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Big Health Insurance Front Groups Are Attacking the No UPCODE Act

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https://healthcareuncovered.substack.com/p/big-health-insurance-front-groups?utm_source=post-email-title&publication_id=255152&post_id=175592755&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

Medicare Advantage Majority and Better Medicare Alliance are flooding the zone with attacks against bipartisan legislation aimed at curbing health insurers’ “upcoding” maneuver.

HEALTH CARE un-covered readers were the first to tip me off to television attack ads against the bipartisan No UPCODE Act, sponsored by Senators Bill Cassidy (R-LA) and ​​Jeff Merkley (D-OR). The ads in question, airing in the Washington D.C. media market, were paid for by Medicare Advantage Majority (MAM), which bills itself as a patient and provider coalition but has all the markings of a front group funded by the nation’s largest health insurers.

After a quick search through MAM’s YouTube channel, I think I found the ad I was tipped about. Titled “Voices,” the video features six seniors fawning over their Medicare Advantage plans – and it ends with a desperate plea to “oppose the No UPCODE Act” and “protect Medicare Advantage.”

MAM appears to have been propped up fairly recently – with their earliest ad (that I can find) from October 2024. All of their ads support Medicare Advantage. Some appear nonpartisan, while others are more overtly political, like the ad “Biden’s Playbook.” Here is a transcription of that ad:

“President Trump kept his promise to protect Medicare benefits for millions of American seniors. But now some in Congress want to take a page out of Joe Biden’s playbook and cut Medicare. These cuts threaten primary and preventative care that help keep millions of seniors healthy while also raising costs.

It’s a betrayal. It’s why people don’t trust Washington. Don’t let the politicians cut Medicare. Tell Congress to stand with President Trump and protect America’s seniors.”

None of MAM’s ads mention the expensive hidden fees, narrow networks of doctors and life-threatening prior-authorization hurdles often associated with private Medicare Advantage plans. Nor does it even hint at why Sen. Cassidy, a doctor and senior Republican leader and committee chair, introduced the No UPCODE Act in the first place: to reduce the tens of billions of dollars in overpayments to Medicare Advantage insurers and keep the Medicare Trust Fund solvent for years longer. Those overpayments – at least $84 billion this year alone – is a leading reason why the Medicare Trust Fund is being depleted.

But Medicare Advantage Majority is not the only insurance industry front group flooding the zone.

I kid you not, while I was writing this very article I got a text from a different Big Insurance-funded group fear-mongering the same “cuts” to Medicare Advantage. As I’m typing away on my laptop, my phone dings… The first words in the text read: “ATTENTION NEEDED:”. The message had all the hallmarks of a cookie-cutter political blast that was cooked up by some DNC-alum or K Street PR strategist.

When I followed the prompt and clicked on the link, it took me to one of the industry’s most trusted hands in the Medicare Advantage fight, the Better Medicare Alliance (BMA) – one of my former colleagues’ most essential propaganda shops these days.

BMA is a slickly branded PR and lobbying shop that presents itself as a coalition of “advocates” working to protect seniors’ care, but it’s heavily funded by private insurers in the MA business who reap billions in those overpayments from taxpayers each year. BMA’s board has been stacked with Humana and UnitedHealth representatives and allies tied to medical schools like Emory and Meharry Medical College. For years, they’ve spent millions lobbying and propagating to protect MA insurers’ profits. This includes rallying against the No UPCODE Act since July; opposing CMS’ risk adjustment model in 2024 (which should help reduce some of the overpayments); and objecting vigorously to any Medicare Advantage plan payment reductions, year in and year out.

In short, BMA and MAM are both 501(c)(4) “social welfare” nonprofits used by Big Insurance as part policy shop, part lobbying arm, and part attack dog. Together, they make up a strategy for insurers that want to keep their MA cash cows gorging on your money.

