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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
“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.
If Trump and RFK Jr. want to crack down on deceptive health care ads, they should start with the avalanche of misleading Medicare Advantage commercials blanketing seniors every fall.
The Trump administration announced last week it plans to crack down on prescription drug advertising. In reporting on the news, the New York Times quoted former Food and Drug Administrator David Kessler as saying that what the administration is proposing “would in essence remove direct-to-consumer advertising from television.”
In a press release, Health and Human Services Secretary Robert F. Kennedy Jr. said the intent is to “shut down that pipeline of deception and require drug companies to disclose all critical safety facts in their advertising.”
You’ll get no argument from me that companies of any kind, especially those that make money in health care, should not be allowed to deceive the public by withholding critical facts.
What I do argue – and hope this administration and Democrats in Congress will agree on – is that this crackdown should also include so-called Medicare Advantage ads.
As we get close to “open enrollment” season, the period of time every fall when seniors and people with qualifying disabilities can choose between Traditional Medicare and one of many private health insurance plans, we already are beginning to see deceptive ads by Big Insurance to once again lure Medicare beneficiaries into their often deadly money machine.
You’ve seen the ads: happy, smiling seniors playing tennis or pickleball and gabbing about “free” groceries and dental benefits they presumably get because of the generosity of their MA plans. Nowhere – ever – have you seen or heard anything in any of those ads about the potentially lethal side effect of signing up for those plans. But the terrifying truth is that an untold number of MA enrollees have gone to early graves because their insurers delayed or outright denied a test, treatment or medication their doctors said they needed. Or because they couldn’t even find a high-quality doctor, hospital or skilled nursing facility close to their home – or even far away for that matter. Many centers of excellence – hospitals and clinics that are renowned for things like cancer and cardiac care – are not in many MA plans’ “networks.”
Seniors need to be told how limited MA networks can be – and that Traditional Medicare, by contrast, doesn’t even have networks. Traditional Medicare doesn’t restrict you to certain providers. That’s because almost all doctors, labs, clinics and hospitals participate in Traditional Medicare.
And seniors need to be told explicitly in ads what prior-authorization is and how it can affect them. And they need to be told about how much money they’ll have to pay out of their own pockets if they knowingly or unknowingly get care from an out-of-network provider. They also need to be told that their MA plans can and do drop doctors and hospitals from their networks during the course of a given year and that more and more physician practices and hospitals – including world-class facilities like Johns Hopkins and M.D. Anderson and the Cleveland Clinic – have dropped out of many MA networks. And they need to be told that their MA plan could very well dump them next year by “exiting” the community they live in, as Humana, Aetna, UnitedHealth and other plans did this year and plan to do next year.
Why, Mr. Trump and Mr. Kennedy, are MA insurers not held to the same standards as pharmaceutical companies? And how fast can you put standards in place to assure us that MA ads don’t omit “critical facts?” You know as well as anyone that between October 15 and December 7 (the open enrollment period) you won’t be able to turn on your TV or scroll through your social media feeds without seeing multiple MA ads that blatantly lie by omission.
Researchers at the nonpartisan KFF found TV ads hawking MA plans ran 650,000 times during the 2022 open enrollment period. You can expect that number will be surpassed this year because Medicare Advantage has become such a cash cow for Big Insurance. As just one example, UnitedHealthcare, a division of the biggest health care conglomerate in the world, got more than 75% of its revenue last year from Medicare and other taxpayer-supported programs. Now you know why those deceptive ads are so ubiquitous, and why private insurers lie with impunity.
Speaking of UnitedHealthcare, it co-brands its MA plans with AARP, which gives that corporation a kind of good seal of approval. AARP has received billions of dollars from UnitedHealthcare over the years as part of the relationship. To its credit, AARP called attention to that KFF study on its website just before the 2023 open enrollment season started. That’s notable, but AARP needs to do much more. So I am hereby calling on AARP to join us in demanding that both the Trump administration and Congress take immediate action to make sure MA ads cannot leave out essential information. Truthful MA ads are just as important as drug company ads. Maybe even more so when you consider all the potential harms MA plans inflict on seniors and people with disabilities every single year.
They were late filing a claim. Now I’m in collections.
Hey there —
I get a lot of questions from An Arm and a Leg listeners. Sometimes I write back with advice. So: Why not share? Welcome to an experiment: Our occasional advice column!
Maybe let’s call it: Can they freaking DO that?!?
Disclaimer: I don’t know everything, I’m not a lawyer, and I haven’t done new reporting for this. It’s the kind of advice I’d give a friend.
Or, in this case, a listener named Chris.
Q: Can they charge me $47,000 for their mistake?
I had an emergency appendectomy. The hospital rang me up for about $47,000 — but, insurance denied the claim because they say the hospital didn’t submit it to them until eight months after the fact — beyond their 60-day “timely filing” limit in the contract [between the hospital and the insurance company].
After that, the hospital started billing me.
I have spent hours and hours on the phone over the last two months with various people in their billing department. I followed their recommendation to send a letter, and an email, requesting that they write off these charges since it was their billing error — and nothing has been fixed.
Now they’ve sent me to collections.
What do I do now? Do I sue? How can I sue? Help!
Chris
A: Don’t run for a lawyer (yet)
Chris, thanks so much for writing in — and YIKES.
I think you’re zeroing in on the right question, which is: How can you demand redress?
Put another way: Where’s your leverage? How can you get them to see they’re better off dealing with you in good faith, versus… getting themselves in actual trouble?
I don’t think you need to run out and hire a lawyer. But there’s a bunch of homework to do.
Start with your insurance
Because it’s their job to protect you from getting unfairly harassed like this.
