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How children are treated in the One Big Beautiful Bill Act

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How children are treated in the One Big Beautiful Bill Act

“The true character of society is revealed in how it treats its children.”- Nelson Mandela

Elected officials of both parties have proposed new and better government support for families with children. President Trump’s One Big Beautiful Bill Act includes some of these proposals, but overall, because of the law’s benefit cuts for working class and lower-income families, it will likely end up hurting roughly as many families with children as it helps.

  • Parts of the law increase help for families with children: The maximum Child Tax Credit was increased from $2,000 to $2,200 per child; however, the increase remains only partially refundable and thus will not be available to many low-wage working families. In addition, on a much smaller scale and with some questions remaining about its workability in practice, the One Big Beautiful Bill Act (OBBBA) created a new type of child savings, “Trump Accounts,” and a temporary program of $1,000 payments for each child born in President Trump’s presidential term. The adoption credit has also been improved. In each of these provisions, there are further changes that could enable these programs to help more children and more families.
  • However, many of the law’s most substantial changes will reduce help to children, particularly those in working class and poor families. The law imposes new legal and bureaucratic filing requirements to previously bipartisan programs, particularly the Supplemental Nutrition Assistance Program (SNAP, formerly known as “food stamps”) and Medicaid, that will keep many families from getting benefits, including benefits for which they are eligible.
  • Overall, OBBBA will likely end up reducing benefits for roughly as many families as it helps, with the greatest losses concentrated among the least well-off. By 2030 the 40% lowest-income households will experience a net loss on average, and the middle quintile will have roughly no net change; there will be ongoing net gains for the top 40% of households.

This note describes some key changes embedded in OBBBA, some related proposals by Democrats, and some improvements that might be made in the future.

Is child policy becoming bipartisan?

Politicians of both parties, who once made a show of kissing babies, have progressed to making a range of proposals to improve children’s lives and prospects. In some cases, perhaps frustrated by ongoing political polarization, they’ve chosen to support the same or similar approaches, including extra tax credits or actual payments for children and child savings accounts. For example, both Senator Ted Cruz (R-TX) and Senator Cory Booker (D-NJ) have proposed savings accounts be started for every child at birth.

Although the recently enacted OBBBA was in no way bipartisan, it included some proposals endorsed by both Republicans and Democrats. At the same time, however, the Act reduced the scope of the previously bipartisan SNAP safety net program and of Medicaid.

The Brookings Institution

Furthermore, despite claims by representatives of both parties to support working families with children, the changes in OBBBA overwhelmingly help families that are already better off. After the temporary tax benefits end, roughly half of U.S. families will be worse off, with most benefits of the bill going to the top 40% of the income distribution.

Below, we discuss two kinds of assistance for families for children: those that provide immediate resources and those that support saving for children’s futures.

Money for children now: Child income tax credits, baby bonus checks

Congress has subsidized children through the tax code for at least a century, starting with dependent exemptions from income1 and following with the Earned Income Tax Credit in 1975 and the Child Tax Credit (CTC) in 1997. By far the most significant action benefitting some children in OBBBA is an increase in the CTC. However, most low-income children are excluded from these higher benefits. At the same time, the Act would dramatically reduce other previously bipartisan safety net programs that support low-income children, particularly SNAP.

Child Tax Credit

The CTC is a tax credit for families with children. It was originally conceived as an anti-poverty program, though for much of its history most of the CTC’s benefits have gone to middle class or wealthier families. The CTC phases in with earnings and the credit is only partially refundable, meaning that if the credit exceeds a filer’s tax liability, families can receive a portion of the credit as a tax refund. Approximately 60 million children benefit from the current credit. In response to the COVID-19 recession, for one year the credit provided families with as much as $3,600 per child and allowed low-earnings families to get the full benefit, but that expired and the maximum returned to the pre-OBBBA maximum of $2,000. Because of the phase-in and other limitations on refundability, an estimated 17 million children in families with low incomes receive less than the full $2,000-per-child credit or no credit at all.

OBBBA Changes

Under OBBBA, the maximum credit was raised to $2,200 per child and then indexed to inflation. Because the bill did not make any changes to the CTC’s refundability or phase-in with earnings, this change will not benefit any of the estimated 17 million children who were left out under pre-OBBBA law. Furthermore, the act’s increase in the standard tax deduction and other changes will increase the number of children whose families don’t get the full credit.