None of this is new, though. It’s the same PR crap I used to fling back in the old days when I was an industry executive and had to peddle Medicare Advantage plans. (Its deliciously ironic that MAM had the audacity to use the term “playbook” in one of its ads. In my old job I used to help write the industry’s playbook.) Each fall we’d work with AHIP (formerly America’s Health Insurance Plans) to host “Granny Fly-Ins” in Washington, D.C. Industry money (actually, taxpayer money) would cover the fly-in expenses, and the seniors would trot around Capitol Hill to extol the supposed benefits of Medicare Advantage plans and dare lawmakers to tamper with it. And that tactic worked for years. Of course, this was all before texting existed.

The squeal tells the story

For years, MA insurers have exaggerated how sick their patients are on paper (making them seem sicker so they can get a bigger taxpayer-funded handout). Hence the term “upcoding.” And the sick joke is – unfortunately – the same insurers who profit most from this upcoding scheme are using their taxpayer loot to stop this bill from gaining traction.

I think the industry’s squeal tells the story.

Let’s be real: Big Insurance wouldn’t be running this PR and lobbying blitz unless this legislation really would do some major good for Americans. The No UPCODE Act is a strong, bipartisan step toward ending wasteful, fraudulent practices that funnel taxpayer money into the pockets of industry executives and Wall Street shareholders. This one bill could save taxpayers as much as $124 billion over the next decade and keep the Medicare Trust Fund solvent for years longer.

You can be sure, though, that people on Capitol Hill and the administration already know ads like these are industry-funded. They see them for what they really are — part of a well-financed intimidation campaign. A game. Running ads like these is the industry’s way of flaunting its power and a reminder that big money can and will be spent in Congressional campaigns — and possibly (again) even during the Super Bowl — to mislead voters.

So remember, when you see an ad or get a text from an organization like MAM or BMA – know that these organizations have a lot to lose if legislation like the No UPCODE Act becomes law. And spending your premium and tax dollars on text blasts and TV spots are well worth the investment – to them, anyway.

How Insurers That Own Providers Can Game The Medical Loss Ratio Rules

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https://www.healthaffairs.org/content/forefront/insurers-own-providers-can-game-medical-loss-ratio-rules

Recent analysis of spending data from five states with health care cost growth targets—Connecticut, Delaware, Massachusetts, Oregon, and Rhode Island—revealed an unexpected trend in 2023: Spending grew sharply in service categories that have historically increased more slowly. The most notable increase was in non-claims payments—payments made through financial arrangements between providers and health insurers that are not tied to individual claims. These payments rose by an average of 40.4 percent across the five states, driven largely by increases in Medicare Advantage non-claims spending.

Increases in non-claims payments are often seen as a positive sign. They suggest a shift away from fee-for-service payments toward alternative payment methods (APMs)—value-based payment models that incentivize care coordination, efficiency, and a focus on outcomes. However, it’s unclear what is included in these non-claims payments. A closer examination of this issue revealed a less visible but important concern: the role of insurer-provider vertical integration in potentially weakening the effectiveness of Medical Loss Ratio (MLR) requirements for insurers.

MLR Requirements

Medical Loss Ratio is a measure of the percentage of premium dollars that a health insurer spends on medical care and quality improvement activities—as opposed to administration, marketing, or profit. Since 2011, the Affordable Care Act has required insurers to maintain an MLR of at least 80 percent in the individual and small group markets, and 85 percent in the large group market. That is, for every dollar spent by an insurer, 80 cents or 85 cents—depending on the market—must go toward actual care and improvement. Insurers that don’t meet these required thresholds must pay a rebate to consumers for the premium dollars that were not spent on health care, less taxes, fees, and adjustments. In 2014, the Centers for Medicare and Medicaid Services instituted a requirement for Medicare Advantage and Part D plans; they must maintain an MLR of at least 85 percent or rebate any excess revenues to the federal government.

These MLR requirements aim to ensure that the majority of premium revenue is used to deliver or improve care. However, a significant loophole allows insurers that have “vertically integrated” with providers to inflate reported medical spending. This reduces their rebate liability while increasing held profits. Since the MLR provisions took effect in 2012, an estimated $13 billion in rebates have been issued—highlighting the strong incentive insurers have to minimize these payouts.

