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Category Archives: Health Insurance Coverage Adequacy
What Trump and the GOP have planned for healthcare
Health systems are rightly concerned about Republican plans to cut Medicaid spending, end ACA subsidies and enact site neutral payments, says consultant Michael Abrams, managing partner of Numerof, a consulting firm.
“Health systems have reason to worry,” Abrams said shortly after President Donald Trump was inaugurated on Monday.
While Trump mentioned little about healthcare in his inauguration speech, the GOP trifecta means spending cuts outlined in a one-page document released by Politico and another 50-pager could get a majority vote for passage.
Of the insurers, pharmaceutical manufacturers and health systems that Abrams consults with, healthcare systems are the ones that are most concerned, Abrams said.
At the top of the Republican list targeting $4 trillion in healthcare spending is eliminating an estimated $2.5 billion from Medicaid.
“There’s no question Republicans will find savings in Medicaid,” Abrams said.
Medicaid has doubled its enrollment in the last couple of years due to extended benefits made possible by the Affordable Care Act, despite disenrolling 25 million people during the redetermination process at the end of the public health emergency, according to Abrams.
Upward of 44 million people, or 16.4% of the non-elderly U.S. population are covered by an Affordable Care Act initiative, including a record high of 24 million people in ACA health plans and another 21.3 million in Medicaid expansion enrollment, according to a KFF report. Medicaid expansion enrollment is 41% higher than in 2020.
The enhanced subsidies that expanded eligibility for Medicaid and doubled the number of enrollees are set to expire at the end of 2025 and Republicans are likely to let that happen, Abrams said. Eliminating enhanced federal payments to states that expanded Medicaid under the ACA are estimated to cut the program by $561 billion.
If enhanced subsidies end, the Congressional Budget Office has estimated that the number of people who will become uninsured will increase by 3.8 million each year between 2026 and 2034.
The enhanced tax subsidies for the ACA are set to expire at the end of 2025. This could result in another 2.2 million people losing coverage in 2026, and 3.7 million in 2027, according to the CBO.
WHY THIS MATTERS
For hospitals, loss of health insurance coverage means an increase in sicker, uninsured patients visiting the emergency department and more uncompensated care.
“Health systems are nervous about people coming to them who are uninsured,” Abrams said. “There will be people disenrolled.”
The federal government allowed more people to be added to the Medicaid rolls during the public health emergency to help those who lost their jobs during the COVID-19 pandemic, Numerof said. Medicaid became an open-ended liability which the government wants to end now that the unemployment rate is around 4.2% and jobs are available.
An idea floating around Congress is the idea of converting Medicaid to a per capita cap and providing these funds to the states as a block grant, Abrams said. The cost of those programs would be borne 70% by the federal government and 30% by states.
This fixed amount based on a per person amount would save money over the current system of letting states report what they spent.
Another potential change under the new administration includes site neutral Medicare payments to hospitals for outpatient services.
The HFMA reported the site neutral policy as a concern in a list it published Monday of preliminary federal program cuts totaling more than $5 trillion over 10 years. The 50-page federal list is essentially a menu of options, the HFMA said, not an indication that programs will actually be targeted leading up to the March 14 deadline to pass legislation before federal funding expires.
Other financial concerns for hospitals based on that list include: the elimination of the tax exemption for nonprofit hospitals, bringing in up to $260 billion in estimated 10-year savings; and phasing out Medicare payments for bad debt, resulting in savings of up to $42 billion over a decade.
Healthcare systems are the ones most concerned over GOP spending cuts, according to Abrams. Pharmacy benefit managers and pharmaceutical manufacturers also remain on edge as to what might be coming at them next.
THE LARGER TREND
President Donald Trump mentioned little about healthcare during his inauguration speech on Monday.
Trump said the public health system does not deliver in times of disaster, referring to the hurricanes in North Carolina and other areas and to the fires in Los Angeles.
Trump also mentioned giving back pay to service members who objected to getting the COVID-19 vaccine.
He also talked about ending the chronic disease epidemic, without giving specifics.
“He didn’t really talk about healthcare even in the campaign,” Abrams said.
However, in his consulting work, Abrams said, “The common thread is the environment is changing quickly,” and that healthcare organizations need to do the same “in order to survive.”
Advocates roll out efforts to shield Medicaid
https://nxslink.thehill.com/view/6230d94bc22ca34bdd8447c8msmrk.ngi/32c5cdf6
Liberal advocacy groups are ramping up efforts to protect the Medicaid program from potential cuts by Republican lawmakers and the new Trump administration.
The Democratic group Protect Our Care launched Tuesday an eight-figure “Hands off Medicaid” ad campaign targeting key Republicans in the House and Senate, warning of health care being “ripped away” from vulnerable Americans.
The lawmakers include GOP Sens. Bill Cassidy (La.), Chuck Grassley (Iowa), Lisa Murkowski (Alaska) and Susan Collins (Maine), as well as Reps. David Schweikert (Ariz.), Mike Lawler (N.Y.) and David Valadao (Calif.).
The campaign will also include digital advertising across platforms targeting the Medicaid population in areas around nursing homes and rural hospitals, ads on streaming platforms as well as billboards and bus stop wraps.
Medicaid covers 1 in 5 Americans, and the group wants to highlight that includes “kids, moms, seniors, people of color, rural Americans, and people with disabilities.”
“The American people didn’t vote in November to have their grandparents kicked out of nursing homes or health care ripped away from kids with disabilities or expectant moms in order to give Elon Musk another tax cut,” Protect Our Care chair Leslie Dach said in a statement.
House Republicans have expressed openness to making some drastic changes in the Medicaid program to pay for extending President Trump’s signature tax cuts, including instituting work requirements and capping how much federal money is spent per person. The ideas have been conservative mainstays since they were included as part of the 2017 Obamacare repeal effort.
Separately, advocacy group Families USA led a letter with more than 425 national, state and local organizations calling on Trump to protect Medicaid.