The Brookings Institution

The OBBBA CTC expansion primarily benefits families with above average income.  As this graph from the The Budget Lab shows, the bottom 40% receive little or no benefit.

Possible Improvements

There are many possible changes to broaden the CTC’s reach and help more children. (See Crandall-Hollick, Maag, & Jha 2025.):

  • CTC “Baby Bonus”: Make the full credit available for all newborns, so that every newborn child’s family would get the full credit for their first year. This could be considered a CTC-based “baby bonus”.
  • Allow full refundability as long as parent earnings are above the minimum ($2,500/year).
  • Start phasing in refundability from the first dollar of parent earnings.
  • Allow full refundability for families with multiple children.

Adoption Credit

Under current law, adoption expenses of up to $17,280 per child can be credited against income taxes. In practice, few families get the full credit because the credit is nonrefundable and few families have an income tax bill greater than this amount.

OBBBA Changes

Under OBBBA2 up to $5,000 of qualified adoption expenses will be refundable, thereby increasing the available adoption credit for approximately 45,000 children per year.3

Possible Improvements

Congress could broaden the benefits of the adoption credit by reducing the total credit and increasing the refundable amount, e.g., reducing the maximum to $12,000 while increasing the refundable amount to $6,000.

Direct cash grants: “Baby Bonuses,” SNAP, etc.

Some observers, concerned about declining birthrates, have proposed a cash payment for newborns soon after birth. Although President Trump has expressed support for a $5,000 “baby bonus”, the administration made no specific proposal and none was included in any version of the OBBBA. (A baby bonus could be implemented via a change in the CTC, as described above.)

Important safety net programs affecting children were cut by OBBBA

There are many federal safety net programs that provide cash or in-kind benefits to families based on having children and the number of children. The largest near-cash program, SNAP, will be cut back very substantially by OBBBA. An Urban Institute report estimated that the SNAP cuts would affect 3.3 million families with children and reduce their benefits by an average of $840 per year.

The Brookings Institution

Money for children’s futures: Baby bonds & Trump child savings accounts

With multiple rationales, policymakers with varying perspectives have concluded that children and their families would benefit from starting life with a nest egg, a savings account to be created early in a child’s life, to be then held and used well in the future for education, homebuying, or other purposes. States, cities, counties, and nonprofits have started programs that both establish child savings accounts and provide a starter contribution to those accounts. According to the Congressional Research Service, over 100 such programs had been started by 2023, in addition to the education savings account programs operated by many states under Section 529 of the Internal Revenue Code.

These programs draw from work in the early 1990s by academic Michael Sherraden which proposed a national program of “Individual Development Accounts” for the poor. This led to local programs in many cities and some states. A similar approach using the term “baby bonds” was proposed by scholars in 2010 as a means to reduce racial gaps in wealth, and this proposal was adapted into the American Opportunity Accounts Act introduced by Senator Cory Booker (D-NJ) in 2018. Under those proposals every child would receive a grant at birth, with additional government grants to children in poorer families in later years. Some child investment programs, such as New York City’s RISE program also incorporate philanthropic gifts.

The approach became bipartisan this year when Senator Ted Cruz (R-TX) proposed that each newborn child receive a one-time $1,000 grant in an “Invest America Account.” Cruz’s rationale was less about reducing wealth disparities and more that such accounts would give children a stake in the future and an understanding of investment markets. In place of ongoing government contributions, he proposed that parents, employers, philanthropies, and others could contribute to the child accounts. The Cruz proposal was, with modifications, adopted in OBBBA.

What are the benefits of child savings accounts?

Advocates of these accounts see several advantages. First, they note with some evidence that having a personal account early in life that can only be accessed later substantially increases a child’s and family’s interest in education and personal betterment. Some believe that these accounts will also improve financial literacy and understanding of the economy and investment.

Other advocates, noting that disparities in wealth are associated with differences in educational opportunities, attainment, and future income and that wide racial differences in wealth persist, believe these programs could reduce wealth disparities at the start of life. The original child savings programs focused on this rationale, with payments or participation incentives that favored the poor.  There is research that finds higher wealth associated with better educational and health outcomes, as well as stronger protection against material hardship following disruptive events, suggesting that policies that facilitate wealth-building could have profound effects.