The MLR Loophole

A company is vertically integrated when it owns or controls more than one entity in the supply chain. For insurers, this means acquiring physician practices, outpatient clinics, and even entire health systems. As a result of this vertical integration, payments to these affiliated providers count as medical spending when calculating an MLR for the insurer. However, there is no MLR requirement for providers. This creates an incentive for the insurer to direct spending to these affiliated provider entities, which may charge inflated prices, allowing the insurer to increase its reported MLR without delivering more care or improving quality.

Consider a hypothetical scenario: Company X owns Health Insurer A and Clinic Y. There’s another health insurer, B, in the market, but it is not owned by Company X. It costs Clinic Y $300 to deliver a particular service.

When a patient covered by Health Insurer B receives this service at Clinic Y, Insurer B pays the clinic $300 for delivering the service. But when another patient covered instead by Health Insurer A receives the same particular service at Clinic Y, Health insurer A pays the clinic a lot more: $500. The full $500 is counted as medical spending in Health Insurer A’s MLR calculation, even though the additional $200 didn’t buy any more services or any better care. It just represents internal profit for the vertically integrated entity, Company X, that is captured on the provider side of the business, and not true care delivery (see exhibit 1 below).

Exhibit 1: Incentives for vertically integrated insurers to direct spending to these affiliated provider entities

Source: Authors’ analysis.

The structure of APMs exacerbates this problem by making it easier to mask price increases. In fee-for-service systems, a price increase shows up directly. However, in APM payments that are per capitation or per episode, providers receive lump-sum payments for a group of services or a population. There is no service breakdown for these APMs. These lump-sum payments can facilitate investment in population health improvement, but if vertically integrated entities are exploiting the MLR loophole by increasing internal payment rates, the use of APMs make such profit maximization easier to conceal.

This dynamic reveals a limitation of the MLR rules. When the insurer is also the provider, there is less transparency into how health care dollars are actually allocated. The vertically integrated insurer and provider entity can also artificially inflate prices for medical services, worsening the nation’s health care affordability problem.

Potential Impact

Currently, there is no standardized way to assess the extent to which insurers that own or are otherwise affiliated with clinics and health systems are taking advantage of this loophole, or how much the practice contributes to high health care prices. However, with the growing trend toward insurer-provider vertical integration, the potential cost implications are significant.

Insurers That Own Providers Capture A Significant Share Of Commercial And Medicare Advantage Enrollment

In the large-group commercial market, the three largest insurers—Kaiser Permanente, UnitedHealthcare, and Elevance—held a combined 39 percent of the national market share in 2023. In the Medicare Advantage market, the top five plans—UnitedHealthcare, Humana, CVS Health/Aetna, Elevance, and Centene—accounted for 68 percent of total enrollment in 2023.All of these insurers operate within larger parent companies that own or control a range of health care provider entities.

For example, UnitedHealth Group, UnitedHealthcare’s parent company, also owns OptumHealth, which employs or manages more than 90,000 physicians across the country. The recently released Sunlight Report on UnitedHealth Group shows that it grew more than 10 times its size over the past decade, and the company now consists of nearly 3,000 distinct legal entities.

UnitedHealth Group is not the only insurer pursuing this strategy of vertical integration. Elevance Health (formerly Anthem, Inc.) owns Carelon, a health services provider that claims to serve one in three people in the US. CVS Health encompasses retail pharmacy storefronts (CVS Pharmacy), a pharmacy benefits manager (CVS Caremark), a health insurer (Aetna), in-store clinics (MinuteClinic), and provider groups such as Oak Street Health and Signify Health. This high level of consolidation gives these companies significant control over how care is delivered, priced, and reported.

Transactions Between Insurers And Their Affiliated Provider Entities Are Substantial And Growing

A 2022 analysis by the Brookings Institution suggests that in Medicare Advantage plans, internal transactions between affiliated insurers and providers can account for spending that ranges from about 20 percent to as much as 71 percent of the total. Cost growth target states’ reports on 2023 spending growth appear to confirm these trends within the Medicare Advantage market. Upon examination of the drivers behind the sharp increases in non-claims payments, a clear pattern emerged. In Connecticut, UnitedHealthcare launched a program that paid its affiliated provider group, which was then called OptumCare Network, a fixed percentage of Medicare Advantage premiums to cover care and care coordination. Oregon reported that the rise in Medicare Advantage non-claims payments was largely due to UnitedHealthcare shifting a significant share of its claims payments into non-claims spending through Optum.