The groups noted that if the Trump administration wants to trim health costs, “there are many well-vetted, commonsense and bipartisan proposals” that don’t involve slashing Medicaid.
“In 2017, millions upon millions of Americans rose up against proposed cuts and caps and made clear how much they valued Medicaid as a critical health and economic lifeline for themselves, their families, and their communities. The American people are watching once again, and we urge you to take this opportunity to choose a different path,” they wrote.
‘Deny. Defend. Depose’: The Chilling Legacy of Managed Care and the American Health Care Crisis
To understand the fatal attack on UnitedHealthcare CEO Brian Thompson and the unexpected reaction on social media, you have to go back to the 1990s when managed care was in its infancy. As a consumer representative, I attended meetings of a group associated with the health care system–doctors, academics, hospital executives, business leaders who bought insurance, and a few consumer representatives like me.
It was the dawn of the age of managed care with its promise to lower the cost and improve the quality of care, at least for those who were insured.
New perils came with that new age of health coverage.
In the quest to save money while ostensibly improving quality, there was always a chance that the managed care entities and the doctors they employed or contracted with – by then called managed care providers – could clamp down too hard and refuse to pay for treatments, leaving some people to suffer medically. Groups associated with the health care industry tried to set standards to guard against that, but as the industry consolidated and competition among the big players in the new managed care system consolidated, such worries grew.
Over the years the squeeze on care got tighter and tighter as the giants like UnitedHealthcare–which grew initially by buying other insurance companies such as Travelers and Golden Rule–and Elevance, which gobbled up previously nonprofit Blue Cross plans in the 1990s, starting with Blue Cross of California, needed to please the gods of the bottom line. Shareholders became all important. Paying less for care meant more profits and return to investors, so it is no wonder that the alleged killer of the UnitedHealthcare chief executive reportedly left the chilling message:
‘‘DENY. DEFEND. DEPOSE,” words associated with insurance company strategies for denying claims.
The American health care system was far from perfect even in the days when more employers offered good coverage for their workers and often paid much or all of the cost to attract workers. Not-for-profit Blue Cross Blue Shield plans in many states provided most of the coverage, and by all accounts, they paid claims promptly. In my now very long career of covering insurance, I cannot recall anyone in the old days complaining that their local Blue Cross Blue Shield organization was withholding payment for care.
Today Americans, even those who thought they had “good” coverage, are now finding themselves underinsured, as a 2024 Commonwealth Fund study so clearly shows. Nearly one-quarter of adults in the U.S. are underinsured meaning that although they have health insurance, high deductibles, copayments and coinsurance make it difficult or impossible for them to pay for needed care. As many as one-third of people with chronic conditions such as diabetes said they don’t take their medications or even fill prescriptions because they cost too much.
Before he passed away last year, one of our colleagues, Marshall Allen, had made recommendations to his followers on how to deal with medical bills they could not pay. KFF reporters also investigated the problems families face with super-high bills. In 2022 KFF reporters offered readers a thorough look at medical debt in the U.S. and reported alarming findings.
In 2019, U.S. medical debt totaled $195 billion, a sum larger than the economy of Greece. Half of adults don’t have enough cash to cover an unexpected medical bill while 50 million adults – one in five in the entire country – are paying off bills on an installment plan for their or a family member’s care.
One would think that such grim statistics might prompt political action to help ease the debt burden on American families. But a look at the health proposals from the Republican Study Committee suggest that likely won’t happen. The committee’s proposed budget would cut $4.5 trillion dollars from the Affordable Care Act, Medicaid, and the Children’s Health Insurance Program leaving millions of Americans without health care.
From the Democrats, there appear to be no earth-shaking proposals in their immediate future, either. Late last summer STAT News reported, “With the notable exception of calling to erase medical debt by working with the states, Democrats are largely eyeing marginal extensions or reinstatements of their prior policy achievements.” Goals of the Democratic National Committee were shoring up the Affordable Care Act, reproductive rights, and addressing ambulance surprise bills.
A few years ago when I was traveling in Berlin, our guide paused by a statue of Otto von Bismarck, Germany’s chancellor in the late 1800s, who is credited with establishing the German health system. The guide explained to his American travelers how and why Bismarck founded the German system, pointing out that Germany got its national health system more than a hundred years before Obamacare. Whether the Americans got the point he was making, I could not tell for no one in the group appeared interested in Germany’s health care system. Today, though, they might pay more attention.
In the coming months, I will write about health systems in Germany and other developed countries that, as The Commonwealth Fund’s research over many years has shown, do a much better job than ours at delivering high quality care – for all of their citizens – and at much lower costs.
Musk’s DOGE could leave millions uninsured
As Donald Trump begins his second term, America’s healthcare system is in crisis: medical costs are skyrocketing, life expectancy has stagnated, and burnout runs rampant among healthcare workers.
These problems are likely to become worse now that Trump has handed the federal budget over to Elon Musk. The world’s richest man now co-heads the Department of Government Efficiency (DOGE), a non-government entity tasked with slashing $500 billion in “wasteful” spending.
The harsh reality is that Musk’s mission can’t succeed without gutting healthcare access and coverage for millions of Americans.
Deleting dollars from American healthcare
Since Trump’s first term, the country’s economic outlook has worsened significantly. In 2016, the national debt was $19 trillion, with $430 billion allocated to annual interest payments. By 2024, the debt had nearly doubled to $36 trillion, requiring $882 billion in debt service—12% of federal spending that is legally untouchable.
Add to that another 50% of government expenditures that Trump has deemed politically off-limits: Social Security ($1.35 trillion), Medicare ($848 billion) and Defense ($1.13 trillion). That leaves just $2.6 trillion—less than 40% of the $6.75 trillion federal budget—available for cuts.
In a recent op-ed, Musk and DOGE co-chair Vivek Ramaswamy proposed eliminating expired or misused funds for programs like Public Broadcasting and Planned Parenthood, but these examples account for less than $3 billion total—not even 1% of their target.
This shortfall will require Musk to cut billions in government healthcare spending. But where will he find it?