OBBBA’s Trump Accounts & $1,000 contribution pilot program

OBBBA permits4 the secretary of the Treasury and/or private financial institutions to offer “Trump accounts,” savings accounts for children under 18 that offer some limited tax benefits if invested and not used until age 18. Contributions to these accounts, limited to $5,000 per year from family members, would be taxed as ordinary income. In addition, there is a 10% penalty for withdrawals before age 59½, with certain exceptions for education, home buying, adoption, disaster relief, etc. Contributions are also permitted from employers, up to $2,500 per year, and as part of a general program from government or philanthropies supporting all children in an approved geographic area.

The act also creates a pilot program of $1,000 government grants for any child born in the years 2025-28 (with a Social Security number) if the parent or Treasury elects5 and if there is an account established for that child. Although the government funds to be provided are given only at birth and are generally much smaller than the CTC, if made universally available they will reach some poor families with children that the Child Tax Credit does not.

Will Trump Accounts work?

While both Republicans and Democrats have endorsed at least the outlines of child savings accounts and a universal starting grant, there are many potential supporters who have questioned the design of Trump Accounts as enacted by Congress. A comprehensive review of child savings accounts systems undertaken by the Aspen Institute’s Financial Security Program raised a series of challenges, only some of which were responded to by the Congress. The Aspen publication noted ominously that similar program in the U.K. had been regarded as a failure and had in effect “poisoned the well” so that other efforts were unlikely to be considered for many years. That may have been a warning for Trump accounts.

Making Trump Accounts and the $1,000 per newborn pilot program work will require:

  • Treasury to encourage all new parents to sign up for (“elect”) the $1,000 grant and/or the Treasury can do so itself. OBBBA does not auto-enroll children. It requires either the parent or the Treasury to “elect” newborn participation in the grant program.
  • Treasury to establish and pay for the millions of accounts for all newborns. Although the law permits private financial institutions to establish these accounts, in practice they are unlikely to do so on their own. The administrative costs of setting up millions of individual private accounts will be large and, after receiving the $1,000 initial grant, many families will conclude that they cannot afford further contributions. Private firms will see little benefit in maintaining millions of individual accounts holding $1,000 with little prospect for more contributions. For that reason alone, Treasury will likely need to set up the program at least initially, perhaps by managing the funds in a single investment pool and having the individual accounts administered centrally. Treasury may also have to subsidize at least part of account administrative costs.For those families that can afford additional contributions, the existing nationwide programs of tuition savings accounts (“529 Plans”) are likely to be preferred: Investment earnings within Trump Accounts will be taxed at the ordinary income tax rate (plus a possible 10% penalty unless used for approved purposes), whereas proceeds from 529 plans if used for tuition expenses are not taxed at all.

Possible changes

Since the program has the president’s name on it, Treasury is likely to make every effort to help Trump Accounts succeed and be widely adopted and used. Some changes have already been suggested:

  • Provide additional government contributions for children of less well-off working families. This could be done several ways: Under the approach proposed by Senator Booker, the government could make smaller grants annually to children in families below an income limit. Alternatively, this could be done by allowing a full refund of the Child Tax Credit regardless of income while requiring the increased refund be invested in a Trump Account or something similar.
  • Ensure that child savings don’t penalize other public support. Retirement accounts and tuition assistance 529 program savings are generally not considered assets in setting eligibility for SNAP and other programs, and they are given preferential treatment in determining student loans. Trump Accounts could get similar treatment, as the Aspen Institute working group proposed for early wealth building policies.
  • Consolidate the many different tax-favored savings accounts into a single account type. (Muresianu & Cluggish, 2025) Since the Trump accounts are in some respects tax-disadvantaged compared to 529 school savings and also to several retirement accounts, a way to ensure the success of the effort might be to incorporate those accounts into the Trump account program.  

What’s the right balance between helping children now versus saving for the future?

Unsurprisingly, there are differences of opinion whether additional resources should be devoted to immediate financial relief (using the CTC or a child grant) or instead to child savings accounts and wealth building for the longer term. There are advocates of both approaches and both have been shown to benefit children and families. However, there isn’t yet enough experience with child savings accounts to form judgments about the appropriate balance of resources between them.

We can do better

Given the broad public support to help children and families with children, elected officials from both parties will claim their efforts do so. As the distinctly non-bipartisan experience with OBBBA shows, however, many programs fall short of the rhetoric: overall, OBBBA seems likely to harm as many families with children as it helps.

Future bipartisan efforts can and should do better, supporting all families with children, including those who are more in need. 