These trends are not limited to Medicare Advantage, however. UnitedHealth and other major insurers such as Elevance and Aetna operate across multiple markets, raising concerns about similar dynamics in the commercial market. A recent analysis by Seth Glickman, a physician and former insurance executive, shows that in the past five years, UnitedHealth Group’s reported corporate “eliminations”—intercompany revenues reported in its consolidated financial statements that represent all books of business—more than doubled, increasing from $58.5 billion to $136.4 billion. At the same time, the share of Optum’s revenue derived from UnitedHealthcare, as opposed to unaffiliated entities, increased by nearly 50 percent.

Prices Of Health Care Services From Vertically Integrated Insurers And Providers Are Higher Than Prevailing Market Prices

Growing evidence also suggests that insurers are paying more for services provided through their affiliated entities than for those delivered by non-affiliated entities. A STAT News investigation revealed that UnitedHealth Group reimburses its own physician groups considerably more than other providers in the same markets for the same set of services. Similarly, a Wall Street Journal investigation showed how certain insurers and pharmacy benefit managers are generating substantial profits by overcharging for generic drugs within their own networks. The analysis found that for a selection of specialty generic drugs, Cigna and CVS’s prices were at least 24 times higher, on average, than the drug manufacturers’ prices.

Stronger Oversight Is Needed

The potential impact of these trends is so significant that policy makers are beginning to take notice. In 2023, Senators Elizabeth Warren (D-MA) and Mike Braun (R-IN) requested that the Department of Health and Human Services Office of Inspector General evaluate the extent to which vertical integration is increasing costs and allowing insurers to bypass federal MLR requirements. Earlier this year, Representatives Lloyd Doggett (D-TX) and Greg Murphy (R-NC) submitted a bipartisan request to the Government Accountability Office—Congress’s independent, nonpartisan oversight agency—urging an investigation into the same issue in Medicare Advantage. It is unclear whether these investigations have been initiated.

Some states—understanding the role that market consolidation plays in driving up health care prices—have made efforts to strengthen oversight. In 2024, 22 states passed laws related to health system consolidation and competition. However, historically, these efforts have largely focused on promoting competition, preventing monopolies, and limiting dominant providers’ ability to charge prices well above competitive levels. Little attention has been given to the MLR loophole and the ability of vertically integrated insurers to report profits as medical care.

As states pursue policies to slow cost growth, they must apply greater scrutiny of vertical integration arrangements—especially around internal financial transactions between affiliated entities. States should require insurers to report detailed information on transactions between related parties, including non-claims-based APMs to affiliated providers and the pricing methodology used to develop these APMs. This reporting could be integrated into states’ premium rate review processes, allowing regulators to assess whether such transactions reflect actual medical costs. States could then modify or deny rate increases where evidence points to gaming of MLR rules.

Policy makers should also reassess whether, given these market dynamics, current regulatory tools such as the MLR are adequate. Addressing these issues will be essential for maintaining the integrity of cost containment efforts and ensuring that health care dollars are spent on delivering meaningful care.

Government shutdown puts hospital funding in peril

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https://www.axios.com/2025/10/02/government-shutdown-hospital-funding-medicaid?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Hospitals in rural and underserved areas could lose out on billions of dollars in federal funding if the government shutdown drags on.

Why it matters: 

Many hospitals already run on tight margins and are bracing for fallout from Medicaid cuts and other changes in the One Big Beautiful Bill Act.

The big picture: 

The immediate concern is health policies that expired when government funding lapsed at midnight Tuesday. Health providers and their lobbyists expect Congress will make providers whole in an eventual funding deal and reimburse claims made during the shutdown.