With Medicare off limits to DOGE, the options for major reductions are extremely limited. Big-ticket healthcare items like the $300 billion in tax-deductibility for employer-sponsored health insurance and $120 billion in expired health programs for veterans will prove politically untouchable. One will raise taxes for 160 million working families and the latter will leave veterans without essential medical care.
This means DOGE will have to attack Medicaid and the ACA health exchanges. Here’s how 20 million people will likely lose coverage as a result.
1. Reduced ACA exchange funding
Since its enactment in 2010, the Affordable Care Act (ACA) has provided premium subsidies to Americans earning 100% to 400% of the federal poverty level. For lower-income families, the ACA also offers Cost Sharing Reductions, which help offset deductibles and co-payments that fund 30% of total medical costs per enrollee. Without CSRs, a family of four earning $40,000 could face deductibles as high as $5,000 before their insurance benefits apply.
If Congress allows CSR payments to expire in 2026, federal spending would decrease by approximately $35 billion annually. If that happens, the Congressional Budget Office expects 7 million individuals to drop out of the exchanges. Worse, without affordable coverage alternatives, 4 million families would lose their health insurance altogether.
2. Slashing Medicaid coverage and tightening eligibility
Medicaid currently provides healthcare for over 90 million low-income Americans, including children, seniors and individuals with disabilities. To meet DOGE’s $500 billion goal, several cost-cutting strategies appear likely:
- Reversing Medicaid expansion: The ACA expanded Medicaid eligibility to those earning up to 138% of the federal poverty level, reducing the uninsured rate from 16% to 8%. Undoing this expansion would strip coverage from millions in the 40 states that adopted the program.
- Imposing work requirements: Proponents argue this could encourage employment, but most Medicaid recipients already work for employers that don’t provide insurance. In reality, work requirements primarily create bureaucratic barriers that disqualify millions of eligible individuals, reducing program costs at the expense of coverage.
- Switching to block grants: Unlike the current Medicaid system, which adjusts funding based on need, less-expensive block grants would provide states with fixed allocations. This will, however, force them to cut services and reduce enrollment.
Medicaid currently costs $800 billion annually, with the federal government covering 70%. Reducing enrollment by 10% (9 million people) could save over $50 billion annually, while a 20% reduction (18 million people) could save $100 billion.
Either outcome would devastate families by eliminating access to vital services including prenatal care, vaccinations, chronic disease management and nursing home care. As states are forced to absorb the financial burden, they’ll likely cut education budgets and reduce infrastructure investments.
The first 100 days
The numbers don’t lie: Musk and DOGE could slash Medicaid funding and ACA subsidies to achieve much of their $500 billion target. But the human cost of this approach would be staggering.
Fortunately, there are alternative solutions that would reduce spending without sacrificing quality. Shifting provider payments in ways that reward better outcomes rather than higher volumes, capping drug prices at levels comparable to peer nations, and leveraging generative AI to improve chronic disease management could all drive down costs while preserving access to care.
These strategies address the root causes of high medical spending, including chronic diseases that, if better managed, could prevent 30-50% of heart attacks, strokes, cancers, and kidney failures according to CDC estimates.
Yet, in their pursuit of immediate budgetary cuts, Musk and DOGE have omitted these kinds of reform options. As a result, the health of millions of Americans is at major risk.
Broken Promises: How Employer Health Plans Are Leaving Millions Underinsured and in Debt
A few weeks ago The Commonwealth Fund, a philanthropic organization in New York City, which keeps tabs on health care trends, released an ominous study signaling that the bedrock of the U.S. health system is in trouble.
The study found that the employer insurance market, where millions of Americans have received good, affordable coverage since the end of World War II, could be in jeopardy. The continuing rise in the costs of medical care, and the insurance premiums to pay for it, may well cause employers to make cutbacks, leaving millions of workers uninsured or underinsured, often with no way to pay for their care and the prospect of debt for the rest of their lives.
Indeed the Fund revealed that 23% of adults in the U.S. are underinsured, meaning that though they were covered by health insurance, high deductibles and coinsurance made it difficult or impossible to pay for the care they needed.
“They have health plans that don’t provide affordable access to care,” said Sara Collins, senior adviser and vice president at the Fund. “They have out-of-pocket costs and deductibles that are high relative to their income.”
This predicament has forced many to assume medical debt or skip needed care. The Fund found that as many as one-third of people with chronic conditions like heart failure and diabetes reported they don’t take their medication or fill prescriptions because they cost too much.
Others did not go to a doctor when they were sick, skipping a recommended follow-up visit or test, and did not see a specialist when one was recommended. Nearly half of the respondents reported they did not get care for an ongoing condition because of the cost. Two out of five working-age adults who reported a delay or skipped care told researchers their health problem had gotten worse. Those findings belie the narrative, deployed when changes to the system are discussed, that America has the best health care in the world, and we dare not change it.
The seeds of today’s underinsurance predicament were planted in the 1990s when the system’s players decided remedies were needed to curb Americans’ appetite for medical interventions.
They devised managed care, with its HMOs, PPOs, insurance company approvals, and other restrictions that are with us today. But health care is far more expensive than it was in the ’90s, leaving patients to struggle to pay the higher prices, or, as the study shows, go without needed care.
Perhaps one of the study’s most striking findings is that a vast majority of underinsured workers had employer insurance plans, which over the decades had provided good coverage. Researchers concluded that recent cost containment measures were simply shifting more costs to workers through higher deductibles and coinsurance.
I checked in with Richard Master, the CEO of MCS Industries in Easton, Pennsylvania. We’ve talked over the years about the rising cost of health insurance for his 91 workers who make picture frames and wall decorations. This year, he was expecting a 5 to 6% increase in insurance rates.
A family plan now costs more than $39,000, he said, adding that “29% of people with employee plans are underinsured and have high out-of-pocket costs.”
To help reduce his own costs, he told me he has put in place a high-deductible plan and was setting up health saving accounts that allow him to give a sum of money to each worker to use for their medical expenses.
