As early as today, the House of Representatives is expected to vote on a government funding package (approved by the U.S. Senate last Friday) that includes long-sought reforms to pharmacy benefit managers (PBM) – pharmaceutical middlemen, the biggest of which are owned by just three health insurance conglomerates – that sit between patients and their prescriptions.

None of this happened over night. PBM reform – even in the health care advocacy world – has only recently become a bi-partisan, winning issue. PBMs were largely only known to pharmacists, other middlemen, health-policy wonks and the small but mighty circle of advocates who understood how they squeeze patients and independent pharmacies and funnel profits back to Big Insurance. PBMs began life as intermediaries meant to negotiate lower drug prices on behalf of consumers, but over time their role changed as they huge profit centers for insurers like UnitedHealth, Cigna and Aetna merged with or created their own PBMs – which now control more than 80% of the PBM business in the country.

This monopolistic-evolution captured the attention of policymakers and watchdogs after HEALTH CARE un-covered and reform advocates began to raise the alarm about PBM abuses and profiteering.

The need for PBM reform was one of the reasons I started the Lower Out-of-Pockets (LOOP NOW) Coalition, in 2021. Over the years, the LOOP NOW Coalition, along with its 100 partner organizations, have worked to educate lawmakers about how PBMs restrict access to life-saving medications and contribute to the U.S. medical debt crisis. The coalition has endorsed legislation to ban several PBM business practices, like spread pricing, and to force PBMs to be far more transparent, especially in their dealings with employers that offer health benefits to their workers. Our work also led to an invitation for me to testify at a meeting of the Department of Labor’s Advisory Council on Employee Welfare and Pension Benefit Plans (the ERISA Advisory Council) and to meet with the Federal Trade Commission regarding the vertical integration of big insurers and the need for PBM (and Medicare Advantage) reform.

Through the work of advocates on the ground, things began to shift. What was once a side quest among health-policy activists became something real in Washington because the issue is easy to understand: PBMs have become unneeded profit centers insurers erected between patients and the medicines their doctors say they need.

We came close to reining in the PBM industry in late 2024 when reforms were included in House Speaker Mike Johnson’s first spending package, but they were scrapped after Elon Musk complained about the size and scope of the legislation.. His Tweets prompted GOP leadership to strip out the PBM provisions, even though they had broad bipartisan support in Congress and were backed by many consumer advocates and independent pharmacists. But now, it seems like the PBM language in the current spending package is more locked in. Here’s what the bill will do:

• Change how PBMs get paid in Medicare Part D by moving them away from percentage-based payments tied to high drug list prices and toward flat, transparent service fees — so PBMs no longer profit more when drug prices are higher.
• Require CMS to define and enforce contract terms between PBMs and Medicare Part D plans, giving the agency real authority to police abusive or one-sided arrangements.
• Increase transparency by allowing CMS to track how PBMs pay pharmacies and which pharmacies are included (or excluded) from PBM networks, so regulators can finally see payment patterns and network practices across the system.
• Lock into law existing protections requiring plan sponsors and PBMs to contract with any pharmacy that agrees to their standard terms — as long as those terms are reasonable and relevant — instead of quietly steering business to preferred or affiliated pharmacies.

These are important reforms, although more are needed. We’ll keep you posted on PBM-related efforts not only on Capitol Hill but also at the Department of Labor and in the states.

And the questions I’d ask UnitedHealth Group’s CEO about his company’s ACA pledge.

When I first saw the headline that UnitedHealth Group would “return Obamacare profits to customers in 2026,” my immediate reaction was: Oh good grief.

The timing is just too perfect.

UnitedHealth’s pledge was tucked neatly into prepared testimony from CEO Stephen Hemsley, just hours before he (and four other Big Insurance CEOs) are to be hauled into Congress to testify before two House hearings on health care affordability.

Today, the CEOs will be asked to explain why Americans are paying through the nose for coverage and still getting denied care, trapped in narrow networks and buried under medical debt. As of late, Republican lawmakers — and President Trump himself — have discovered religion on the issue, publicly fuming about high premiums and insurer abuses.

If you’re feeling a little misty-eyed about this sudden burst of corporate altruism, let me save you the trouble. This isn’t a moral awakening. It’s a PR maneuver and narrative control being implemented in real time.

Hail Mary

It’s the corporate version of a quarterback, down by four points, seconds left on the clock, closing his eyes and launching the ball fifty yards downfield, hoping something — anything — miraculous happens before the time runs out. UnitedHealth’s pledge is just a long, desperate PR pass into the end zone, praying lawmakers and reporters will focus on the gesture instead of the business model that allows them to gobble up those dollars in the first place.