  • But that’s not a given. And uncertainty about how long the shutdown will go on is leaving some of the most financially vulnerable hospitals in limbo.
  • “There’s just that underlying fear of, oh my gosh, what if they can’t come together on any agreement to open the government again, and we all get looped into it,” said Kelly Lavin Delmore, health policy adviser and chair of government relations at Hooper Lundy Bookman.

State of play: 

Safety-net hospitals face an $8 billion cut to Medicaid add-on payments in the absence of a government funding package.

  • The cuts to so-called disproportionate share hospital payments originate from the Affordable Care Act.
  • Congress has postponed the pay reductions more than a dozen times, but the most recent delay expired on Tuesday and Congress hasn’t signaled if or when it will step in.

The add-on payments are made quarterly, so hospitals may not feel immediate effects, even if Congress doesn’t further delay the cuts, according to the American Hospital Association. But state Medicaid agencies could let the cuts take place if they think lawmakers’ standoff will continue indeterminately, per AHA.

  • The uncertainty “really impacts that predictability and reliability as it relates to funding,” said Leonard Marquez, senior director of government relations and legislative advocacy at the Association of American Medical Colleges.
  • If the cuts do take effect, it would significantly hamper hospitals’ ability to care for their communities, Beth Feldpush, senior vice president of advocacy and policy at America’s Essential Hospitals, told Axios in a statement.

Additionally, two long-running programs that give pay bumps to rural hospitals expired on Wednesday.

  • One program adjusts Medicare payment upward for rural hospitals that discharge relatively few patients.
  • The other gives increased reimbursement rates to rural hospitals that have at least 60% of patients on Medicare.
  • They were designed to keep care available in communities that might otherwise not be able to support a hospital.
  • Both programs have expired in the past, only to be brought back to life with claims paid retroactively.

Zoom out: 

Hospital industry groups have also been urging Congress to extend enhanced Affordable Care Act tax credits, which have become a flashpoint in the shutdown fight. Democrat lawmakers have so far refused to pass GOP-led funding proposals that don’t include a full extension of the subsidies.

What they’re saying: 

AHA is urging Congress to find a bipartisan solution and reopen the government, a spokesperson told Axios.

  • “Patient care doesn’t go away with the loss of coverage and the loss of funding,” said Lisa Smith, vice president of advocacy and public policy for the Catholic Health Association.
  • “I just don’t know how long that’s going to be sustainable for our facilities that are really already operating on the margins.”

Hospital expense growth is outpacing revenue

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https://www.healthcarefinancenews.com/news/hospital-expense-growth-outpacing-revenue

Hospital financial and operational performance could be threatened by a trend showing a growth in the cost of expenses outpacing that of revenue, according to a Kaufman Hall National Hospital Flash Report.

“While performance has generally been strong this year, profitability has decreased slightly over the past few months. Bad debt and charity care also continue to rise. In addition, operating margins for health systems are about one percent lower than hospital margins. This points to potential challenges for hospitals and health systems to weather future uncertainty,” said Erik Swanson, managing director and group leader, Data and Analytics, at Kaufman Hall.

WHY THIS MATTERS

What the report shows is that hospital performance has softened in recent months. 

While patient volumes and revenues are trending upward, bad debt and charity care are also elevated.

Expense growth is outpacing revenue growth, with non-labor expenses  putting pressure on hospitals. Supplies are up 26% compared to 2022, and drugs costs are up 31% compared to 2022.

Margins have improved over prior years, though there has been some softening in recent months. Given an uncertain future outlook, many hospitals are taking steps to build long-term resiliency, the report said.

Operating margins in August 2024 were 4.6% but fell to 5% in December 2024. Starting in January, margins jumped to 6.9% and remained in the 6.2% range until this past June, when they fell to 5.5% and in July, 5.3%.

Profitability is down from 48% in July 2024 to 27% this year.

THE LARGER TREND

Data for the report came from more than 1,300 hospitals sampled on a monthly basis from Strata Decision Technology.

The sample of hospitals for the report represents all types of hospitals in the United States, from large academic to small critical access hospitals, geographically and by bed size.

Kaufman Hall, a Vizient company, provides advisory services and management consulting.