As health insurance premiums continue to rise, more employers will likely heap more of those rising costs onto workers, many of whom will inevitably have a tough time paying for them.
Every time there has been a hint in the air that maybe, just maybe, America might embrace a universal system like peer nations across the globe that offer health care to all their citizens, the special interests—doctors, hospitals, insurers, employers, and others that benefit financially from the current system have snuffed out any possibility that might happen, worried that such a system could affect their profits.
For as long as I can remember, the public has been told America has the best health care system in the world. Major holes in our system exposed by The Commonwealth Fund belie that assumption.
America Needs a National Healthcare System
There’s only one person in this photograph/video of a recent G7 meeting who represents a country where an illness can destroy an entire family, leaving them bankrupt and homeless, with the repercussions of that sudden fall into poverty echoing down through generations.
Most Americans have no idea that the United States is quite literally the only country in the developed world that doesn’t define healthcare as an absolute right for all of its citizens. That’s it. We’re the only one left.
The United States spends more on “healthcare” than any other country in the world: about 17% of GDP.
Switzerland, Germany, France, Sweden and Japan all average around 11%, and Canada, Denmark, Belgium, Austria, Norway, Netherlands, United Kingdom, New Zealand and Australia all come in between 9.3% and 10.5%.
Health insurance premiums right now make up about 22% of all taxable payroll, whereas Medicare For All would run an estimated 10%.
We are literally the only developed country in the world with an entire multi-billion-dollar for-profit industry devoted to parasitically extracting money from us to then turn over to healthcare providers on our behalf. The for-profit health insurance industry has attached itself to us like a giant, bloodsucking tick.
And it’s not like we haven’t tried.
Presidents Theodore Roosevelt, Franklin Roosevelt, Harry Truman, Jack Kennedy and Lyndon Johnson all proposed and made an effort to bring a national healthcare system to the United States. Here’s one example really worth watching where President Kennedy is pushing a single-payer system (as opposed to Britain’s “socialist” model):
They all failed, and when I did a deep dive into the topic two years ago for my book The Hidden History of American Healthcare I found two major barriers to our removing that tick from our backs.
The early opposition, more than 100 years ago, to a national healthcare system came from southern white congressmen (they were all men) and senators who didn’t want even the possibility that Black people could benefit, health-wise, from white people’s tax dollars. (This thinking apparently still motivates many white Southern politicians.)
The leader of that healthcare-opposition movement in the late 19th and early 20th centuries was a German immigrant named Frederick Hoffman, as I mentioned in a recent newsletter. Hoffman was a senior executive for the Prudential Insurance Company, and wrote several books about the racial inferiority of Black people, a topic he traveled the country lecturing about.
His most well-known book was titled Race Traits and Tendencies of the American Negro. It became a major best-seller across America when it was first published for the American Economic Association by the Macmillan Company in 1896, the same year the Supreme Court’s Plessy v. Ferguson decision legally turned the entire US into an apartheid state.
Hoffman taught that Black people, in the absence of slavery, were so physically and intellectually inferior to whites that if they were simply deprived of healthcare the entire race would die out in a few generations. Denying healthcare to Black people, he said, would solve the “race problem” in America.
Southern politicians quoted Hoffman at length, he was invited to speak before Congress, and was hailed as a pioneer in the field of “scientific racism.” Race Traits was one of the most influential books of its era.
By the 1920s, the insurance company he was a vice president of was moving from life insurance into the health insurance field, which brought an added incentive to lobby hard against any sort of a national healthcare plan.
Which brings us to the second reason America has no national healthcare system: profits.
“Dollar” Bill McGuire, a recent CEO of America’s largest health insurer, UnitedHealth, made about $1.5 billion dollars during his time with that company. To avoid prosecution in 2007 he had to cough up $468 million, but still walked away a billionaire. Stephen J Hemsley, his successor, made off with around half a billion.
And that’s just one of multiple giant insurance companies feeding at the trough of your healthcare needs.
Much of that money, and the pay for the multiple senior executives at that and other insurance companies who make over $1 million a year, came from saying “No!” to people who file claims for payment of their healthcare costs.
This became so painful for Cigna Vice President Wendell Potter that he resigned in disgust after a teenager he knew was denied payment for a transplant and died. He then wrote a brilliant book about his experience in the industry: Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans.
Companies offering such “primary” health insurance simply don’t exist (or are tiny) in almost every other developed country in the world. Mostly, where they do exist, they serve wealthier people looking for “extras” beyond the national system, like luxury hospital suites or air ambulances when overseas. (Switzerland is the outlier with exclusively private insurance, but it’s subsidized, mandatory, and non-profit.)
If Americans don’t know this, they intuit it.
In the 2020 election there were quite a few issues on statewide ballots around the country. Only three of them outpolled Joe Biden’s win, and expanding Medicaid to cover everybody was at the top of that list. (The other two were raising the minimum wage and legalizing pot.)
The last successful effort to provide government funded, single-payer healthcare insurance was when Lyndon Johnson passed Medicare and Medicaid (both single-payer systems) in the 1960s. It was a hell of an effort, but the health insurance industry was then a tiny fraction of its current size.
In 1978, when conservatives on the Supreme Court legalized corporations owning politicians with their Buckley v Belotti decision (written by Justice Louis Powell of “Powell Memo” fame), they made the entire process of replacing a profitable industry with government-funded programs like single-payer vastly more difficult, regardless of how much good they may do for the citizens of the nation.
The Court then doubled-down on that decision in 2010, when the all-conservative vote on Citizens United cemented the power of billionaires and giant corporations to own politicians and even write and influence legislation and the legislative process.
Medicare For All, like Canada has, would save American families thousands every year immediately and do away with the 500,000+ annual bankruptcies in this country that happen only because somebody in the family got sick. But it would kill the billions every week in profits of the half-dozen corporate giants that dominate the health insurance industry.
This won’t be happening with a billionaire in the White House, but if we want to bring America into the 21st century with the next administration, we need to begin working, planning, and waking up voters now.
