s up to the states and should be safe and rare. A 16-week ban should be the national standard.’
Ageism
‘President Biden is alert and capable. It’s a non-issue.’
‘President Biden is senile and unlikely to finish a second term is elected. President Trump is active and prepared.’
Access to IVF Treatments
‘It’s a basic right and should be universally accessible in every state and protected’
‘It’s a complex issue that should be considered in every state.’
Affordability
‘The system is unaffordable because it’s dominated by profit-focused corporations. It needs increased regulation including price controls.’
‘The system is unaffordable to some because it’s overly regulated and lacks competition and price transparency.’
Access to Health Insurance Coverage
‘It’s necessary for access to needed services & should be universally accessible and affordable.’
‘It’s a personal choice. Government should play a limited role.’
Public health
‘Underfunded and increasingly important.’
‘Fragmented and suboptimal. States should take the lead.’
Drug prices
‘Drug companies take advantage of the system to keep prices high. Price controls are necessary to lower costs.’
‘Drug prices are too high. Allowing importation and increased price transparency are keys to reducing costs.’
Medicare
‘It’s foundational to seniors’ wellbeing & should be protected. But demand is growing requiring modernization (aka the value agenda) and additional revenues (taxes + appropriations).’
‘It’s foundational to senior health & in need of modernization thru privatization. Waste and fraud are problematic to its future.’
Medicaid
‘Medicaid Managed Care is its future with increased enrollment and standardization of eligibility & benefits across states.’
‘Medicaid is a state program allowing modernization & innovation. The federal role should be subordinate to the states.’
Competition
‘The federal government (FTC, DOJ) should enhance protections against vertical and horizontal consolidation that reduce choices and increase prices in every sector of healthcare.’
‘Current anti-trust and consumer protections are adequate to address consolidation in healthcare.’
Price Transparency
‘Necessary and essential to protect consumers. Needs expansion.’
‘Necessary to drive competition in markets. Needs more attention.’
The Affordable Care Act
‘A necessary foundation for health system modernization that appropriately balances public and private responsibilities. Fix and Repair’
‘An unnecessary government takeover of the health system that’s harmful and wasteful. Repeal and Replace.’
Role of federal government
‘The federal government should enable equitable access and affordability. The private sector is focused more on profit than the public good.’
‘Market forces will drive better value. States should play a bigger role’
My take:
Polls indicate Campaign 2024 will be decided based on economic conditions in the fall 2024 as voters zero in on their choice. Per KFF’s latest poll, 74% of adults say an unexpected healthcare bill is their number-one financial concern—above their fears about food, energy and housing. So, if you’re handicapping healthcare in Campaign 2024, bet on its emergence as an economic issue, especially in the swing states (Michigan, Florida, North Carolina, Georgia and Arizona) where there are sharp health policy differences and the healthcare systems in these states are dominated by consolidated hospitals and national insurers.
Three issues will be the primary focus of both campaigns: women’s health and access to abortion, affordability and competition. On women’s health, there are sharp differences; on affordability and competition, the distinctions between the campaigns will be less clear to voters. Both will opine support for policy changes without offering details on what, when and how.
The Affordable Care Act will surface in rhetoric contrasting a ‘government run system’ to a ‘market driven system.’ In reality, both campaigns will favor changes to the ACA rather than repeal.
Both campaigns will voice support for state leadership in resolving abortion, drug pricing and consolidation. State cost containment laws and actions taken by state attorneys general to limit hospital consolidation and private equity ownership will get support from both campaigns.
Neither campaign will propose transformative policy changes: they’re too risky. integrating health & social services, capping total spending, reforms of drug patient laws, restricting tax exemptions for ‘not for profit’ hospitals, federalizing Medicaid, and others will not be on the table. There’s safety in promoting populist themes (price transparency, competition) and steering away from anything more.
As the primary season wears on (in Michigan tomorrow and 23 others on/before March 5), how the health system is positioned in the court of public opinion will come into focus.
Abortion rights will garner votes; affordability, price transparency, Medicare solvency and system consolidation will emerge as wedge issues alongside.
PS: Re: federal budgeting for key healthcare agencies, two deadlines are eminent: March 1 for funding for the FDA and the VA and March 8 for HHS funding.
In Sunday’s Axios’ AM, Mike Allen observed “Republicans know immigration alone could sink Biden. So, Trump and House Republicans will kill anything, even if it meets or exceeds their wishes. Biden knows immigration alone could sink him. So he’s willing to accept what he once considered unacceptable — to save himself.”