UnitedHealth CEO Says Company is Cutting Thousand of Doctors Out of Network to Boost Profits

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https://healthcareuncovered.substack.com/p/unitedhealth-ceo-says-company-is?utm_source=post-email-title&publication_id=255152&post_id=177888241&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

“Value-based care” in UnitedHealth’s Optum division apparently means fewer doctors for fatter margins.

UnitedHealth Group announced last week that it plans to cut thousands of doctors from its network, a move CEO Stephen Hemsley said will increase profits for the country’s richest health care conglomerate.

UnitedHealth assembled a network of nearly 90,000 physicians across the country as it bought hundreds of physician practices, began managing the Medicaid program in many states and became the biggest Medicare Advantage company. It also owns one of the nation’s largest pharmacy benefit managers, Optum Rx.

Of those 90,000 doctors, the company says fewer than 10,000 are currently directly employed by UnitedHealth. The company has been gobbling up a broad range of medical facilities in recent years, buying or creating nearly 2,700 subsidiaries and gaining direct control or affiliation with 10% of doctors working in the U.S. in the process.

The announcement by Hemsley came during a third-quarter earnings call with investors last week, when UnitedHealth announced it made $4.3 billion in profit in the last three months by generating revenues of $113 billion.

Read more here on how they did that. Spoiler alert: It involves raising health care premiums and collecting billions more from the Medicare Trust Fund and seniors.

Hemsley said the company’s health care services division, Optum Health, needed to consolidate its physician rolls to improve its bottom line.

He passed questions about how that will be done to Optum’s CEO Patrick Conway, who said too many doctors in the network weren’t aligned with UnitedHealth’s business model, which he called “value-based care.”

“We are moving to employed or contractually dedicated physicians wherever possible,” Conway said.

Overseeing an empire that offers health insurance, pharmacy benefits and doctors who provide care and write prescriptions, UnitedHealth has become America’s third-richest company behind Walmart and Amazon. There are 29.9 million Americans enrolled in UnitedHealthcare’s commercial plans, 8.4 million in its Medicare Advantage plans and 7.5 million in state-run Medicaid programs.

In 2024, the company brought in more than $400 billion in revenue, according to its financial filings.

Americans’ health care premiums are expected to rise drastically in 2026 after climbing as much as 6% on average this year compared to 2024.

UnitedHealth’s decision to remove doctors from networks means that many of its patients will have to find new, in-network physicians unless they change their insurers.

UnitedHealth isn’t alone in taking steps to trim its medical expenses to boost its bottom line. Both CVS Health, which owns Aetna, the PBM CVS Caremark and more than 9,000 retail pharmacies, and Cigna, which owns the PBM Express Scripts, also told investors they are implementing plans to improve earnings next year.

CVS Health is just behind UnitedHealth at No. 5 on the country’s Fortune 500 list, bringing in nearly $373 billion in revenue last year. Cigna is 13th with $247 billion in revenue.

Healthcare’s Biggest Blindspot: Household Financial Insecurity

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Healthcare’s Biggest Blindspot: Household Financial Insecurity

The U.S. health industry revolves around a flawed presumption: individuals and families are dependent on the health system to make health decisions on their behalf. It’s as basic as baseball and apple pie in our collective world view.

It’s understandable. Consumers think the system is complex. They believe the science on which diagnostics and therapeutics are based requires specialized training to grasp. They think health insurance is a hedge against unforeseen bills that can wipe them out. And they think everything in healthcare is inexplicably expensive.

This view justifies the majority of capital investments, policy changes and competitive strategies by organizations geared to protecting traditional roles and profits. It justifies guardianship of scope of practice limits controlled by medical societies because patients trust doctors more than others.  It justifies pushback by hospitals, insurers and drug companies against pro-price transparency regulations arguing out-of-pocket costs matter more. It justifies mainstream media inattention to the how the health system operates preferring sensationalism (medical errors, price sticker shock, fraud) over more complicated issues. And it justifies large and growing disparities in healthcare workforce compensation ranging from hourly workers who can’t afford their own healthcare to clinicians and executives who enjoy high six figure base compensation and rich benefits awarded by board compensation committees.