It’s worth noting that UnitedHealthcare, while the largest insurer in the country with 50 million health plan enrollees, is actually a relatively small player in the ACA marketplace — about 1 million customers in 2026, compared with roughly 6 million for Centene, according to Politico. This is not UnitedHealth sacrificing a part of its core profit engine. (It doesn’t even disclose how much it makes on its ACA business, but I can assure you it’s a very small part of the more than $30 billion in annual profits it’s been making in recent years.) This is a carefully calibrated concession of a slice of this conglomerate’s business that won’t jeopardize its Wall Street standing, which is what Hemsley cares about most.

As I wrote yesterday, I spent years inside the insurance industry, helping executives shape their public image and get ahead of bad headlines. I know this playbook by heart. When scrutiny spikes, you roll out a “good guy” story. You announce a consumer-friendly initiative and you flood the zone with talking points. You give lawmakers anything they can point to as evidence of “progress,” so the temperature in the room drops just a few degrees. It’s all an optics game, and if I was in my old job I’d probably get a bonus for thinking of a stunt like this.

Reputational damage control

When Hemsley and his Big Insurance buddies sit before Congress, don’t be surprised if he pivots quickly from this show of supposed humility to pointing fingers at everyone else for driving up costs – including hospitals, doctors, drug companies and whoever else. How do I know this? Hemsley said as much in his prepared testimony. His fellow CEOs sang from the exact same hymnbook, written by the best flacks money can buy.

So no, I’m not impressed by UnitedHealth Group’s gesture. And neither should lawmakers.

If UnitedHealth and its peers were serious about affordability, they wouldn’t be waiting until the night before a congressional grilling to dangle a symbolic rebate. They would be opening their books and explaining their pricing algorithms. They’d come clean about how much of our premium dollar goes to care and how much goes to executive compensation, stock buybacks and acquisitions that tighten their grip on the health care system.

This isn’t a gift. It’s a distraction.

And like most Hail Marys, it doesn’t work if you’re already down a whole lot of points. I hope the lawmakers at today’s hearing remember the score.

In light of UnitedHealth Group’s latest move, see below for some questions that I would ask Hemsley if I were in Congress:

• ACA plan and pledge specifics
  • How many people are enrolled in your ACA marketplace plans, and how much total profit are you committing to rebate to them?
  • What were your profits from ACA marketplace plans in recent years?
  • Will you commit to disclosing ACA-specific enrollment and profit figures when you announce 2025 earnings next Tuesday? And how many people dropped coverage after the enhanced ACA subsidies were not renewed?
  • By how much, on average, did you raise ACA premiums because Congress did not renew those subsidies?
• Public money vs. private plans
  • Between 2020–2024, your filings show about $140 billion in operating profits and roughly $894 billion in revenue from Medicare and Medicaid versus $321 billion from commercial plans. Do you agree that about 74% of your revenue now comes from taxpayers and seniors?
  • Given that you have about twice as many people in commercial plans as in Medicare/Medicaid, do you agree the government is paying you far more per enrollee than private customers are?
• Accountability going forward
  • Will you commit to disclosing ACA-specific enrollment and profit figures when you announce 2025 earnings next Tuesday?
  • Will you commit not to raise premiums or fees in your other lines of business to offset the ACA rebates?
  • Will you commit to providing the transparency and granularity needed for the public to verify that this rebate pledge is real and not a PR maneuver?

Rising health care costs are quietly reshaping family life and pushing homeownership, parenthood and financial stability further out of reach for millions of Americans.

The youngest of Millennials will hit 30 years old this year. For them and their older Millennial-counterparts, this is supposed to be the stage of life where people buy homes, have kids and settle into the textbook version of stability. But the reality for far too many Americans is something entirely different. It means delaying marriage, delaying children, delaying homeownership — and adopting pets to save them from college tuitions and pediatric specialists.

It’s not because an entire generation is collectively bucking the way “adulthood” used to be. It’s because the math doesn’t work anymore – and health insurance costs are a huge part of why.

Health care is eating the family budget

According to a new analysis from the Center for Economic and Policy Research (CEPR), the typical working family spent $3,960 on health care in 2024, including premiums and out-of-pocket costs. That’s the median… meaning half of families paid more.

Another striking finding from CEPR is that one in ten working families paid more than $14,800 in a single year on health care expenses. And for many low-income and rural households, health care consumed more than 10% of their entire income.