The Two Events that Changed U.S. Healthcare for Everyone
In late 2025, two events reset the U.S. health system’s future at least through 2026 and possibly beyond:
- November 5, 2024: The Election: Its post-mortem by pollsters and pundits reflects a country divided and unsettled: 22 Red States, 7 Swing States and 21 Blue States. But a solid majority who thought the country was heading in the wrong direction and their financial insecurity driving voters to return the 45th President to the White House. With slim majorities in the House and Senate, and a short-leash before mid-term elections November 3, 2026, the Trump team has thrown out ‘convention’ in their setting policies and priorities for their second term. That includes healthcare.
- December 4, 2024: The Murder of a Health Executive : The murder of Brian Thompson, United Healthcare CEO, sparked hostility toward health insurers and a widespread backlash against the corporatization of the U.S. health system. While UHG took the most direct hit for its aggressiveness in managing access and coverage disputes, social media and mainstream journalists exposed what pollsters affirmed—the majority of American’s distrust the health system, believing it puts its profits above their needs. And their polls indicate animosity is highest among young adults, in lower income households and among members of its own workforce.
These events provide the backdrop for what to expect this year and next. Four directional shifts seem to underly actions to date and announced plans:
- From elitism to populism: Key personnel and policy changes will draw less from Ivy League credentials, DC connections and recycled federal health agency notables and more from private sector experience, known disruptors and unconventional thought leaders. Notably, the new Chairs of the 7 Congressional Committees that control healthcare regulation, funding and policy changes in the 119th Congress represent LA, AL, WV, ID, VA, MO & KY constituents—hardly Ivy League territory.
- From workforce disparities to workforce modernization: The Departments of Health & Human Services, Labor, Commerce and Treasury will attempt to suspend/modify regulatory mandates and entities they deem derived from woke ideology. The Trump team will replace them with policies that enable workforce de-regulation and modernization in the private sector. Hiring quotas, non-compete contracts, DEI et al will get a fresh look in the context of technology-enabled workplaces and supply-demand constraints. The HR function in every organization will become ground zero for Trump Healthcare 2.0 system transformation.
- From western medicine to whole person wellbeing: HHS Secretary Nominee Robert F. Kennedy Jr. (RFK) Jr.’s “Make America Healthy Again” pledges war on ultra-processed foods. CMS’ designee Mehmet Oz advocates for vitamins, supplements and managed care. FDA nominee Marty Makary, a Hopkins surgeon, is a RFKJ ally in the “Health Freedom” movement promoting suspicion about ‘mainstream medicine’ and raising doubts about vaccination efficacy for children and low-risk adults. NIH nominee Jay Bhattacharya, director of Stanford’s Center for Demography and Economics of Health and Aging, opposed Covid-19 lockdowns and is critical of vaccine policies. Collectively, this four-some will challenge conventional western (allopathic) medicine and add wide-range of non-traditional interventions that are a safe and cost-effective to the treatment arsenal for providers and consumers. The food supply will be a major focus: HHS will work closely with the USDA (nominee Brooke Rollins, currently CEO of the America First Policy Institute, to reduce the food chain’s dependence on ultra-processed foods in public health.
- From DC dominated health policies to states: The 2022 Supreme Court’ Dobbs decision opened the door for states to play the lead role in setting policies for access to abortion for their female citizens. It follows federalism’s Constitutional preference that Washington DC’s powers over states be enumerated and limited. Thus, state provisions about healthcare services for its citizens will expand beyond their already formidable scope. Likely actions in some states will include revised terms and conditions that facilitate consolidation, allowance for physician owned hospitals and site-neutral payments, approval of “skinny” individual insurance policies that do not conform to the Affordable Care Act’s qualified health plan spec’s, expanded scope of practice for nurse practitioners, drug price controls and many others. At least for the immediate future, state legislatures will be the epicenters for major policy changes impacting healthcare organizations; federal changes outside appropriations activity are unlikely.
Transforming the U.S. health system is a bodacious ambition for the incoming Trump team. Early wins will be key—like expanding price transparency in every healthcare sector, softening restrictions on private equity investments, targeted cuts in Medicaid and Medicare funding and annulment of the Inflation Reduction Act. In tandem, it has promised to cut Federal government spending by $2 trillion and lower prices on everything including housing and healthcare—the two spending categories of highest concern to the working class. Healthcare will figure prominently in Team Trump’s agenda for 2025 and posturing for its 2026 mid-term campaign. And equally important, healthcare costs also figure prominently in quarterly earnings reports for companies that provide employee health benefits forecast to be 8% higher this year following a 7% spike the year prior. Last year’s 23% S&P growth is not expected to repeat this year raising shareholder anxiety and the economy’s long-term resilience and the large roles housing and healthcare play in its performance.
My take:
The 2024 election has been called a change election. That’s unwelcome news to most organizations in healthcare, especially the hospitals, physicians, post-acute providers and others who provide care to patients and operate at the bottom of the healthcare pyramid.
Equipping a healthcare organization to thoughtfully prepare for changes amidst growing uncertainty requires extraordinary time and attention by management teams and their Boards. There are no shortcuts. Before handicapping future state scenario possibilities, contingencies and resource requirements, a helpful starting point is this: On the four most pressing issues facing every U.S. healthcare company/organization today, Boards and Management should discuss…
- Trust: On what basis can statements about our performance be verified? Is the data upon which our trust is based readily accessible? Does the organization’s workforce have more or less trust than outside stakeholders? What actions are necessary to strengthen/restore trust?
- Purpose: Which stakeholder group is our organization’s highest priority? What values & behaviors define exceptional leadership in our organization? How are they reflected in their compensation?
- Affordability: How do we measure and monitor the affordability of our services to the consumers and households we ultimately depend? How directly is our organization’s alignment of reducing cost reduction and pass-through savings to consumers? Is affordability a serious concern in our organization (or just a slogan)?
- Scale: How large must we be to operate at the highest efficiency? How big must we become to achieve our long-term business goals?
