Category Archives: Profit Motive

The Perfect Storm has Hit U.S. Healthcare

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Healthcare Reform, Lobbyist, Medicaid, Medicaid Cuts, Perfect Storm, Profit, Profit Margin, Profit Motive • Tagged , , , , • Leave a comment
The Perfect Storm has Hit U.S. Healthcare

The perfect storm has hit U.S. healthcare:

  • The “Big Beautiful Budget Bill” appears headed for passage with cuts to Medicaid and potentially Medicare likely elements.
  • The economy is slowing, with a mild recession a possibility as consumer confidence drops, the housing market slows and uncertainty about tariffs mounts.
  • And partisan brinksmanship in state and federal politics has made political hostages of public and rural health safety net programs as demand increases for their services.

Last Wednesday, amidst mounting anxiety about the aftermath of U.S. bunker-bombing in Iran and escalating conflicts in Gaza and Ukraine, the Centers for Medicare and Medicaid Services (CMS) released its report on healthcare spending in 2024 and forecast for 2025-2033:

“National health expenditures are projected to have grown 8.2% in 2024 and to increase 7.1% in 2025, reflecting continued strong growth in the use of health care services and goods.

During the period 2026–27, health spending growth is expected to average 5.6%, partly because of a decrease in the share of the population with health insurance (related to the expiration of temporarily enhanced Marketplace premium tax credits in the Inflation Reduction Act of 2022) and partly because of an anticipated slowdown in utilization growth from recent highs. Each year for the full 2024–33 projection period, national health care expenditure growth (averaging 5.8%) is expected to outpace that for the gross domestic product (GDP; averaging 4.3%) and to result in a health share of GDP that reaches 20.3% by 2033 (up from 17.6% in 2023) …

Although the projections presented here reflect current law, future legislative and regulatory health policy changes could have a significant impact on the projections of health insurance coverage, health spending trends, and related cost-sharing requirements, and they thus could ultimately affect the health share of GDP by 2033.”

As has been the case for 20 years, spending for healthcare grew faster than the overall economy in 2024. And it is forecast to continue through 2033:

 2024Baseline2033Forecast% Nominal Chg.2024-2033
National Health Spending$5,263B$8,585B+63.1%
US Population337,2M354.8M+5.2%
Per capita personal health spending$13,227$20,559+55.7%
Per capita disposable personal income$21,626$31,486+45.6%
NHE as % of US GDP18.0%20.3%+12.8%

In its defense, industry insiders call attention to the uniqueness of the business of healthcare:

  • ‘Healthcare is a fundamental need: the health system serves everyone.’
  • ‘Our aging population, chronic disease prevalence and socioeconomic disparities are drive increased demand for the system’s products and services.’
  • ‘The public expects cutting edge technologies, modern facilities, effective medications and the best caregivers and they’re expensive.’
  • ‘Burdensome regulatory compliance costs contribute to unnecessary spending and costs.’

And they’re right.

Critics argue the U.S. health system is the world’s most expensive but its results (outcomes) don’t justify its costs.  They acknowledge the complexity of the industry but believe “waste, fraud and abuse” are pervasive flaws routinely ignored. And they remind lawmakers that the health economy is profitable to most of its corporate players (investor-owned and not-for-profits) and its executive handsomely compensated.

Healthcare has been hit by a perfect storm at a time when a majority of the public associates it more with corporatization and consolidation than caring. This coalition includes Gen Z adults who can’t afford housing, small employers who’ve cut employee coverage due to costs and large, self-insured employers who trying to navigate around the 10-20% employee health cost increase this year, state and local governments grappling with health costs for their public programs and many more. They’re tired of excuses and think the health system takes advantage of them.

As a percentage of the nation’s GDP and household discretionary spending, healthcare will continue to be disproportionately higher and increasingly concerning.  Spending will grow faster than other industries until lawmakers impose price controls and other mechanisms like at least 8 states have begun already.

Most insiders are taking cover and waiting ‘til the storm passes. Some are content to cry foul and blame others. Others will emerge with new vision and purpose centered on reality.

Storm damage is rarely predictable but always consequential. It cannot be ignored. The Perfect has Hit U.S. healthcare. Its impact is not yet known but is certain to be a game changer.

Health Insurance Industry Promises Reforms After $476 Million PR and Lobbying Campaign

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Health Insurance Denial, Health Insurance Industry, Health Insurance Premiums, Health Policy, Healthcare Reform, Lobbyist, Pharmacy Benefits Management, Profit, Profit Margin, Profit Motive • Tagged , , , , • Leave a comment
https://healthcareuncovered.substack.com/p/health-insurance-industry-promises?utm_source=post-email-title&publication_id=255152&post_id=166816548&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

Health insurers and their lobbying arms have spent $476.5 million since 2020 to block reform, protect profits, and mislead the public — and it’s coming straight from our premiums and tax dollars.

AHIP, the big PR and lobbying outfit for most health insurers, undoubtedly believes the praise it got from Trump administration officials and some members of Congress this week – when it announced changes insurers presumably will make voluntarily to alleviate the burden of prior authorization demands on patients and health care providers – has taken the heat off insurers. AHIP’s message to Washington politicos: You don’t need to pass any new laws to make us do the right thing. You can trust us, despite our decades of engaging in untrustworthy behavior to maximize profits.

As former health insurance executive Seth Glickman, M.D., explained yesterday, nobody should believe this hen-house guarding fox.