CVS Health’s Omnicare files for Chapter 11 bankruptcy

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https://www.healthcarefinancenews.com/news/cvs-healths-omnicare-files-chapter-11-bankruptcy

The financial challenges are linked to a lawsuit charging the PBM with filing more than 3.3 million false claims from 2010 to 2018.

CVS Health subsidiary Omnicare has filed for Chapter 11 bankruptcy due to issues related to its recent litigation in the U.S. District Court for the Southern District of New York, the company said this week.

A federal judge in July determined that Omnicare had illegally charged the U.S. government for prescription drugs and ordered it to pay more than $948 million in damages and penalties. Omnicare filed more than 3.3 million false claims between 2010 and 2018, in violation of the False Claims Act, according to court documents.

The original lawsuit had been filed by a former Omnicare pharmacist, who had accused the pharmacy benefit manager (PBM) of improperly billing Medicare, Medicaid and the Tricare military program for more than $135 million in drugs that weren’t covered.

The Chapter 11 agreement is for $110 million in debtor-in-possession (DIP) financing. Once the court gives the go-ahead, the company expects the financing to provide enough liquidity for it to meet its ongoing business obligations during the process.

Omnicare said it will use the Chapter 11 process to address other financial challenges facing the long-term care pharmacy industry and will potentially mull restructuring options. That could include anything from standalone restructuring to outright sale.

The company said it will seek authorization from the court to continue its operations during the Chapter 11 proceedings. To that end, it said it would meet its commitment to stakeholders, including continuing to pay for employee wages and benefits. 

Omnicare said it also expects to pay vendors and suppliers in full, under normal terms, for goods and services.

Responding to Trump Healthcare 2.0: Key Takeaways after 8 Months

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Responding to Trump Healthcare 2.0: Key Takeaways after 8 Months

The Trump 2.0 administration is 8-months into its MAGA agenda. Summer has passed. Schools are open. Congress is in session. Campaign 2026 is underway. The economy is slowing and public sentiment is dropping.

For U.S. healthcare, it’s more bad news than good. The challenges are unprecedented. Most organizations—hospitals, medical groups, drug and device makers, infomediaries and solution providers, insurers, et al—are defaulting to lower risk bets since the long-term for the health system is unclear.

The good news is that the health system in the U.S. is big, fragmented, complex, expensive (5% CAGR spending increases thru 2034) and slow to change. It is highly regulated at local, state and federal levels, labor intense (20 million) and capital-dependent (government funding, private investment)—a trifecta nightmare for operators and goldmine for private investors who time the system for shareholders effectively. And it operates opaquely: business practices are hidden from everyday users and bona-fide measures of its effectiveness not widely applied or accepted.

The bad news is its long-term sustainability in its current form is suspect and its short-term success is dependent on adapting to key tenets in Trump Healthcare 2.0:

  • Trump Healthcare 2.0 is about reducing federal healthcare spending so federal deficits appear to be going down to voters in the mid-term election (November 3, 2026). Healthcare, which represents 27% of federal spending is an attractive target since a significant majority of all voters (especially MAGA Republicans) are dissatisfied with its performance and think is wasteful and inefficient. It views healthcare as a market where less government, more private innovation achieves more.
  • The effect of One Big Beautiful Bill Act cuts to Medicaid and marketplace subsidies and imposition of Make America Healthy Again dogma in CMS, CDC, FDA and FCC are popular in the MAGA base while problematic to states, hospitals, physicians and insurers whose business practices and clinical accountability will be more closely scrutinized.
  • The federal courts—SCOTUS, 13 circuit and 94 district courts– will support Trump Healthcare 2.0 policy changes in their decisions favoring state authority over federal rules, enabling White House executive orders and administrative actions against challenges and departmental directives that encourage competition, price transparency and cost reduction.
  • The FTC and DOJ will pro-actively pursue actions that reverse/disable collusion, horizontal and vertical consolidation in each sector deemed to raise prices and lower choices for consumers.