When the average Millennial earns about $47,034 a year, even the “average” health insurance spending now represents a meaningful slice of take-home pay before rent, student loans or the price of simply existing are even deducted. That threshold forces real tradeoffs: rent or deductible? Daycare or co-pays? Savings or prescriptions?

For young families trying to get started, that tradeoff answers itself.

Families with children spend significantly more on both health insurance and health care than those without. Working families with at least one child spent a median $5,150 per year.

Add that to childcare costs and it becomes clearer why many Millennials are putting off parenthood — or skipping it altogether. Hence the cat that doesn’t need braces or an albuterol prescription.

Health costs and home ownership

Diapers aside, medical bills also directly collide with the ability to own a home.

A recent study published in JAMA Network Open found that adults carrying medical debt were significantly more likely to experience housing instability such as trouble paying rent and mortgage, or evictions and foreclosures. As KFF researchers found, more than 100 million Americans have medical debt, and the vast majority of them have health insurance. It just isn’t adequate coverage because of ever-growing cost-sharing requirements.

That matters enormously for young families and would-be homeowners. Medical debt lowers credit scores, drains savings needed for down payments and makes lenders more hesitant. It’s hard to compete in today’s housing market when your emergency fund got wiped out by an MRI. Or your credit score took a hit because you found a lump.

This is not about lifestyle choices

In part because of these costs, the traditional milestones that once built financial security now often increase financial risk. Health insurance and health care costs are rising faster than inflation and faster than they did for previous generations. That’s why more and more insured families are delaying prescriptions and skipping care because of cost.

These uniquely American costs bleed into career moves, relationships, everything.

Millennials aren’t afraid of commitment. They’re afraid of math that doesn’t add up in large part because of a health care system that continues to be an ever-growing weight that is capable of wiping out savings and reshaping family decisions.

It’s easy to frame these trends as cultural shifts or personal preferences, but the data helps fill in the blanks. It’s not just Millannials facing these issues. Gen Xers and even Baby Boomers (some of whom still have a few years until they cross the Medicare and Social Security finish line) are dealing with budget-eating health care costs and medical debt, too.

When nearly half of adults say they couldn’t afford an unexpected $500 medical bill, it’s not surprising that people hesitate before taking on a 30-year mortgage or the lifelong responsibility of raising a child (or taking that trip to celebrate their retirement for that matter.)

For now, all that can be said is that Millennials’ cats are doing fine. They are benefiting heavily from the status quo. Maybe they have something to do with all of this.

Health insurers are feeling political heat as Republicans try to shape the affordability narrative and counter Democratic messaging on health care costs.

Why it matters: 

President Trump and his allies have been increasingly assailing health plans over costs while seeking to deflect blame for blocking enhanced Affordable Care Act subsidies that help people afford premiums.

• But the administration and Congress have less leverage than they have with drugmakers, and would have to address underlying drivers of health costs to really do something about premiums.

Driving the news: 

House Republicans have called CEOs of five of the largest health insurance companies in back-to-back hearings on Thursday, where they will be pressed on costs of coverage.

• Executives from UnitedHealth, CVS, Elevance, Cigna and Ascendiun will appear before the House Energy and Commerce and Ways and Means committees.
• Energy and Commerce Chair Brett Guthrie (R-Ky.) said on Wednesday the companies cover over half of the insured lives in the U.S., “so everybody’s being affected by the high cost of health insurance.”

Between the lines: 

It’s one thing to bash insurers, but quite another to match the talk with substantive health system changes.

• “I think it’s interesting that they’re adopting some of the anti-insurer, populist rhetoric, but it needs to be backed up with actual policies that hold the health industry to account,” said Anthony Wright, executive director of consumer group Families USA.
• He added that the hearing also should not be used to “distract” from the need to extend the ACA subsidies.

The other side: 

Insurers agree that health care costs are too high, but say they’re the part of health care that’s working to bring costs down. Executives blame high premiums on the prices charged by hospitals and drug companies.

• “Congress is doing its job,” Mike Tuffin, CEO of the insurer trade group AHIP, told Axios when asked about the pressure from Republicans.
• But he added that “a thorough evaluation of the causes of higher premiums clearly demonstrates that it’s the underlying cost of medical care that is the reason that premiums continue to go up.”

What they’re saying: 

Stephen Hemsley, CEO of UnitedHealth Group, will strike a note of contrition in his testimony, saying “like all of you, we are dissatisfied with the status quo in health care,” according to prepared remarks.

• “The cost of health insurance is driven by the cost of health care,” he adds. “It is a symptom, not a cause.”