After all, AHIP is nothing more than a PR and lobbying shop with millions of our dollars to play with. It has zero ability to force insurers to do what AHIP claims they will do. I know this because I worked closely with AHIP during my 20 years in the industry and represented Cigna on its strategic communications committee.

From Fox to “Fixer”?

AHIP pulled off its big show on Monday – and got plenty of generally fawning press coverage – because of all the money it and affiliated insurers throw around Washington every year to protect what has become an incredibly profitable status quo.

Collectively, the seven biggest for-profit insurers reported $70 billion in profits last year.

(Beleauered UnitedHealth alone reported $34.4 million in operating earnings.) And that’s just seven among dozens. One way they make that kind of dough, for their shareholders and top executives, is by using prior authorization to avoid paying for patients’ medically necessary care. Many people die as a result, while investors get richer. It’s that simple and that cold.

So just how much money does AHIP and the insurance industry spend to bamboozle members of Congress and the White House every year? We’re talking stupid money. And orders of magnitude more than nonprofits that advocate for reforms that would benefit patients instead of shareholders.

Nearly Half a Billion Ways They Tip the Scale

To find out just how much, I turned to OpenSecrets and did some math. OpenSecrets, as a reminder, is the well-named organization that keeps tabs on campaign contributions and lobbying expenses.

What I discovered is that AHIP has spent almost $65 million lobbying Congress and the Biden and Trump administrations since 2020. Its cousin, the Blue Cross Blue Shield Association, has spent even more. More than twice as much more.

And that, folks, is just the tip of the iceberg, and it doesn’t even include the tens of millions the industry spends on massive advertising campaigns inside the DC beltway that it’s not required to report. Or the dark money ads and advocacy the industry bankrolls.

But just the lobbying totals are mind-blowing. When you factor in the money spent by the big seven insurers and the other PR and lobbying groups that insurers funnel money to, the total grows to almost $500 million. You read that right: nearly half a billion dollars.

Most of that spending was during the Biden administration, but the industry is on track to break spending records during the first year of the current Trump administration. They are lobbying not only to beat back new laws and regulations that could constrain their prior authorization practices but also to protect their biggest cash cows: Medicare Advantage and their pharmacy benefit managers (PBMs).

Three PBMs – owned by Cigna, CVS/Aetna and UnitedHealth –control 80% of the pharmacy benefit market and determine which drugs we’ll have access to and how much we have to pay out of pocket even with insurance.

The Big Number

$476.5 million – That’s the amount of money health insurance corporations and four of their PR and lobbying groups – AHIP, BCBSA (which includes contributions from Elevance/Anthem as well as numerous other BCBS companies), the Pharmaceutical Care Management Association and the Better Medicare Alliance – have collectively spent on lobbying Congress and federal regulators between January 1, 2020, and March 31, 2025.

The Breakdown

Lobby dollars spent by AHIP; BCBSA; BMA; PCMA; Centene; Cigna; CVS/Aetna; Humana; Molina; and UnitedHealth between January 1, 2020, and March 31, 2025.

Keep in mind that that money is not coming out of executives’ paychecks. It’s coming out of our pockets. Insurers skim money from our premiums and taxes to finance their propaganda and lobbying efforts to keep the gravy train rolling. And it’s in addition to all the campaign cash they dole out every year, which I tabulated recently.

This is not to say that reform is impossible. Scrappy advocacy groups with a tiny fraction of that total have scored important victories over the years. But it is why progress is so slow and setbacks are so frequent.

But just imagine how all that money could be put to better use to ensure that all Americans, including those with insurance, are able to get the care they need when they need it. It’s clear that in addition to reforming our health care system, we need political reforms that make it more difficult for big corporations and their trade groups to influence elections and public policy.

For a Wall Street Lifeline, UnitedHealth Is Throwing Brokers Overboard

Posted on by • Posted in Health Insurance Industry, Investor Expectations, Medical Loss Ratio (MLR), Medicare Advantage, Profit Margin, Profit Motive, UnitedHealthcare, Utilization Trends, Wall Street • Leave a comment
https://healthcareuncovered.substack.com/p/for-a-wall-street-lifeline-unitedhealth?utm_source=post-email-title&publication_id=255152&post_id=166322427&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

In a concession to Wall Street investors, starting this summer, UnitedHealth will stop paying commissions to agents and brokers for some new enrollees in nearly 200 UnitedHealthcare Medicare Advantage plans across 39 markets.

And it’s happening not because UnitedHealth can’t afford to pay. As we’ve published previously, the company reported $9.1 billion in profits during the first quarter of 2025 — up from $7.9 billion the year before. But that wasn’t enough to satisfy Wall Street, which punished UnitedHealth with the steepest one-day stock drop in 26 years — a $110 billion free fall in market value — after the company revised its full-year profit guidance downward.

Why the drop? 

Because UnitedHealth admitted it may not squeeze quite as much profit from taxpayers this year as expected — mainly due to unexpectedly high care utilization from some of the new Medicare Advantage enrollees it brought on during the last open enrollment period. Particularly enrollees who, as then-CEO Andrew Witty described, came from other insurers exiting the market and hadn’t been properly coded. Yawn.

For Now, Brokers Are UNH’s Patsy

This recent commission cut is less about operational efficiency and more about damage control. UnitedHealth is signaling to investors that it’s willing to shrink its Medicare Advantage footprint — at least temporarily — if that helps preserve profit margins. And Wall Street analysts are eating it up, seeing it as a way to slow the flow of high-cost members and stabilize earnings, according to BarChart.