In the administration’s posturing for the mid-term election November 3, 2026, it’s assumed the economy and prices will be THE major issues to voters: healthcare affordability, housing costs and food prices will get heightened attention as a result.  Thus, every healthcare organization board and leadership team should revisit short and long-term strategies, since traditional lag indicators re: utilization, regulations, structure, roles, responsibilities and funding are decreasingly predictive of the future.

Though every organization is different, there are 6 takeaways that merit particular attention as C suites and Boards re-evaluate strategies and timing:

  1. Monitor the entire economy. The healthcare is 18% of the GDP; 82% of commerce falls outside its domain. Appropriations for healthcare compete with education, defense and public safety and health; household spending for healthcare competes with housing, food and transportation costs. The healthcare dollar is not insulated from competing priorities. If, as expected, the economy slows due to slowdowns in the job market and in housing, and if cuts to marketplace subsidies are enacted, healthcare spending will quickly and significantly drop though utilization will increase.
  2. Follow clinical innovations carefully. Understand bench to bedside obstacles. The FDA will authorize 50-60 novel drugs and biologics and over 100 AI-enabled devices this year. Some will fundamentally alter care management processes; all will change costs and pricing. Those with short-term cost-reduction potential require consideration first. Given increased margin pressures, capital and operating budgets will reflect a more cautious and risk averse posture.
  3. Manage fixed costs (more) aggressively and creatively. Direct costs reduction is not enough. Facilities and administrative functions are fair game and for outsourcing, partnerships and risk sharing with suppliers, vendors, advisors and even competitors.
  4. Don’t underestimate price transparency. Prices matter. Consumers and regulator demand for price transparency from drugmakers, hospitals and insurers are inescapable. Justification and verification will be critical to trust and utilization.
  5. Navigate AI strategically. The pace and effectiveness of Ai-enabled solutions will define winners and losers in each segment. And private capital—investors, partners—will bring those solutions to market.
  6. Don’t discount public opinion. Consumer sentiment about the economy is low and dissatisfaction with the health system is high and increasing. Understanding root causes and initiating process improvement are starting points.

As I head back to DC today, the FY26 federal budget is in suspense as the GOP-controlled Senate and House debate a final version to avoid a shutdown next week.  Physicians, public health and state officials will digest last week’s ACIP vaccine advisory recommendations and issue their own directives and insurers will file their plan revisions for 2026.  That’s what lawmakers and trade groups will be watching.

But at the kitchen tables in at least 40% of America’s households, unpaid healthcare bills from hospitals, labs, doctor offices and set-aside cash for over-the-counter remedies and prescription drug co-pays are on the agenda. Student loan payments, escalating costs for groceries, housing, rent and child care and an unstable employment market are squeezing families. Budgeting for healthcare is more problematic for them than anything else because price are not accessible and charges are not known until after services are performed.

Trump Healthcare 2.0 is not transformational: it is transactional. It aims to simplify the system and facilitate changes certain to disrupt the status quo. Its locus of control, is Main Street USA. not Pennsylvania Ave, in DC.

The Future of ACA Coverage Hangs on a Washington Deal

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https://healthcareuncovered.substack.com/p/the-future-of-aca-coverage-hangs?utm_source=post-email-title&publication_id=255152&post_id=173957513&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

Lawmakers weigh extending enhanced subsidies that keep plans affordable while grappling with calls to curb hidden costs and insurer abuses.

There’s some real political drama brewing in Washington, and the outcome will determine whether millions of Americans will be able to keep their health insurance. I’m not talking about Medicaid or Medicare but the 24 million Americans who are not eligible for either of those programs or even for coverage through an employer.

As the federal government barrels toward its Sept. 30 shutdown deadline, Democrats say they won’t vote to keep the government open unless Republicans agree to extend the subsidies that make coverage available through the Affordable Care Act (ACA) marketplace more affordable for individuals and families who get their health insurance there. At the heart of the debate are the so-called “enhanced” subsidies that were put in place during the Covid pandemic. Those subsidies are set to expire at the end of this year. If they do, more than 90% of people who buy coverage in the ACA marketplace will have to pay a whole lot more for it next year.