Mike called this a “truth Bomb” and he’s probably right: the polarizing issue of immigration is tantamount to a bomb falling on the political system forcing well-entrenched factions to re-think and alter their strategies.
In 2024, in U.S. healthcare, three truth bombs are in-bound. They’re the culmination of shifts in the U.S.’ economic, demographic, social and political environment and fueled by accelerants in social media and Big Data.
Truth bomb: The regulatory protections that have buoyed the industry’s growth are no longer secure.
Despite years of effectively lobbying for protections and money, the industry’s major trade groups face increasingly hostile audiences in city hall, state houses and the U.S. Congress.
The focus of these: the business practices that regulators think protect the status quo at the public’s expense. Example: while the U.S. House spent last week in their districts, Senate Committees held high profile hearings about Medicare Advantage marketing tactics (Finance Committee), consumer protections in assisted living (Special Committee on Aging), drug addiction and the opioid misuse (Banking) and drug pricing (HELP). In states, legislators are rationalizing budgets for Medicaid and public health against education, crime and cybersecurity and lifting scope of practice constraints that limit access.
Drug makers face challenges to patents (“march in rights”) and state-imposed price controls. The FTC and DOJ are challenging hospital consolidation they think potentially harmful to consumer choice and so. Regulators and lawmakers are less receptive to sector-specific wish lists and more supportive of populist-popular rules that advance transparency, disable business relationships that limit consumer choices and cede more control to individuals. Given that the industry is built on a business-to-business (B2B) chassis, preparing for a business to consumer (B2C) time bomb will be uncomfortable for most.
Truth bomb: Affordability in U.S. is not its priority.
The Patient Protection and Affordability Act 2010 advanced the notion that annual healthcare spending growth should not exceed more than 1% of the annual GDP. It also advanced the premise that spending should not exceed 9.5% of household adjusted gross income (AGI) and associated affordability with access to insurance coverage offering subsidies and Medicaid expansion incentives to achieve near-universal coverage. In 2024, that percentage is 8.39%.
Like many elements of the ACA, these constructs fell short: coverage became its focus; affordability secondary.
The ranks of the uninsured shrank to 9% even as annual aggregate spending increased more than 4%/year. But employers and privately insured individuals saw their costs increase at a double-digit pace: in the process, 41% of the U.S. population now have unpaid medical debt: 45% of these have income above $90,000 and 61% have health insurance coverage. As it turns out, having insurance is no panacea for affordability: premiums increase just as hospital, drug and other costs increase and many lower- and middle-income consumers opt for high-deductible plans that expose them to financial insecurity. While lowering spending through value-based purchasing and alternative payments have shown promise, medical inflation in the healthcare supply chain, unrestricted pricing in many sectors, the influx of private equity investing seeking profit maximization for their GPs, and dependence on high-deductible insurance coverage have negated affordability gains for consumers and increasingly employers. Benign neglect for affordability is seemingly hardwired in the system psyche, more aligned with soundbites than substance.
Truth bomb: The effectiveness of the system is overblown.
Numerous peer reviewed studies have quantified clinical and administrative flaws in the system. For instance, a recent peer reviewed analysis in the British Medical Journal concluded “An estimated 795 000 Americans become permanently disabled or die annually across care settings because dangerous diseases are misdiagnosed. Just 15 diseases account for about 50.7% of all serious harms, so the problem may be more tractable than previously imagined.”
The inadequacy of personnel and funding in primary and preventive health services is well-documented as the administrative burden of the system—almost 20% of its spending. Satisfaction is low. Outcomes are impressive for hard-to-diagnose and treat conditions but modest at best for routine care. It’s easier to talk about value than define and measure it in our system: that allows everyone to declare their value propositions without challenge.
Truth bombs are falling in U.S. healthcare. They’re well-documented and financed. They take no prisoners and exact mass casualties.
Most healthcare organizations default to comfortable defenses. That’s not enough. Cyberwarfare, precision-guided drones and dirty bombs require a modernized defense. Lacking that, the system will be a commoditized public utility for most in 15 years.
PS: Last week’s report, “The Holy War between Hospitals and Insurers…” (The Keckley Report – Paul Keckley) prompted understandable frustration from hospitals that believe insurers do not serve the public good at a level commensurate with the advantages they enjoy in the industry. However, justified, pushback by hospitals against insurers should be framed in the longer-term context of the role and scope of services each should play in the system long-term. There are good people in both sectors attempting to serve the public good. It’s not about bad people; it’s about a flawed system.
HENRY KOTULA 