Off Wall Street, the move has already come under fire. As the National Association of Benefits and Insurance Professionals put it, UnitedHealth is “cutting off the very people best equipped to help” seniors — especially low-income and rural enrollees who depend on brokers to explain their options.

While we would warn seniors against enrolling in a Medicare Advantage plan in the first place – without brokers, many beneficiaries will be left to fend for themselves in a system that’s already infamously confusing, expensive and deadly.

A Strategic Retreat Disguised as a Cost-Containment Strategy

The problem is the perverse incentive structure UnitedHealth and other insurers helped build — one that rewards risk-coding gamesmanship more than it rewards delivering care. For years, the company thrived by maximizing revenue through “coding intensity” and by acquiring everything from doctors’ offices to behavioral health firms to control more of the health care ecosystem.

Now, UnitedHealth is responding the way Wall Street expects: by slashing anything that isn’t bolted down – including brokers.

So here we are: 

UnitedHealth is still wildly profitable, still drawing billions from taxpayer-funded programs like Medicare and Medicaid — and now it’s cutting out the professionals who presumably help seniors navigate a convoluted health care system. All this, mind you, to appease jittery investors. And despite UnitedHealth’s current wobbly share price, analysts expect it to rebound, especially with a continuation of share buybacks on the horizon.

During the first quarter of this year alone, the company bought back $3 billion worth of its own shares. Over the past year, buybacks totaled more than $12 billion. When you factor in dividends, the company said it “returned” more than $16 billion to shareholders in 2024. That’s how you keep investors at least partially satisfied.

They Cut Medicaid, Not the Waste: Congress Protects Big Insurance While Slashing Care

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Healthcare Reform, Lobbyist, Medicaid, Medicaid Cuts, Medicare, Medicare Advantage, MedPAC, Political Action Committees (PAC), Political Lobbying, Pre-Authorization, Profit, Profit Margin, Profit Motive, Super PAC, Upcoding • Leave a comment
https://healthcareuncovered.substack.com/p/they-cut-medicaid-not-the-waste-congress?utm_source=post-email-title&publication_id=255152&post_id=163510896&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

The House of Representatives’ reconciliation bill, passed by the powerful Energy and Commerce Committee today, cuts just about everything when it comes to health care – except the actual waste, fraud and abuse. Now the bill heads to the floor for a vote of the full House of Representatives before it must also be passed by the Senate to become law. 

I know what you’re thinking: not another story about Medicaid. With the flood of articles detailing the devastating Medicaid cuts proposed by House Republicans —cuts that could strip 8.7 million people of their health coverage — there’s an important fact being overlooked: Members of Congress chose to sidestep policies aimed at reining in Big Insurance abuses and, instead, opted to cut Medicaid.

And the real irony of it all is they could have saved a ton of money if they would just address the elephant in the room. 

Abuses by Big Insurance companies have been going on for decades but have only recently come under scrutiny. Insurance companies figured out how to take advantage of the structure of the Medicare Advantage program to receive higher payments from the government.

They do this in two ways:

  1. They make their enrollees seem sicker than they are through a strategy called “upcoding” and;
  2. They use care obstacles such as prior authorization and inadequate provider networks that eventually drive sicker people to drop their plans and leave them with healthier enrollees, referred to as “favorable selection.” 

According to the Medicare Payment Advisory Commission (MedPAC) these tactics lead the government to overpay insurance corporations running MA plans by $84 billion a year. This number is expected to grow, and estimates show that overpayments will cost the government more than a $1 trillion from 2025-2034. That is $1 trillion dollars in potential savings Republicans could have included in their bill instead of cutting Medicaid spending that provides care for vulnerable communities. 

These overpayments do not lead to better care in MA plans; in fact, research has shown that care quality and outcomes are often worse in MA compared to traditional Medicare. Even worse, these overpayments are tax dollars meant for health care that end up in the pockets of shareholders of big insurance corporations, which spend billions of taxpayer dollars on things like stock buybacks and executive bonuses. 

One of the most frustrating parts of the lawmaker’s choice to target Medicaid rather than Big Insurance abuses is that there are multiple policies supported by both Republicans and Democrats to stop these abuses. Sen. Bill Cassidy (R-Louisiana), along with Sen. Jeff Merkley (D-Oregon), have introduced the NO UPCODE Act, which would cut down on the practice of upcoding explained above. President Trump’s Administrator of the Centers for Medicare and Medicaid Services, Dr. Mehmet Oz, said during his confirmation hearing that he supports efforts to crack down on practices used by insurers to upcode. And Rep. Mark Green (R-Tennessee) introduced a bipartisan bill to decrease improper prior authorization denials in MA. 

In a somewhat cruel twist, the only mention of Medicare fraud in the Republican reconciliation bill proposals is a section claiming to crack down on improper payments in Medicare Parts A and B (which make up traditional Medicare) by using artificial intelligence.

The total improper payments in TM represent just over one-third of the overpayments going to MA plans each year, and many of the payments flagged as improper in TM are flagged due to missing documentation rather than questionable tactics that MA insurers use. 

In reflecting on why Republicans in Congress ignored potential savings from Big Insurance reforms and instead pursued cuts to care for people depending on Medicaid, which do not save as much, my biggest question was, why?

Why would lawmakers swerve around a populist policy right in front of them to stop Big Insurance from profiting off of the federal government to instead propose a regressive policy that targets millions of working Americans and leaves health insurance corporations that make billions in profits each year untouched?