Republicans, who control Congress, are split. Hardliners want the subsidies to disappear, but a growing faction of GOP lawmakers see the political peril staring them in the face: Millions of their constituents will receive marketplace renewal notices with eye-popping premium hikes as open enrollment begins Nov. 1, and they likely will blame Republicans for those hikes.

Virginia Republican Rep. Jen Kiggans has even taken the lead on a one-year extension bill, warning that “people will get a notice that their health care premiums are going to go up by thousands of dollars” if Congress doesn’t act. A July GOP poll found that letting the subsidies lapse could tank Republicans’ midterm prospects.

As Senate Majority Leader Chuck Schumer put it:

“The Republicans have to come to meet with us in a true bipartisan negotiation to satisfy the American people’s needs on health care or they won’t get our votes, plain and simple”.

Why extending the subsidies matters — but why it shouldn’t be a blank check

When I was an insurance executive, I used to champion high deductible health plans and steep out-of-pocket costs, arguing Americans needed to have “more skin in the game.” The industry sold Congress on that logic during the ACA debates – and it worked. Lawmakers not only set the law’s out-of-pocket (OOP) maximum high from the start, they also – at the insurance industry’s insistence – let it rise to new heights every year.

The result? That cap ballooned 67% between 2014 and 2025. And in 2026, the max will reach $10,600 for an individual and $21,200 for a family. That means most ACA plans leave people exposed to thousands of dollars in medical bills even after they’ve paid their premiums. And the people who get burned the most are those with chronic illnesses or sudden serious diagnoses – or even an accident.

If the subsidies vanish, the nonpartisan Congressional Budget Office projects about 4 million people will drop out of ACA plans in the first year. People will get sicker. Some will die sooner.

But let’s not kid ourselves: Simply shoveling more taxpayer money into insurers’ coffers is not a solution. These same companies are already awash in tax dollars through their private Medicare Advantage plans, Medicaid contracts, and even the VA.

The concessions for subsidy extension

Here’s the tradeoff Congress should demand: Insurers can get the subsidies (which go straight to them), but only if they agree to put some of their own skin in the game. And they have plenty of it. Just the seven largest for-profit health insurers reported more than $71 billion in profits last year.

Specifically, lawmakers should:

  • Cap out-of-pocket costs on ACA plans. Apply the same protections Congress just gave to Medicare beneficiaries: a $2,000 cap on prescription drugs AND a $5,000 overall cap on annual out-of-pocket costs. That would be a seismic shift, bringing ACA plans closer to what Americans think they’re buying when they pay for “coverage.”
  • Crack down on prior authorization abuse. Prior authorization delays and denials are rampant in ACA plans, just as they are in Medicare Advantage. If taxpayers are footing the bill, patients should get timely care — not insurer red tape.
  • Fix ghost networks. Insurers routinely list doctors who aren’t actually accepting new patients or aren’t even in-network. Regulators should require accurate, verified networks so people can actually see the providers they’re paying to have access to.

My former Big Insurance colleagues will howl and launch a massive propaganda campaign when these ideas gain traction, claiming they’ll have to jack up premiums even more than they usually do if they have to be even slightly more patient-friendly. I know because I used to plan and execute the industry’s fear-mongering campaigns. Don’t fall for it this time or ever again. Those seven giant insurers took in more than 1.5 trillion dollars and shared more than $71 billion of their windfall with their already rich shareholders last year alone. Yes, the industry’s lobbying will be intense. But if members of Congress do the right thing, they won’t just preserve coverage for millions, they will finally start forcing insurers to compete on value, not just premium retention.

What comes next

If Democrats are going to play hardball by threatening a government shutdown if Republicans don’t extend these ACA subsidies, they should make it count. Americans need relief not just on premiums, but on the crushing costs hidden behind their insurance cards.

Republicans, meanwhile, should recognize the political reality. Roughly 45% of people who buy their own insurance (most through the ACA marketplace) identify as Republican or lean Republican. Letting their premiums spike by more than 75% next year would be political malpractice.

We can extend these subsidies without simply enriching insurers. We can make coverage both affordable and usable.