• Still, Hemsley will say his company will rebate its profits this year from ACA coverage back to consumers, though he notes the company is a “relatively small participant” in that market. It’s unclear how much money will be rebated.
• UnitedHealth became the object of widespread consumer anger just over a year ago, when the killing of CEO Brian Thompson unleashed a wave of social media-fueled rage over coverage denials and other business practices.

The big picture: 

Insurers say they support a range of policies aimed at lowering health care costs by targeting hospitals and drug companies.

• Those include “site-neutral” payment policies to address hospital outpatient billing, efforts to curb hospital consolidation and a crackdown on tactics drug companies use to delay cheaper generic competition.
• But lawmakers have broached other changes that would directly strike health plans, like targeting what many experts say are overpayments in Medicare Advantage, or restricting pretreatment reviews that can lead to denials of care.

What’s next: 

Trump earlier this month said he wanted a meeting with health insurance executives to press them on costs, but nothing is on the schedule and it’s unclear if that will happen.

• Tuffin said he also expects future House hearings on health care costs with other parts of the health care industry besides insurers.
• An Energy and Commerce Committee spokesperson confirmed there’s more to come but declined to provide details.

Yesterday, the Centers for Medicare and Medicaid Services released the latest data on national health expenditures (NHE). The headline number, 7.2 percent growth in 2024, is concerning but hardly a surprise. It follows 7.4 percent growth in 2023. This rate of NHE growth is not sustainable. It exceeds general inflation and growth in the gross domestic product (GDP), pushing the share if GDP devoted to health care spending to 18 percent in 2024; the share of GDP devoted to health care is projected to rise to 20.3 percent by 2033. In fact, these figures may be an underestimate of the fiscal burden of the health care system because spending on some things, such as employer administrative costs, are not captured.

Government policies that shield employers, their workers, those seeking individual coverage and participants in public insurance programs from the financial burden of the health care system can mitigate access and affordability problems from the perspective of those groups. But shifting the financing burden from employers and individuals to taxpayers broadly does not solve the affordability problem and will exacerbate already challenging federal and state fiscal situations. Long term fiscal stability of the system requires addressing the underlying growth in spending, not simply who pays.

What Is Not Driving Spending Growth

Given all the attention to prices and insurer profits, it is important to note that those factors are not the main drivers of spending growth—this time, it’s not the prices, stupid. There was virtually no excess medical inflation (medical inflation above general inflation) for 2023 or 2024. In fact, prices for retail drugs (net of rebates) rose at a rate below inflation. There will certainly be cases of rising prices driving spending, but on average, price growth is not the problem. This does not mean high-priced products and services are not an important component of spending growth, but instead it implies that their contribution to spending growth on average stems from their greater use, not rising prices.

Similarly, non-medical spending by private health insurers, which includes profits, grew at 4.4 percent rate, which is below overall spending growth. As the study notes, the increased medical spending was unanticipated by many insurers, which led to reductions in nonmedical insurance expenditures, the subcategory that includes underwriting gains or losses and thus where profits (or surpluses in the case of non-profit insurers) are recorded.

What Is Driving Spending Growth

The main driver of spending growth is greater volume and intensity of care. Volume refers to the number of encounters (admissions, visits, etc.) and intensity refers to the mix of services (high-cost versus low-cost admissions, shifts from an inpatient to an outpatient setting or from an office to a hospital outpatient department, or the use of expensive vs less-expensive drugs). Most decompositions of health spending growth follow the national health accounts framework, focusing on the sector getting paid (hospital, physicians, retail drugs). This may mask some underlying dynamics related to mix that are important.

Coding Intensity

Payment for health care services is based on service codes and the coding system is dependent on coding patterns. Spending may rise if the care delivered is coded differently, even if the underlying delivery of care is unchanged. There is some evidence from recent years of an uptick in coding for sepsis, greater use of higher acuity evaluation and management codes and use of new Evaluation & Management codes.

The drivers of greater coding intensity are unclear. Coding concerns are not new, but new technologies enabled by artificial intelligence (AI) and ambient scribe technology may be accelerating the trend. Some of the coding may be accurate. But if payment rates are based on earlier coding patterns, the payment rates may not be appropriate. As a result, greater coding intensity increases spending and may add very little clinical value.

AI-Enabled Medical Services

Apart from the role of AI technology in supporting administrative activities such as coding, AI offers great potential to improve the value and efficiency of care. New AI-enabled services, particularly diagnostic services, can better direct care, eliminating unnecessary, potentially harmful, and costly services.