Unfortunately, the answer likely lies in money. Although people enrolled in Medicaid and the Children’s Health Insurance Program (CHIP) make up roughly one-third of the U.S. population, they account for just 0.5% of all political campaign contributions — about $60 million annually. This disparity is likely driven by financial constraints: Many of these individuals are rightly focused on covering basic needs such as housing, food, and childcare, especially as wages have not kept pace with the rising cost of living.

In contrast, the health care sector — which includes major players like big insurance, pharmaceutical and hospital companies—contributed $357 million during the 2020 election cycle, including $97 million to outside groups such as Super PACs. These outside spending groups are largely funded by corporations and wealthy individuals, who represent less than 1% of the population but wield significant political influence.

Super PACs spent more than $2 billion during the 2020 election cycle, amplifying the voices of industry-aligned donors. This stark imbalance in political spending may help explain why congressional proposals targeted Medicaid recipients while leaving the powerful health insurance industry largely untouched.

It is not only Republicans who have failed to stop Big Insurance from taking advantage of federal health programs, Democrats declined to take action when negotiating their health care legislation during President Biden’s term. Rather, it seems to be a failure of policymakers of both parties to pass legislation that makes it clear to Big Insurance that our health care is not an investment opportunity for Wall Street, and the dollars we pay in taxes to support Medicare are not pocket change for executives to use for stock buybacks.

The failure to include MA reform represents a missed opportunity to prioritize patient care over corporate profits. However, the growing strength and voices of patients across the nation will ultimately make it impossible for lawmakers to ignore this issue much longer. With continued momentum, the fight to put patients over Big Insurance profits will succeed.

Big Shifts: CVS Is Pulling the Plug on ACA Coverage — And 1 Million Americans Will Pay the Price

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Abandon, ACA, Commitment, Congressional Budget Office (CBO), Health Insurance Coverage Adequacy, Health Insurance Industry, High Deductible Health Plans, Out of Pocket Expenses, Profit, Profit Margin, Profit Motive, Underinsured, Uninsured, Vertical Consolidation, Vertical Integration, Wall Street • Leave a comment
https://healthcareuncovered.substack.com/p/big-shifts-cvs-is-pulling-the-plug?utm_source=post-email-title&publication_id=255152&post_id=163399094&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

In what’s becoming an all-too-familiar pattern, CVS Health announced it will pull Aetna out of the Affordable Care Act (ACA) marketplace in 2026, leaving about a million people across 17 states searching for new health coverage — and in some cases, fighting to afford any at all.

This marks yet another retreat by a major for-profit insurer from a program designed to provide affordable health coverage to Americans who don’t get it through work. CVS made the announcement while simultaneously celebrating a 60% increase in quarterly profit and revealing a new deal to boost sales of the pricey weight-loss drug Wegovy through its pharmacy and pharmacy benefit manager (PBM) arms.

Let me repeat that: Aetna is exiting the ACA because it claims it can’t make enough money on people enrolled in those plans, on the same day its parent company posted nearly $1.8 billion in profits in just the first three months of this year. 

This is the same company, by the way, that dumped hundreds of thousands of seniors and disabled people at the end of 2024 because some of them were using more medical care than Wall Street found acceptable. If this doesn’t tell you everything you need to know about who the health insurance industry is really working for, I don’t know what will.

From “Commitment” to Abandonment

Aetna first bailed on the ACA exchanges in 2018, then re-entered in 2022 when insurers could see more clearly how they could make significant profits on that book of business. Now, after just a few years of moderate participation, it’s heading for the exits again. CVS Health executives blamed “regulatory uncertainty” and “highly variable economic factors,” according to a statement to The Columbus Dispatch.

But make no mistake—this was a cold business calculation. Uncertainties and economic variabilities are constants in the insurance game.

CVS’ CEO David Joyner told investors:

“We are disappointed by the continued underperformance from our individual exchange products … this is not a decision we made lightly.”

That’s corporate-speak for “our Wall Street friends weren’t impressed.”

Aetna’s ACA exchange business, covering roughly 1 million people, is just a sliver of CVS’ overall medical membership of 27.1 million. But even though the profits weren’t massive, the people depending on this coverage — many of them self-employed, working multiple part-time jobs, or recently uninsured — will now be thrown into chaos.

And it’s happening at a time when health insurance for many Americans hangs by a thread. Unless Congress acts in the coming months, the ACA’s enhanced tax subsidies—first implemented under the American Rescue Plan—are set to expire at the end of this year. Without them, premiums could spike by 50% to 100% depending on income and geography.

The Congressional Budget Office projects that the lapse in subsidies could leave 3.8 million more Americans uninsured — and now, 1 million more will be forced to find new plans as CVS/Aetna walks away.

Same Song: Prioritizing Profit, Not Patients

Let’s be clear about what CVS is doing here: It’s ditching an essential safety net for millions in order to chase higher profits elsewhere—most notably, in the exploding market for GLP-1 drugs like Wegovy. On the same day it abandoned the ACA, CVS announced a new deal to give Wegovy preferred placement on its PBM formulary, displacing Eli Lilly’s Zepbound. This will help CVS dominate the obesity drug market—and rake in profits through its Caremark PBM and nearly 9,000 retail pharmacies.

It’s a powerful example of vertical integration in action.

CVS owns the insurer (Aetna), the PBM (Caremark), and the pharmacy (CVS retail stores). When it walks away from lower-margin business like ACA plans and doubles down on high-dollar drug deals, we see its true priorities: selling expensive drugs, saddling individuals, families and employers with the costs, and keeping Wall Street happy.