It’s a flawed presumption. It’s the unintended consequence of a system designed around sick care for the elderly that working age populations are obliged to fund. Healthcare organizations should pivot because this view is a relic of healthcare’s past. Consider:

  • Most consumers think the health system is fundamentally flawed because it prioritizes its business interests above their concerns and problems.
  • Most think technologies—monitoring devices, AI, et al– will enable them to own their medical records, self-diagnose and monitor their health independently.
  • And most –especially young and middle age consumers—think their healthcare spending should be predictable and prices transparent.

In response, most organizations in healthcare take cautious approaches i.e. “affordability” is opined as a concern but defined explicitly by few if any.  “Value” is promised but left to vague, self-serving context and conditions. “Quality” is about affiliations, capabilities and processes for which compliance can be measured but results (outcomes, diagnostic accuracy, efficacy, savings, coverage adequacy, et al) — hardly accessible. And so on.

For starters, the industry must address its prices, costs and affordability in the broader context of household discretionary spending. Healthcare’s insiders are prone to mistaken notions that the household healthcare spend is somehow insulated from outside forces: that’s wrong. Household healthcare expenditures constitute 8.3% of the monthly consumer price index (CPI); housing is 35.4%, food is 13.6% and energy is 6.4%. In the last 12 months, the overall CPI increased 2.9%, healthcare services increased 4.2%, housing increased 3.6%, food increased 3.2% and energy costs increased only 0.2%. In that same period, private industry wages increased 1.0% and government wages increased 1.2%. Household financial pressures are real and pervasive. Thus, healthcare services costs are complicit in mounting household financial anxiety.

The pending loss of marketplace subsidies and escalating insurance premiums means households will be expected to spend more for healthcare. Housing market instability that hits younger and lower-middle income households hardest poses an even larger threat to household financial security and looms large in coming months. Utilization of healthcare products and services in households during economic downturns shrinks some, but discretionary spending for health services—visits, procedures, tests, premiums, OTC et al—shrinks substantially as those bills take a back seat to groceries, fuel, car payments, student loan debt, rent/mortgage payments and utilities in most households.

Healthcare organizations must rethink their orientations to patients, enrollees and users. All must embrace consumer-facing technologies that empower individuals and households to shop for healthcare products and services deliberately. In this regard, some insurers and employers seem more inclined than providers and suppliers, but solutions are not widely available. And incentives to stimulate households to choose “high value” options are illusory. Data show carrots to make prudent choices work some, but sticks seem to stimulate shopping for most preference-sensitive products and services.

The point is this: the U.S. economy is slowing. Inflation is a concern and prices for household goods and necessary services are going up. The U.S. health industry can ill-afford to take a business-as-usual approach to how our prices are set and communicated, consumer debt collection (aka “rev cycle”) is managed and how capital and programmatic priorities are evaluated.

Net Promoter Scores, Top 100 Recognition and Star Ratings matter: how organizations address household financial pressures impacts these directly and quickly. And, as never before, consumer sentiment toward healthcare’s responsiveness to their financial pressures is at an all-time low. It’s the imperative that can’t be neglected.

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.

Providence Inches Closer to Breakeven in Q2, But Reckons With ‘Polycrisis’

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https://www.healthleadersmedia.com/ceo/providence-inches-closer-breakeven-q2-reckons-polycrisis

The nonprofit health system narrowed its operating loss while continuing to grapple with financial and policy pressures as it progresses towards profitability.

KEY TAKEAWAYS

Providence cut its operating loss in the second quarter to $21 million, improving from a $123 million loss a year ago.

Revenue rose 3% year-over-year to $7.91 billion, driven by higher patient volumes and better commercial rates.

The health system faces ongoing “polycrisis” challenges, including rising supply costs, staffing mandates, insurer denials, and looming Medicaid cuts, which have already prompted layoffs, hiring pauses, and leadership restructuring.

Providence made promising strides toward financial sustainability in the second quarter as higher patient volumes helped trim an operating loss that has weighed heavily on its balance sheet.

Yet the Renton, Washington-based health system warned that a compounding set of external pressures, which it labeled a “polycrisis,” still poses formidable challenges to its mission and future.

For the three months ended June 30, the nonprofit reported an operating loss of $21 million, equating to an operating margin of –0.3%, representing a marked improvement from the $123 million loss (–1.6%) posted over the same period in 2024. Compared with the previous quarter, the gain was even starker as Providence trimmed its deficit by $223 million. Through the first six months of the year, the health system had an operating loss of $265 million (-1.7%).