It stands to reason that such tools will lower spending, but realization of that promise depends on how AI services are priced and how providers respond. If the new services are paid for by fee for service, price will likely exceed marginal cost and use may grow beyond what would be optimal. (Because of the potential for quality improvement, the optimal level of use would be above the money-saving level.) Moreover, such tools may require use of other, potentially expensive diagnostic services. For example, AI tools that help diagnose heart disease may require CT-scans that would otherwise not occur. Finally, the productivity gains from AI may free up resources to deliver services that would otherwise not be used.

We are very early in the adoption of AI-based services into the health care system, and it is unlikely that such services contributed significantly to the 2024 spending trend. But going forward, monitoring and evaluating the impact of these services will be a first order concern.

Changes In Health Care Infrastructure, Provider Consolidation And Shifts In Patient Flows

The infrastructure of health care is constantly changing. New outpatient facilities (independent and system-affiliated) are opening and providers are consolidating. Private equity firms have a growing presence in the market. These developments may have important consequences for spending. The shift to lower price settings may lower spending, but integration of physician practices with health systems may raise it because, in general, systems are paid more. Expanding infrastructure may also lead to greater utilization of care. Shifts in patients towards higher-priced providers within sectors (e.g., from low-priced to high-priced hospitals) may also increase spending.

Much of the related policy attention has been focused on antitrust issues and private equity, both of which are important, but the impact of the evolving infrastructure and changing patient flows extends well beyond these issues and remains poorly understood. The key issue is the balance between, on the one hand, efficiency-generating shifts toward lower-priced or better-quality care and, on the other hand, inefficient shifts towards high-priced settings, higher-priced providers within settings, or potentially inappropriate use of services.

Use Of Expensive Products

 A non-trivial, though likely not the dominant, driver of spending growth is the increased use of expensive products. Prescription drugs, both in the retail setting and those covered by the medical benefit, garner the most attention. GLP-1s, used to treat diabetes and obesity, are the sentinel example. Despite declines in prices, increased utilization drove up spending on these medications. Yet other products matter as well, including skin substitutes, whose use has skyrocketed. As with all products and services, though more saliently for expensive ones, the core policy questions involve limiting use to situations where the clinical benefit is sufficient to justify the cost (net of any offsets elsewhere) and restraining prices without unduly hampering innovation. Policies such as greater bundling of similar medications, reforming the Average Sales Price+ 6 percent payment policy for drugs under Medicare Part B. and ensuring value is a cap on price should be explored. CMS has been very active in this area, launching several new financing models, including the GLOBE model, the GUARD model and the Generous model, on top of very active implementation of Inflation Reduction Act policies related to drug pricing. Monitoring the impact of these demonstrations on prices, spending, access and innovation will be important.

Looking Forward

Health care spending growth continued at an unsustainable pace in 2024. Early reports suggest spending growth in 2025 will remain elevated. Such growth challenges policy makers and private payers alike.

Reactions often involve efforts to shift the financial burden to other stakeholders. For example, reductions in the federal share of Medicaid spending (the federal Medicare assistance percentage, or FMPAP) shift funding from the federal to state governments; decreases in marketplace subsidies shift some of the burden to individuals, as do employer increases in employee premium contributions. In some cases, shifting who pays may induce reductions in aggregate spending, but such decreases—for example in the case of reductions from higher out-of-pocket cost sharing—may result in lower use of high value services. Our ultimate goal should be to reduce spending in the least deleterious manner possible.

In that spirit, several options include:

• Focusing on strategies to reduce low-value care and inappropriate coding in fee-for-service settings. The WISeR model and private utilization management programs seek to accomplish this goal. The devil is always in the details.
• Improving designs of alternative payment models (APM) that create incentives for providers to practice efficiently. Benchmark-setting rules and risk adjustment are likely the greatest leverage points, but it is also important to consider APM programs holistically; Maintaining too many constantly evolving APM experiments will likely be counter-productive.
• Regulating areas where markets fail. This may include price regulation (including Medicare fee schedule improvement), standardization to support choice, and simplification of administratively burdensome regulations (including broad revision of programs to improve quality). System simplification should be a guiding principle
• Improving market mechanisms to induce more efficient care-seeking behavior and pricing, which may involve antitrust enforcement, providing better consumer information, improving choice support tools, and creating benefit packages based on the principles of value-based insurance design. But market mechanisms have limits and past efforts have not proven very successful. Thus, pursuit of more efficient markets should not forestall necessary regulation.

The specifics of these strategies will be central to establishing a fiscally sustainable health care system. But the spending growth we have experienced, and will experience in the future, reflect system design choices. Our ability to support access to high-quality care at a cost that is affordable in aggregate will require redoubled efforts to reform both health care financing and delivery.