Even worse, the decision is taking place against a troubling political backdrop. The Trump administration has already taken steps to undermine ACA infrastructure and expressed skepticism toward core public health programs. Cuts to navigator funding, changes to vaccine guidelines, and looming uncertainty around tax credits are all part of a slow-motion sabotage of the ACA. This is not to say that the ACA doesn’t have its flaws that need to be addressed.

But instead of penalizing hard-working Americans and their families, lawmakers and the Trump administration should focus instead on lowering the ridiculously high out-of-pocket maximum that the ACA established (and that keeps going up every year) and fixing the medical loss ratio provision that has fueled the vertical integration in the insurance industry.

Medicare Scramble: Wall Street Wants Insurers to Dump Costly Seniors

Posted on by • Posted in Health Insurance Coverage Adequacy, Health Insurance Industry, Health Insurance Premiums, High Premiums, High Risk Patients, Lobbyist, Medicare, Medicare Advantage, Preexisting Conditions, Profit Motive, Underinsured, Wall Street • Leave a comment
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Wall Street is speaking loudly to Medicare Advantage insurers: If you want us to stick with you, keep dumping seniors who are pinching your profit margins. 

Investors continue to punish UnitedHealth Group since the company downgraded its 2025 profit expectations on April 17. On Friday, UnitedHealth’s stock price hit not only a 52-week low—$393.11—but its lowest point in years. The last time UnitedHealth’s stock price went below $400 a share was on October 14, 2021. 

The company’s shares lost nearly 4.5% of their value during the past week, contributing to a decline that started soon after the company set an all-time high of $630.73 last November. UnitedHealth’s shares have lost more than 33% of their value since then. 

Wall Street Sends a Message

Meanwhile, investors have once again embraced UnitedHealth’s top two rivals in the Medicare Advantage business–Humana and CVS/Aetna. Those companies told investors last year, when both were in the Wall Street dog house for spending more than investors expected on patients’ medical care, that they would dump hundreds of thousands of their costliest Medicare Advantage enrollees to improve their profits. They made good on that promise, shedding almost 650,000 seniors and people with disabilities by the end of the year. 

Many of those people enrolled in a UnitedHealth Medicare Advantage plan. The company reported 400,000 more Medicare Advantage enrollees in the first quarter of 2025 than in the fourth quarter of 2024. That used to be a good thing, but UnitedHealth’s executives told investors on April 17 that it wouldn’t make as much money for them as the company had assured them just three months earlier because it likely will have to spend more than they expected on those new MA enrollees’ medical care. Investors responded by immediately dispatching the company’s shares to the cellar. Those shares lost about 23% of their value in a single day.

The Street had also punished Humana and CVS last year when they said they were paying more for seniors’ medical care than they’d expected. Shares of both companies cratered, losing around half their value. So, executives at both Humana and CVS started identifying Medicare markets to get out of entirely. The culling was ruthless. CVS shed 227,000 MA enrollees. Humana got rid of 419,000.

Locked Out of Traditional Medicare

Those seniors and disabled people had to scramble to find a new Medicare Advantage insurer because it is difficult for most people to go back to traditional Medicare and find an affordable Medicare supplement policy. Medicare supplement insurers must waive underwriting during the first six months of applicants’ eligibility for Medicare, but people who enroll in a Medicare Advantage plan and want or need to make a change months later find out that insurers will charge them more unless their health is nearly perfect. 

Of the seven big for-profit health insurers, four (Cigna, CVS/Aetna, Humana and Centene) collectively cut 1.3 million of their Medicare Advantage enrollees adrift at the end of 2024 in an effort to stay in Wall Street’s good graces. Cigna dumped all 600,000 of its MA enrollees, selling them to the Blue Cross corporation HCSC. For-profit Blue Cross insurer Elevance picked up 227,000; Molina added 18,000, and, as noted, UnitedHealth signed up 400,000 new MA enrollees. 

While UnitedHealth’s shares have lost a third of their value, CVS’s shares have increased more than 50%  since the first of this year. They even set a 52-week high of $72.51 on Thursday. Humana’s shares closed Friday at $258.48, up 1.88% since January 1. They are out of the Wall Street dog house – for now, anyway. 

Profits, Lobbying Soar

I trust you are not feeling sorry for UnitedHealth because of its misfortune on Wall Street. It is still a hugely profitable company–just not profitable enough lately to please investors. This huge corporation, the fourth largest in America, reported $9.1 billion in profits in just the first quarter of this year. If the company makes it more difficult for its health plan enrollees to get the care they need this year, it could make even more than the $34.4 billion in profits it made last year. 

And as a group, the seven big for-profits, including those that spent more than Wall Street felt was necessary on patients’ medical care, made $70 billion in profits last year. (UnitedHealth made nearly as much as the other six combined.)

And collectively, those giant corporations took in a record $1.5 trillion in revenue from us as customers and taxpayers last year. They are doing quite well. But that won’t stop them from trying to keep lawmakers and Trump administration officials from cracking down this year on the widespread waste, fraud and abuse in the Medicare Advantage program. You can expect them to spend a record amount of our money on lobbying expenses in Washington this year to keep their Medicare Advantage cash cow well fed. 

Medicare Scramble: Wall Street Wants Insurers to Dump Costly Seniors

Posted on by • Posted in Health Insurance Coverage Adequacy, Health Insurance Industry, High Deductible Health Plans, High Premiums, Lobbyist, Medicare, Medicare Advantage, Preexisting Conditions, Profit Motive, Underinsured, Wall Street • Leave a comment
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Wall Street is speaking loudly to Medicare Advantage insurers: If you want us to stick with you, keep dumping seniors who are pinching your profit margins. 