This week, thousands of healthcare’s operators will be in San Francisco (JPM Healthcare Conference), Naples (TGI Leadership Conference) and in Las Vegas (Consumer Electronics Show) as healthcare begins a new year. No one knows for sure what’s ahead or who the winners and losers will be. What’s for sure is that healthcare will be in the spotlight and its future will not be a cut and paste of its past.
PS: The parallels between radical changes facing the health system and other industries is uncanny. College athletics is no exception. As you enjoy the College Football Final Four this weekend, consider its immediate past—since 2021, the impact of Name, Image and Likeness (NIL) monies on college athletics, and its immediate future–pending regulation that will codify permanent revenue sharing arrangements (to be implemented 2026-2030) between college athletes, their institutions and sponsors. What happened to the notion of student athlete and value of higher education? Has the notion of “not-for-profit” healthcare met a similar fate? Or is it all just business?
The Two Events that Changed U.S. Healthcare for Everyone
In late 2025, two events reset the U.S. health system’s future at least through 2026 and possibly beyond:
- November 5, 2024: The Election: Its post-mortem by pollsters and pundits reflects a country divided and unsettled: 22 Red States, 7 Swing States and 21 Blue States. But a solid majority who thought the country was heading in the wrong direction and their financial insecurity driving voters to return the 45th President to the White House. With slim majorities in the House and Senate, and a short-leash before mid-term elections November 3, 2026, the Trump team has thrown out ‘convention’ in their setting policies and priorities for their second term. That includes healthcare.
- December 4, 2024: The Murder of a Health Executive : The murder of Brian Thompson, United Healthcare CEO, sparked hostility toward health insurers and a widespread backlash against the corporatization of the U.S. health system. While UHG took the most direct hit for its aggressiveness in managing access and coverage disputes, social media and mainstream journalists exposed what pollsters affirmed—the majority of American’s distrust the health system, believing it puts its profits above their needs. And their polls indicate animosity is highest among young adults, in lower income households and among members of its own workforce.
These events provide the backdrop for what to expect this year and next. Four directional shifts seem to underly actions to date and announced plans:
- From elitism to populism: Key personnel and policy changes will draw less from Ivy League credentials, DC connections and recycled federal health agency notables and more from private sector experience, known disruptors and unconventional thought leaders. Notably, the new Chairs of the 7 Congressional Committees that control healthcare regulation, funding and policy changes in the 119th Congress represent LA, AL, WV, ID, VA, MO & KY constituents—hardly Ivy League territory.
- From workforce disparities to workforce modernization: The Departments of Health & Human Services, Labor, Commerce and Treasury will attempt to suspend/modify regulatory mandates and entities they deem derived from woke ideology. The Trump team will replace them with policies that enable workforce de-regulation and modernization in the private sector. Hiring quotas, non-compete contracts, DEI et al will get a fresh look in the context of technology-enabled workplaces and supply-demand constraints. The HR function in every organization will become ground zero for Trump Healthcare 2.0 system transformation.
- From western medicine to whole person wellbeing: HHS Secretary Nominee Robert F. Kennedy Jr. (RFK) Jr.’s “Make America Healthy Again” pledges war on ultra-processed foods. CMS’ designee Mehmet Oz advocates for vitamins, supplements and managed care. FDA nominee Marty Makary, a Hopkins surgeon, is a RFKJ ally in the “Health Freedom” movement promoting suspicion about ‘mainstream medicine’ and raising doubts about vaccination efficacy for children and low-risk adults. NIH nominee Jay Bhattacharya, director of Stanford’s Center for Demography and Economics of Health and Aging, opposed Covid-19 lockdowns and is critical of vaccine policies. Collectively, this four-some will challenge conventional western (allopathic) medicine and add wide-range of non-traditional interventions that are a safe and cost-effective to the treatment arsenal for providers and consumers. The food supply will be a major focus: HHS will work closely with the USDA (nominee Brooke Rollins, currently CEO of the America First Policy Institute, to reduce the food chain’s dependence on ultra-processed foods in public health.
- From DC dominated health policies to states: The 2022 Supreme Court’ Dobbs decision opened the door for states to play the lead role in setting policies for access to abortion for their female citizens. It follows federalism’s Constitutional preference that Washington DC’s powers over states be enumerated and limited. Thus, state provisions about healthcare services for its citizens will expand beyond their already formidable scope. Likely actions in some states will include revised terms and conditions that facilitate consolidation, allowance for physician owned hospitals and site-neutral payments, approval of “skinny” individual insurance policies that do not conform to the Affordable Care Act’s qualified health plan spec’s, expanded scope of practice for nurse practitioners, drug price controls and many others. At least for the immediate future, state legislatures will be the epicenters for major policy changes impacting healthcare organizations; federal changes outside appropriations activity are unlikely.
Transforming the U.S. health system is a bodacious ambition for the incoming Trump team. Early wins will be key—like expanding price transparency in every healthcare sector, softening restrictions on private equity investments, targeted cuts in Medicaid and Medicare funding and annulment of the Inflation Reduction Act. In tandem, it has promised to cut Federal government spending by $2 trillion and lower prices on everything including housing and healthcare—the two spending categories of highest concern to the working class. Healthcare will figure prominently in Team Trump’s agenda for 2025 and posturing for its 2026 mid-term campaign. And equally important, healthcare costs also figure prominently in quarterly earnings reports for companies that provide employee health benefits forecast to be 8% higher this year following a 7% spike the year prior. Last year’s 23% S&P growth is not expected to repeat this year raising shareholder anxiety and the economy’s long-term resilience and the large roles housing and healthcare play in its performance.
My take:
The 2024 election has been called a change election. That’s unwelcome news to most organizations in healthcare, especially the hospitals, physicians, post-acute providers and others who provide care to patients and operate at the bottom of the healthcare pyramid.