Revenue growth was fueled by higher patient volumes and improved commercial rates, Providence highlighted. Operating revenue rose 3% year-over-year to $7.91 billion as inpatient admissions (up 3%), outpatient visits (up 3%), case mix–adjusted admissions (up 3%), physician visits (up 8%), and outpatient surgeries (up 5%) all contributed.

On the expense side, Providence managed a 2% rise in operating costs to $7.93 billion, thanks largely to productivity gains, including a 43% reduction in agency contract labor. However, supply costs swelled by 9% and pharmacy expenses jumped by 12% year-over-year.

Providence, along with the healthcare industry at large, faces what CEO Erik Wexler called a “polycrisis” due to a mix of inflation, tariff-driven supply pressures, new state laws on staffing and charity care, insurer reimbursement delays and denials, and looming federal Medicaid cuts, especially from the One Big Beautiful Bill Act, which the health system said “threatens to intensify health care pressures.”

Those factors are significantly influencing hospitals’ and health systems’ decision-making. Providence has made staffing adjustments that include cutting 128 jobs in Oregon earlier this month, a restructuring in June that eliminated 600 full-time equivalent positions, a pause on nonclinical hiring in April, and leadership reorganization since Wexler took over as CEO in January.

Accounts receivable is another area that has been indicative of headwinds, with Providence noting that while it improved in the second quarter, it “remains elevated compared to historical trends.”

Even with the roadblocks in its path, Providence is working towards profitability after being in the red for several years running.

“I’m incredibly proud of the progress we’ve made and grateful to our caregivers and teams across Providence St. Joseph Health for their continued dedication,” Wexler said in the news release. “The strain remains, especially with emerging challenges like H.R.1, but we will continue to respond to the times and answer the call while transforming for the future.”

Self-dealing: Illegal in Most Industries, Rampant in Health Insurance

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https://healthcareuncovered.substack.com/p/self-dealing-illegal-in-most-industries?utm_source=post-email-title&publication_id=255152&post_id=171376851&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

Self-dealing is illegal in banks, real estate, and investment firms, but in health insurance, it’s not only legal, it’s widespread. Large insurers have spent decades consolidating the U.S. health care system, acquiring medical practices, pharmacies, and pharmacy benefit managers, all while sidestepping rules meant to protect patients and taxpayers.

For example, UnitedHealth Group has 2,694 subsidiaries, as documented in the Center for Health and Democracy’s Sunlight Report on UnitedHealth Group. Within this conglomerate, there are 589 clinician practice locations across 32 states acquired between 2007 and 2023. UnitedHealth Group also has 24 subsidiary pharmacy benefit managers and over 30 subsidiary pharmacies. Data and insider accounts suggest that UnitedHealth Group and other vertically integrated insurers engage in self-dealing to increase profits. The ways these subsidiaries interact closely resembles self-dealing practices that are prohibited by law in other industries, such as banking, real estate, and investment firms.

As Dr. Seth Glickman and I have explained in earlier pieces, when a health insurer owns or controls medical practices, pharmacy benefit managers, or pharmacies, it can circumvent medical loss ratio (MLR) regulations. MLR rules require insurance companies to spend 80–85% of premium dollars on medical costs, leaving the remainder for administrative fees and profits. Unitedhealth Group, for instance, reportedly pays its own subsidiary providers above-market rates for medical services. These payments count as “medical costs” under MLR rules, yet the subsidiaries retain the excess as profit. Similarly, when a patient uses Optum Rx, a UnitedHealth Group subsidiary, or a subsidiary pharmacy, the fees added by the PBM are counted as medical costs, even though they are retained as profit by the parent company.

In banking, such actions are expressly prohibited. Consider a bank CEO who owns a real estate development company and seeks a loan for a risky project. If the bank lends to the CEO’s company at a below-market interest rate, the loan violates federal law and could trigger millions in fines as well as civil and criminal charges for both the CEO and the bank. This scenario parallels UnitedHealth Group’s current operations. In both cases, customer money (depositor funds in a bank; premium dollars in insurance) is used to funnel profit to insiders or affiliates, bypassing the market discipline that governs arm’s-length transactions.

Real estate law similarly prohibits self-dealing. Imagine a real estate agent hired to sell a client’s home who secretly buys the property through an affiliate at a lower price than the market reflects. By underrepresenting the home’s value, the agent enriches themselves at the client’s expense. This violates state real estate laws and common law fiduciary duties. The parallel in Insurance is clear: insurers pay inflated prices to their owned practices, driving up care costs and premiums. In both cases, the fiduciary is using client assets (property or premium dollars) to generate hidden profits for themselves or their affiliates, avoiding fair-market competition.