Investors continue to punish UnitedHealth Group since the company downgraded its 2025 profit expectations on April 17. On Friday, UnitedHealth’s stock price hit not only a 52-week low—$393.11—but its lowest point in years. The last time UnitedHealth’s stock price went below $400 a share was on October 14, 2021. 

The company’s shares lost nearly 4.5% of their value during the past week, contributing to a decline that started soon after the company set an all-time high of $630.73 last November. UnitedHealth’s shares have lost more than 33% of their value since then. 

Wall Street Sends a Message

Meanwhile, investors have once again embraced UnitedHealth’s top two rivals in the Medicare Advantage business–Humana and CVS/Aetna. Those companies told investors last year, when both were in the Wall Street dog house for spending more than investors expected on patients’ medical care, that they would dump hundreds of thousands of their costliest Medicare Advantage enrollees to improve their profits. They made good on that promise, shedding almost 650,000 seniors and people with disabilities by the end of the year. 

Many of those people enrolled in a UnitedHealth Medicare Advantage plan. The company reported 400,000 more Medicare Advantage enrollees in the first quarter of 2025 than in the fourth quarter of 2024. That used to be a good thing, but UnitedHealth’s executives told investors on April 17 that it wouldn’t make as much money for them as the company had assured them just three months earlier because it likely will have to spend more than they expected on those new MA enrollees’ medical care. Investors responded by immediately dispatching the company’s shares to the cellar. Those shares lost about 23% of their value in a single day.

The Street had also punished Humana and CVS last year when they said they were paying more for seniors’ medical care than they’d expected. Shares of both companies cratered, losing around half their value. So, executives at both Humana and CVS started identifying Medicare markets to get out of entirely. The culling was ruthless. CVS shed 227,000 MA enrollees. Humana got rid of 419,000.

Locked Out of Traditional Medicare

Those seniors and disabled people had to scramble to find a new Medicare Advantage insurer because it is difficult for most people to go back to traditional Medicare and find an affordable Medicare supplement policy. Medicare supplement insurers must waive underwriting during the first six months of applicants’ eligibility for Medicare, but people who enroll in a Medicare Advantage plan and want or need to make a change months later find out that insurers will charge them more unless their health is nearly perfect. 

Of the seven big for-profit health insurers, four (Cigna, CVS/Aetna, Humana and Centene) collectively cut 1.3 million of their Medicare Advantage enrollees adrift at the end of 2024 in an effort to stay in Wall Street’s good graces. Cigna dumped all 600,000 of its MA enrollees, selling them to the Blue Cross corporation HCSC. For-profit Blue Cross insurer Elevance picked up 227,000; Molina added 18,000, and, as noted, UnitedHealth signed up 400,000 new MA enrollees. 

While UnitedHealth’s shares have lost a third of their value, CVS’s shares have increased more than 50%  since the first of this year. They even set a 52-week high of $72.51 on Thursday. Humana’s shares closed Friday at $258.48, up 1.88% since January 1. They are out of the Wall Street dog house – for now, anyway. 

Profits, Lobbying Soar

I trust you are not feeling sorry for UnitedHealth because of its misfortune on Wall Street. It is still a hugely profitable company–just not profitable enough lately to please investors. This huge corporation, the fourth largest in America, reported $9.1 billion in profits in just the first quarter of this year. If the company makes it more difficult for its health plan enrollees to get the care they need this year, it could make even more than the $34.4 billion in profits it made last year. 

And as a group, the seven big for-profits, including those that spent more than Wall Street felt was necessary on patients’ medical care, made $70 billion in profits last year. (UnitedHealth made nearly as much as the other six combined.)

And collectively, those giant corporations took in a record $1.5 trillion in revenue from us as customers and taxpayers last year. They are doing quite well. But that won’t stop them from trying to keep lawmakers and Trump administration officials from cracking down this year on the widespread waste, fraud and abuse in the Medicare Advantage program. You can expect them to spend a record amount of our money on lobbying expenses in Washington this year to keep their Medicare Advantage cash cow well fed. 

Gaming the System: Medical Loss Ratios and How Insurers Manipulate Them

Posted on by • Posted in ACA, Cost Shifting, Cost Transparency, Health Insurance Industry, Manipulative, Medical Loss Ratio (MLR), Profit Margin, Profit Motive, Quality Incentives • Leave a comment
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Last week, I made my once a decade trek to a dealership to buy a new car. I did my research in advance (and even negotiated the price) so I was hoping for a stress-free experience. 

It was – up until the point where I got locked in the finance manager’s office for “the talk”. You know, the one where you are made to feel like a neglectful parent unless you pony up for all the fixin’s – everything from nitrogen filled tires to paint protection (just in case I encounter a flock of migratory geese on the drive home).  I shook my head no about ten times before we got to the pre-paid maintenance plan options. I decided to be polite and listen (plus I was curious since I was purchasing a car from a manufacturer notorious for costly repairs). As compelling as it was to pay nearly $5,000 to what ultimately would amount to a few tire rotations for my electric vehicle, I held firm. The finance manager angrily handed me my signed documents and whisked me out of his office.

I guess I can’t blame car dealers for applying massive mark-ups for services that are inexpensive to provide. Except similar financial chicanery is currently playing out in our health insurance system. If you swap out the finance manager for a health insurer and replace me with the average everyday consumer, the dealer’s tactics are analogous to how insurers game medical loss ratio (MLR) requirements (except as a health care consumer, you can’t say “no”). 