Equipping a healthcare organization to thoughtfully prepare for changes amidst growing uncertainty requires extraordinary time and attention by management teams and their Boards. There are no shortcuts. Before handicapping future state scenario possibilities, contingencies and resource requirements, a helpful starting point is this: On the four most pressing issues facing every U.S. healthcare company/organization today, Boards and Management should discuss…
- Trust: On what basis can statements about our performance be verified? Is the data upon which our trust is based readily accessible? Does the organization’s workforce have more or less trust than outside stakeholders? What actions are necessary to strengthen/restore trust?
- Purpose: Which stakeholder group is our organization’s highest priority? What values & behaviors define exceptional leadership in our organization? How are they reflected in their compensation?
- Affordability: How do we measure and monitor the affordability of our services to the consumers and households we ultimately depend? How directly is our organization’s alignment of reducing cost reduction and pass-through savings to consumers? Is affordability a serious concern in our organization (or just a slogan)?
- Scale: How large must we be to operate at the highest efficiency? How big must we become to achieve our long-term business goals?
This week, thousands of healthcare’s operators will be in San Francisco (JPM Healthcare Conference), Naples (TGI Leadership Conference) and in Las Vegas (Consumer Electronics Show) as healthcare begins a new year. No one knows for sure what’s ahead or who the winners and losers will be. What’s for sure is that healthcare will be in the spotlight and its future will not be a cut and paste of its past.
PS: The parallels between radical changes facing the health system and other industries is uncanny. College athletics is no exception. As you enjoy the College Football Final Four this weekend, consider its immediate past—since 2021, the impact of Name, Image and Likeness (NIL) monies on college athletics, and its immediate future–pending regulation that will codify permanent revenue sharing arrangements (to be implemented 2026-2030) between college athletes, their institutions and sponsors. What happened to the notion of student athlete and value of higher education? Has the notion of “not-for-profit” healthcare met a similar fate? Or is it all just business?
BIG INSURANCE 2022: Revenues reached $1.25 trillion thanks to sucking billions out of the pharmacy supply chain – and taxpayers’ pockets
HIGHLIGHTS
- Big Insurance revenues and profits have increased by 300% and 287% respectively since 2012 due to explosive growth in the companies’ pharmacy benefit management (PBM) businesses and the Medicare replacement plans they call Medicare Advantage.
- The for-profits now control more than 80% of the national PBM market and more than 70% of the Medicare Advantage market.
In 2022, Big Insurance revenues reached $1.25 trillion and profits soared to $69.3 billion.
That’s a 300% increase in revenue and a 287% increase in profits from 2012, when revenue was $412.9 billion and profits were $24 billion.
Sucking billions out of the pharmacy supply chain – and taxpayers’ pockets
What has changed dramatically over the decade is that the big insurers are now getting far more of their revenues from the pharmaceutical supply chain and from taxpayers as they have moved aggressively into government programs. This is especially true of Humana, Centene, and Molina, which now get, respectively, 85%, 88%, and 94% of their health-plan revenues from government programs.
The two biggest drivers are their fast-growing pharmacy benefit managers (PBMs), the relatively new and little-known middleman between patients and pharmaceutical drug manufacturers, and the privately owned and operated Medicare replacement plans they market as Medicare Advantage.
With the exception of Humana, Centene, and Molina, most of the companies that constitute Big Insurance continue to make substantial amounts of money selling policies and services in what they refer to as their commercial businesses – to individuals, families, and employers – but the seven companies’ commercial revenue grew just 260%, or $176 billion, over 10 years (from $110.4 billion to $287.1 billion). While that’s significant, profitable growth in the commercial sector has become a major challenge for big insurers – so much so that Humana just last week announced it is exiting the employer-sponsored health-insurance marketplace entirely.
The insurers’ commercial businesses have stagnated because small businesses – which employ nearly half of the nation’s workers – are increasingly being priced out of the health insurance market. Most small businesses can no longer afford the premiums. The average premium for an employer-sponsored family plan – not including out-of-pocket requirements – was $22,463 in 2022, up 43% since 2012, which has contributed to the decades-long decline in the percentage of U.S. employers offering coverage to their workers.
The percentage of U.S. employers providing some level of health benefits to their workers dropped from 69% to 51% between 1999 and 2022 – including a dramatic 8% decrease last year alone. Growth in this category is largely the result of insurers “stealing market share” from each other or from smaller competitors.
As a consequence of this segment’s relative stagnation, PBMs and government programs have become the new cash cows for Big Insurance.
Spectacular PBM Growth
PBM HIGHLIGHTS
- Cigna now gets far more revenue from its PBM than from its health plans. CVS gets more revenue from its PBM than from either Aetna’s health plans or its nearly 10,000 retail stores.
- UnitedHealth has the biggest share of both the PBM and Medicare markets and, through numerous acquisitions of physician practices, is now the largest U.S. employer of doctors.
PBMs are middlemen companies that manage prescription drug benefits for health insurers, Medicare Part D drug plans, employers, and, in some cases, unions. As the Commonwealth Fund has noted:
PBMs have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid.
The Commonwealth Fund went on to say that PBMs have faced growing scrutiny about their role in rising prescription drug costs and spending. A big reason for the scrutiny – by Congress, state lawmakers and now also by the FTC – is that the biggest PBMs are now owned by Big Insurance.
Through mergers and acquisitions in recent years, three of the seven for-profit insurers – Cigna, CVS/Aetna, and UnitedHealth – now control 80% of the U.S. pharmacy benefits market.
They determine which drugs will be listed in each of their formularies (lists of drugs they will “cover” based on secret deals they negotiate with pharmaceutical companies) and how much patients will have to pay out of their own pockets at the pharmacy counter – in many cases hundreds or thousands of dollars – before their coverage kicks in. The PBMs also “steer” health-plan enrollees to their preferred or owned pharmacies (and, increasingly, away from independent pharmacists), thereby capturing even more of what we spend on our prescription medications.
Ten years ago, PBMs contributed relatively little to the three companies’ revenues and profits. But since then, the rapid growth of PBMs has transformed all of the companies. The combined revenues from their PBM business units increased 250% between 2012 and 2022, from $196.7 billion to $492.4 billion.