Investment advisers are also prohibited from similar practices. If you hire a broker to get the best price for a stock trade, the broker cannot quietly route the trade to an affiliate at a worse price so the affiliate profits. Even small losses per trade scale into substantial gains for the broker’s affiliate, all at the client’s expense. These actions violate the Investment Advisers Act of 1940, the Securities Exchange Act of 1934, and SEC rules when proper disclosure or consent is not obtained. Similarly, insurers use premium dollars to channel profits to subsidiaries instead of relying on competitive market pricing.

The stark parallels between self-dealing in banks, real estate, and investment brokerages, which Congress regulated decades ago, and health insurance are damning. Health insurance conglomerates have built empires on paying themselves to the detriment of patients and taxpayers. Congress must act to regulate this type of self-dealing in insurance as it does in other industries.

Moreover, the depth of insurer control over the patient care system necessitates regulations to prevent vertical monopolies, where insurers dominate every stage of care delivery.

From Budget Battles to Consumer Backlash: Paul Keckley on the Future of U.S. Health Care

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The U.S. health care industry is approaching a critical inflection point, according to veteran health care strategist Paul Keckley. In a candid and thought-provoking keynote at the 2025 Healthcare Marketing & Physician Strategies Summit (HMPS) in Orlando, Keckley outlined the challenges and potential opportunities health care leaders must navigate in an era of unprecedented economic uncertainty, regulatory disruption, and consumer discontent.

Drawing on decades of policy experience and his signature candid style, Keckley delivered a sobering yet actionable assessment of where the industry stands and what lies ahead.

Paul Keckley, PhD, health care research and policy expert and managing editor of The Keckley Report

Health care now accounts for a staggering 28 percent of the federal budget, with Medicaid expenditures alone ranging from the low 20s to 34 percent of individual state budgets. Despite its fiscal significance, Keckley points out that health care remains “not really a system, but a collection of independent sectors that cohabit the economy.”

In the article that follows, Keckley warns of a reckoning for those who remain entrenched in legacy assumptions. On the flip side, he notes, “The future is going to be built by those who understand the consumer, embrace transparency, and adapt to the realities of a post-institutional world.”

A Fractured System in a Fractured Economy

Fragmentation complicates any effort to meaningfully address rising costs or care quality. It also heightens the stakes in a political climate marked by what Keckley termed “MAGA, DOGE, and MAHA” factions, shorthand for various ideological forces shaping health care policy under the Trump 2.0 administration.

Meanwhile, macroeconomic conditions are only adding to the strain. At the time of Keckley’s address, the S&P 500 was down 8 percent, the Dow down 10 percent, and inflationary pressures were squeezing both provider margins and household budgets.

“Economic uncertainty is not just about Wall Street,” Keckley warns. “It’s about kitchen-table economics — how households decide between paying for care or paying the cable bill.”

Traditional Forecasting Is Failing

One of Keckley’s key messages was that conventional methods of strategic planning in health care, based on lagging indicators like utilization rates and demographics, are no longer sufficient. Instead, leaders must increasingly look to external forces such as capital markets, regulatory volatility, and consumer behavior.

“Think outside-in,” he urges. “Forces outside health care are shaping its future more than forces within.”

He encourages health systems to go beyond isolated market studies and adopt holistic scenario planning that considers clinical innovation, workforce shifts, AI and tech disruption, and capital availability as interconnected variables.

Affordability and Accountability: The Hospital Reckoning

Keckley pulls no punches in addressing the mounting criticism of hospitals on Capitol Hill, particularly not-for-profit health systems. Public perception is faltering, with hospital pricing increasing faster than other categories in health care and only a third of providers in full compliance with price transparency rules.

“Economic uncertainty is not just about Wall Street. It’s about kitchen-table economics — how households decide between paying for care or paying the cable bill.”

“We have to get honest about trust, transparency, and affordability,” he says. “I’ve been in 11 system strategy sessions this year. Only one even mentioned affordability on their website, and none defined it.”

Keckley also predicts that popular regulatory targets like site-neutral payments, the 340B program, and nonprofit tax exemptions will face intensified scrutiny.