A bit of background is in order to understand why I thought about health insurance and car dealers in the same breath.

Insurance companies are required to spend a certain percentage of money they get from premiums on medical costs and quality improvement (QI); this is known as the medical loss ratio (MLR). If companies do not meet this ratio (usually 80-85%, depending on the product), they must refund the difference in the form of a rebate, or reduction in future premiums, to consumers.

Like any for-profit corporation in America today, a health insurer wants to avoid giving money back to consumers. Therefore, insurers have become adept at manipulating their MLRs through various accounting and financial engineering techniques. This manipulation optimizes their ability to meet MLR thresholds and avoid paying rebates, which runs afoul of its intended purpose: to ensure that patients receive the appropriate level of care.  

So how do insurers game the system, and what evidence exists for this activity?

The current MLR formula is:

Health insurers do not control taxes and fees, but they can easily engineer the other variables. Below, I’ll explain how.

Step 1: Quality Improvement (QI) Expenses

The definition of allowable QI expenses is broad and includes activities to improve outcomes, patient safety, and reduce mortality (mom and apple pie stuff). Insurers played a big role in writing the MLR regulations after Congress enacted legislation and made sure they’d have wide latitude in what expenses are classified as QI (akin to the car dealer “option” list) and what product segments they assign them to. 

Looking at reported QI expenses sheds light on this practice. QI expenses vary between insurers.  But they also vary widely for the same insurer from year to year (even after controlling for geography and product segment). In large part, this is attributable to financial engineering. QI costs can be effectively “transferred” on the income statement from one product segment to another, by adjusting the pro rata weightings). This enables them to optimize MLR performance across their insurance portfolio (i.e. by taking from a bucket with excess medical costs and putting it in another with insufficient costs) in a way that maximizes benefit to the insurer and is camouflaged from regulators and consumers. This is language from a recent UnitedHealth Group filing with the Securities and Exchange Commission: “Assets and liabilities jointly used are assigned to each reportable segment using estimates of pro-rata usage.”

Annual QI expenses across four insurers in Florida in the small group market.

Although these QI percentages are small, the associated dollar amounts are large. In 2022, UnitedHealth, Humana, and Aetna reported $494 million, $550 million, and $395 million respectively in allowable QI expenses for their national plans. While there is some legitimate QI activity at insurers (e.g., pharmacists who identify high risk medications in the elderly), the reality is that much of the QI work is already heavily resourced within provider organizations, where it is more effective. Insurers also can (and do) count “wellness and health promotion activities” despite limited evidence these programs improve health outcomes and are more often used by insurers as marketing tools.

Step 2. Health Care Claims

The other variable that insurers can manipulate is claims costs. The more an insurer is vertically integrated, the easier it is. The prime example is UnitedHealth, which has an insurance arm (UnitedHealthcare) and a big division that encompasses medical services, among many other things (Optum), as well as various other subsidiaries. Optum Health and Optum Rx receive a significant portion of their revenue from UnitedHealthcare for providing services like care and pharmacy benefit management to people enrolled in its health plans. In fact, the amount of UnitedHealth’s corporate “eliminations,” (meaning inter-company revenue that is reported on their consolidated financial statement) has more than doubled over the past five years (from $58.5 billion to $136.4 billion). The proportion of revenue Optum derives from UnitedHealthcare versus unaffiliated entities has increased by nearly 50% over the same period.  A similar trend is playing out at every major insurer.

Take the example of the insurance company Aetna, the PBM CVS Caremark, and CVS Pharmacy, which are all vertically integrated and owned by CVS Health. If a patient goes to a CVS store to fill a prescription for Imatinib, a generic chemotherapy drug, the total cost the patient and insurance company pay is $17,710.21 for a 30-day supply. The same drug is sold by Cost Plus Drugs for $72.20 (the cost is calculated by adding the wholesale price and a 15% fee). When the patient fills the prescription at a CVS retail pharmacy, CVS Health can record that the patient paid a medical claim cost of $17,710.21 (even though the cost to acquire the drug is $70) and the remaining $17,640 can be retained as profits disguised as medical costs. 

Insurers’ extensive acquisition of physician practices also facilitates gamification of the MLR via its ability to pay capitation (a set amount per person) to a risk-bearing provider organization (RBO) it owns, such as a medical group. This enables the insurer to lock in a set amount of premium as “medical expense” (usually around 85%) with the downstream provider group “managing” those costs.  There’s a loophole, however. While the insurer has technically met its MLR requirement, the downstream RBO is subject to far fewer regulations on how it spends the money, which makes it easier to generate profits by skimping on care.  

The regulations on RBOs vary by state. In many cases, while RBOs need to meet minimum capital requirements, they are not subject to the same MLR provisions as insurers. For a vertically integrated insurer that gets a huge amount of revenue from taxpayer-supported programs like Medicare Advantage and Medicaid, this essentially means that (1) the Center for Medicare and Medicaid Services puts the money into the insurer’s right pocket, (2) the insurer moves it to the left pocket, and (3) CMS checks the right pocket – and just the right pocket – at the end of the year to make sure it’s mostly empty (without regard to the fact that the left one may be busting at the seams).

The good news is there are ways to address these issues, both through updating the MLR provisions in the Affordable Care Act (which are long in the tooth) and more rigorous and comprehensive reporting requirements and regulation of vertically integrated insurers.  