PBM Profit Generation
The PBM profit growth at the three companies over the past decade was even more dramatic than revenue growth. Collectively, their PBM profits increased 438%, from $6.3 billion in 2012 to $27.6 billion in 2022.
As a result of this fast growth, more than half (52%) of three companies’ profits in 2022 came from their PBM business units: Cigna’s Evernorth, CVS/Aetna’s Caremark, and UnitedHealth’s Optum. Cigna now gets far more revenue and profits from its PBM than from its health plans. And CVS gets more revenue from its PBM than from either Aetna’s health plans or its nearly 10,000 retail stores. (The companies’ business units that include their PBMs have also moved aggressively in recent years into health-care delivery through acquisitions of physician practices, clinics, dialysis centers, and other facilities. Notably, UnitedHealth Group is now the largest U.S. employer of physicians.)
Huge strides in privatizing both Medicare and Medicaid
GOVERNMENT PROGRAMS HIGHLIGHTS
- More than 90% of health-plan revenues at three of the companies come from government programs as they continue to privatize both Medicare and Medicaid, through Medicare Advantage in particular.
- Enrollment in government-funded programs increased by 261% in 10 years; by contrast commercial enrollment increased by just 10% over the past decade.
- Commercial enrollment actually declined at both UnitedHealth and Humana.
- 85% of Humana’s health-plan members are in government-funded programs; at Centene, it is 88%, and at Molina, it is 94%.
The big insurers now manage most states’ Medicaid programs – and make billions of dollars for shareholders doing so – but most of the insurers have found that selling their privately operated Medicare replacement plans is even more financially rewarding for their shareholders.
This is especially apparent when you see that the Big Seven’s combined revenues from taxpayer-supported programs grew 500%, from $116.3 billion in 2012 to $577 billion in 2022.
These numbers should be of interest to the Biden administration and members of Congress, many of whom are calling for much greater scrutiny of the Medicare Advantage program. Numerous media and government reports have shown that the federal government is overpaying private insurers billions of dollars a year, largely because of loopholes in laws and regulations that enable them to get more taxpayer dollars by claiming their enrollees are sicker than they really are. The companies also make aggressive use of prior authorization, largely unknown in traditional Medicare, to avoid paying for doctor-ordered care and medications.
In addition to their focus on Medicare and Medicaid, the companies also profit from the generous subsidies the government pays insurers to reduce the premiums they charge individuals and families who do not qualify for either Medicare or Medicaid or who work for an employer that does not offer subsidized coverage. But many people enrolled in those types of plans – primarily through the health insurance “marketplaces” established by the Affordable Care Act – cannot afford the deductibles and other out-of-pocket requirements they must pay before their insurers will begin paying their medical claims.
Dramatic Enrollment Shifts
Changes in health-plan enrollment over the past decade show how dramatic this shift has been. Between 2012 and 2022, enrollment in the companies’ private commercial plans increased by 10%, from 85.1 million in 2012 to 93.8 million in 2022.
By comparison, growth in enrollment in taxpayer-supported government programs increased 261%, from 27 million in 2012 to 70.4 million in 2022.
Within that category, Medicare Advantage enrollment among the Big Seven increased 252%, from 7.8 million in 2012 to 19.7 million in 2022.
Nationwide, enrollment in Medicare Advantage plans increased to 28.4 million in 2022 (and to 30 million this year). That means that the Big Seven for-profit companies control more than 70% of the Medicare Advantage market.
The remaining growth in the government segment occurred in the Medicaid programs that a subset of the Big Seven (UnitedHealth, Elevance, Centene, and Molina in particular) manages for several states.
A few other facts and figures to keep in mind as Big Insurance thrives:
- 27.5 million people remain uninsured in the United States. Up to 14 million more will lose their Medicaid coverage once the pandemic emergency period ends later this year.
- 100 million of us – almost one of every three people in this country – now have medical debt.
- In 2023, U.S. families can be on the hook for up to $18,200 in out-of-pocket requirements before their coverage kicks in, up 43% since 2014 when it was $12,700.The Affordable Care Act allows the out-of-pocket maximum to increase annually – 43% since the maximum limit went into effect in 2014.
- 44% of people in the United States who purchased coverage through the individual market and (ACA) marketplaces were underinsured or functionally uninsured.
- 46% of those surveyed said they had skipped or delayed care because of the cost.
- 42% said they had problems paying medical bills or were paying off medical debt.
- Half (49%) said they would be unable to pay an unexpected medical bill within 30 days, including 68% of adults with low income, 69% of Black adults, and 63% of Latino/Hispanic adults.
- In 2021, about $650 million, or about one-third of all funds raised by GoFundMe, went to medical campaigns. That’s not surprising when you realize that in the United States, even people with insurance all too often feel they have no choice but to beg for money from strangers to get the care they or a loved one needs.
- 62% of bankruptcies are related to medical costs.
- Even as we spend about $4.5 trillion on health care a year, Americans are now dying younger than people in other wealthy countries. Life expectancy in the United States actually decreased by 2.8 years between 2014 and 2021, erasing all gains since 1996, according to the Centers for Disease Control and Prevention.
BOTTOM LINE:
The companies that comprise Big Insurance are vastly different from what they were just 10 years ago, but policymakers, regulators, employers, and the media have so far shown scant interest in putting their business practices under the microscope.
Changes in federal law, including the Medicare Modernization Act of 2003, which created the lucrative Medicare Advantage market, and the Affordable Care Act of 2010, which gave insurers the green light to increase out-of-pocket requirements annually and restrict access to care in other ways, opened the Treasury and Medicare Trust Fund to Big Insurance. In addition, regulators have allowed almost all of their proposed acquisitions to go forward, which has created the behemoths they are today.
CVS/Health is now the 4th largest company on the Fortune 500 list of American companies. UnitedHealth Group is now No. 5 – and all the others are climbing toward the top 10.
HENRY KOTULA 