“Hospitals are no longer viewed as sacred institutions,” he says. “They’re being seen as part of the problem, especially by younger, more educated, and more skeptical Americans.”

The Consumer Awakens

Perhaps the most urgent shift Keckley outlines is the redefinition of the health care consumer. “We call them patients,” he says, “but they are consumers. And they are not happy.”

Keckley cites polling data showing that two out of three Americans believe the health care system needs to be rebuilt from the ground up. Roughly 40 percent of U.S. households have at least one unpaid medical bill, with many choosing intentionally not to pay. Among Gen Y and younger households, dissatisfaction is particularly acute.

“[Consumers] expect digital, personalized, seamless experiences — and they don’t understand why health care can’t deliver.”

These consumers aren’t just passive recipients of care; they’re voters, payers, and critics. With 14 percent of health care spending now coming directly from households, Keckley argues, health systems must engage consumers with the same sophistication that retail and tech companies use.

“They expect digital, personalized, seamless experiences — and they don’t understand why health care can’t deliver.”

Tech Disruption Is Real

Keckley underscores the transformative potential of AI and emerging clinical technologies, noting that in the next five years, more than 60 GLP-1-like therapeutic innovations could come to market. But the deeper disruption, he warns, is likely to come from outside the traditional industry.

Citing his own son’s work at Microsoft, Keckley envisions a future where a consumer’s smartphone, not a provider or insurer, is the true hub of health information. “Health care data will be consumer-controlled. That’s where this is headed.”

The takeaway for providers: Embrace data interoperability and consumer-centric technology now, or risk irrelevance. “The Amazons and Apples of the world are not waiting for CMS to set the rules,” Keckley says.

Capital, Consolidation, and Private Equity

Capital constraints and the shifting role of private equity also featured prominently in Keckley’s remarks. With declining non-operating revenue and shrinking federal dollars, some health systems increasingly rely on investor-backed funding.

But this comes with reputational and operational risks. While PE investments have been beneficial to shareholders, Keckley says, they’ve also produced “some pretty dire results for consumers” — particularly in post-acute care and physician practice consolidation.

“Policymakers are watching,” he says. “Expect legislation that will limit or redefine what private equity can do in health care.”

Politics and Optics: Navigating the Policy Minefield

In the regulatory arena, Keckley emphasizes that perception often matters more than substance. “Optics matter often more than the policy itself,” he says.

He cautions health leaders not to expect sweeping policy reform but to brace for “de jure chaos” as the current administration focuses on symbolic populist moves — cutting executive compensation, promoting price transparency, and attacking nonprofit tax exemptions.

With the 2026 midterm elections looming large, Keckley predicts a wave of executive orders and rhetorical grandstanding. But substantive policy change will be incremental and unpredictable.

“Don’t wait for a rescue from Washington. The future is going to be built by those who understand the consumer, embrace transparency, and adapt to the realities of a post-institutional world.”

The Workforce Crisis That Wasn’t Solved

Keckley also addresses the persistent shortage of health care workers and the failure of Title V of the ACA, which had promised to modernize the workforce through new team-based models. “Our guilds didn’t want it,” Keckley notes, bluntly. “So nothing happened.”

He argues that states, not the federal government, will drive the next chapter of workforce reform, expanding the scope of practice for pharmacists, nurse practitioners, and even lay caregivers, particularly in behavioral health and primary care.

What Should Leaders Do Now?

Keckley closed his keynote with a challenge for marketers and strategists: Get serious about defining affordability, understand capital markets, and stop defaulting to legacy assumptions.

“Don’t wait for a rescue from Washington,” he says. “The future is going to be built by those who understand the consumer, embrace transparency, and adapt to the realities of a post-institutional world.”

He encouraged leaders to monitor shifting federal org charts, track state-level policy moves, and scenario-plan for a future where trust, access, and consumer empowerment define success.

Conclusion: A Health Care Reckoning in the Making

Keckley’s keynote was more than a policy forecast; it was a wake-up call. In a landscape shaped by economic headwinds, political volatility, and consumer rebellion, health care leaders can no longer afford to stay in their lane. They must engage, adapt, and transform, or risk becoming casualties of a system under siege.

“Health care is not just one of 11 big industries,” Keckley says. “It’s the one that touches everyone. And right now, no one is giving us a standing ovation.”

Success story: Faced with closure five years ago, Florida hospital now in the black

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