Just like I don’t want car dealers pushing unnecessary add-ons to increase their profit margins, consumers deserve that the required portion of their hard spent premium dollar actually goes toward their health care instead of further enriching huge corporations, executives, and Wall Street shareholders.

‘Deny. Defend. Depose’: The Chilling Legacy of Managed Care and the American Health Care Crisis

Posted on by • Posted in ACA, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Maintenance Organization (HMO), Health Plan, Health Policy, Managed Care, Out of Pocket Expenses, Outcomes, Profit, Profit Motive, Underinsured, Uninsured, Wall Street • Leave a comment
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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.

Senate report slams private equity’s ownership of hospitals

Posted on by • Posted in Bankruptcy, Financial Performance, Financial Stewardship, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Mergers & Acquisitions, Private Equity, Profit, Profit Motive, Public Interest, Sign of the Times • Leave a comment
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A bipartisan Senate report on private equity ownership of two health systems shows PE investment puts a priority of profit over patient health and hospital finances.

A yearlong investigation found that patient care deteriorated at both systems, while private equity owners received millions, according to the Senate Budget Committee’s bipartisan staff report, “Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System.”

The investigation was led by Senate Budget Committee Chairman Sheldon Whitehouse, D-R.I., and Ranking Member Charles E. Grassley, R-Iowa.

WHY THIS MATTERS

The report centered on the hospital Ottumwa Regional Health Center in Iowa and its operating company, Lifepoint Health in Tennessee.

Private equity company Apollo Global Management owns Lifepoint Health.

The investigation expanded to include other entities, including PE firm Leonard Green & Partners and hospital operator Prospect Medical Holdings, in which Leonard Green & Partners held a majority stake. Leonard Green & Partners (LGP) is a private equity firm in Los Angeles that owns hospitals under Prospect Medical Holdings (PMH).

“LGP and PMH’s primary focus was on financial goals rather than quality of care at their hospitals, leading to multiple health and safety violations as well as understaffing and the closure of several hospitals,” the report said.

The investigation originated from questions over the role, if any, private equity played in a series of patient sexual assaults by a nurse practitioner at the Iowa hospital. In 2022, a nurse practitioner fatally overdosed on drugs acquired at the hospital. Police discovered the nurse had sexually assaulted nine incapacitated female patients over a two-year period, the report said.

Prospect Medical Holdings owns and operates hospitals in urban and suburban areas, primarily on the East and West Coasts, including Connecticut, Rhode Island, Pennsylvania and California.

It is a previously public traded company that went private in 2010 when LGP acquired a 61% majority stake. During the course of LGP’s majority ownership, Prospect Medical Holdings acquired 16 hospitals over a span of four years. PMH has operated a total of 21 unique hospitals, the report said.

Apollo has a 97% ownership stake in Lifepoint Health, a company that owns and operates acute care hospitals in predominantly rural areas. This includes Ottumwa Regional Health Center. Apollo owns around 220 hospitals nationwide, making it the single largest private equity owner of hospitals in the United States, the report said.

Ottumwa has been under PE ownership since 2010, when it was acquired by the PE-owned hospital operator RegionalCare, which was later acquired by Apollo.

KEY FINDINGS

The report’s key findings show that LGP controlled the Prospect Medical Holding board of directors, which incentivized management to satisfy financial goals regardless of patient outcomes.

“According to documents obtained by the committee, discussion amongst PMH and LGP leadership during board meetings centered around profits, costs, acquisitions, managing labor expenses and increasing patient volume – with little or no discussion of patient outcomes or quality of care.”

Current PMH leadership has overseen the closure of eight hospitals, with three-fourths coming during or directly after LGP’s majority ownership, including four in Texas and two in Pennsylvania.

Several hospitals suffered from labor cuts, decreased patient capacity, unsafe building maintenance and financial distress, the report said.

Despite this, LGP took home $424 million of the $645 million that PMH paid out in dividends and preferred stock redemption, in addition to over $13 million in fees, leaving PMH in severe financial distress.

In order to pay investors dividend distributions, PMH was forced to take on hundreds of millions of dollars in debt, running out of cash and defaulting on its loans, the report said.

ORHC’s PE owned companies, including Lifepoint Health, have failed to fulfill at least seven promises, including legally binding ones made to Ottumwa, including those related to growth, physician recruitment, routine capital expenditures, charity care, patient satisfaction and continuation of services.

Patient volumes have decreased, likely due to long wait times in the ER, outgoing transfers, insufficient staffing and a lack of specialists, the report said. This has also resulted from having a poor reputation in the community.

Because of financial harm, OTHC is dependent on Lifepoint Health to pay its expenses.

However, Lifepoint pays Apollo $9.2 million annually in management fees, as well as a 1% transaction fee each time Lifepoint completes an acquisition, which included a $55 million fee in relation to the acquisition of Lifepoint Health in 2018.

THE LARGER TREND

PE and other private funds had less than $1 trillion in managed assets in 2004, but now manage more than $13 trillion globally. PE firms create affiliated funds with money raised from investors, such as pension funds, foundations and insurance companies. The intention is generating returns for their investors within a short period of time.

PE has grown in healthcare. In the 2010s investors spent more than $1 trillion. By 2021 PE investment had reached an all-time high of 515 deals valued at $151 billion.

ON THE RECORD

“Recent peer reviewed studies have generally found negative consequences for general acute care hospitals during the first three years of PE ownership as compared to non-PE owned hospitals, including lower quality of care, increased transfers to other hospitals, decreased staffing and higher prices,” the report said.