Sounds like the hospital promised the insurance company — in a contract — to submit bills within 60 days.
That contract probably does not say, “and if we’re late on that, we’ll just go after Chris.”
No. I’m thinking it says, “If we don’t get you that bill on time, that’s just too bad for us.”
So: the insurance company has a right — and an obligation to you — to tell the hospital where to stick that bill.
So ask your insurance company: What’s *supposed* to happen if a hospital doesn’t submit a bill on time? What’s their process for getting things fixed? Can they tell the hospital to just knock it off, already?
And while you’ve got them, you may as well ask: If the hospital had submitted the bill on time, what would you have been on the hook for?
…because when this gets fixed, you’ll probably owe that amount.
If your insurance won’t cough up the info and won’t go to bat for you, get help. If you get your insurance through work, call HR. Otherwise, ring up your state insurance regulator.
Dispute the bill in collections
Meanwhile, you’ve got the hospital siccing a collection agent on you. That’s not right.
Notify the collection agency that you’re disputing this debt, as described in this recent First Aid Kit — which includes a dispute-letter template. (While you’re at it, send a copy to the hospital billing office.)
Document your efforts to get the hospital to see the light on this. If you’ve written to them, attach copies of previous correspondence. If it’s been all phone calls, document them: You called them on this day, at that time, etc.
If you haven’t been logging calls — keeping a set of notes with times, dates, who you spoke to, and where things stood at the end of the call — start now.
Let the hospital know: They could get in trouble
Your state’s consumer-protection office might take a dim view of what the hospital is doing here.
I mean, I’m not a lawyer, but I’m pretty sure there are laws against chasing you for money you don’t actually owe.
Look up that consumer-protection office here. If you can talk with someone there, great. If your state’s consumer-protection laws are easy to find online (and understand), also great.
(If not, consider calling your local public library. Seriously, librarians are amazing at helping dig up useful information.)
Once you’ve got some sense of your legal rights — from the hospital’s contract with the insurance company, from your state’s consumer-protection laws…
Start writing letters. To the hospital, to the collection agency — saying: Let’s get this settled before I have to complain to regulators about this. (When you write to the hospital, maybe cc the General Counsel’s office.)
Let them know how you expect things to go, and indicate — subtly but clearly —that you know what kind of trouble they could be in and why.
The person who gets the letter has to make the decision: “Do I ignore this, or do I bring it to my manager?”
And if I was that person and [the letter-writer] was very calm — just saying, “this is happening, and it’s starting to look like this [legal issue] and I want this to be handled according to your processes,” that’s the part I’d find alarming.
If I was that person, I would either make sure it’s handled according to my processes, or give my manager a heads up: that there’s a grownup who seems somewhat irritated.
Somehow, we never actually used that tape, even though I think about it all the time — until now. Thanks for the chance to bring it back.
Health care inflation hit a three-year high last month, in the latest sign that workers could soon be juggling big premium increases with higher prices for groceries, clothing and other items subject to President Trump’s tariffs.
WHY IT MATTERS:
Medical prices have been steadily rising, but corporations projecting increases of 9% or more next year are no longer willing to insulate their employees from the pain.
DRIVING THE NEWS:
Medical care costs rose 4.2%, compared with an overall inflation rate of 2.9%, the Bureau of Labor Statistics said Thursday.
Consulting firms are forecasting that the trend will carry over into next year, even without sector-specific tariffs on drugs.
Mercer recently forecast that employers are facing their highest health benefit cost increase in 15 years. Beyond higher demand for health services, other factors include rising wages in the medical sector.
On Wednesday, professional services firm Aon reported that U.S. employer health care costs are projected to rise 9.5% in 2026, or more than $17,000 per employee. It blamed rising prescription drug costs and higher health care utilization.
“The overlooked reality is that employers continue to act as a stabilizing force,” Farheen Dam, head of Health Solutions for North America at Aon, said in a statement. “They absorb the bulk of the increase while making smart, targeted adjustments that protect employees and preserve plan value.”
BETWEEN THE LINES:
The rising costs are being felt beyond workplace insurance; Affordable Care Act marketplace plans are seeking median 18% premium hikes for next year, according to KFF. That’s the largest rate change insurers have requested since 2018, they said.
The insurers cite high-priced drugs, increasing labor costs and general inflation, as well as concern about the expiration of enhanced subsidies that could hike out-of-pocket premiums an average of 75% for over 20 million enrollees.
THE BOTTOM LINE:
Inflation is hitting health care harder than the broader economy, setting up a painful year ahead for both patients and employers.
It’s unclear whether the biggest health insurance price hikes in years could lead to deferred care, or more people opting to go uncovered.
The Trump administration has confirmed it will once again expand access to so-called short-term health insurance — which all too often fall into the category of “junk” insurance. They’re usually skimpy policies that do not meet the coverage requirements of the Affordable Care Act and that were largely reined in (again) by the Biden administration because of how devastating they can be for families with pre-existing conditions – or anyone who gets badly injured or sick.
Calling many of these plans junk insurance isn’t hyperbole. They’re called that because they are not designed to protect policyholders from financially crippling medical expenses. They’re built to look affordable upfront but in many cases leave people dangerously exposed when they need care most. Leslie Dach of Protect Our Care summed it up plainly:
“Short-term junk plans are allowed to deny coverage, drop people when they get sick, and exclude life-saving coverage such as prescription drugs and hospital care, leaving families with sky-high bills and nowhere else to turn”
Short-term, limited-duration insurance (STLDI) plans were originally designed as a stop-gap for people who needed catastrophic-protection between jobs. But starting in 2018, the ACA rules were loosened to allow these plans to last for a year and be renewed for up to three years, which inspired health insurers to jump in and begin heavily marketing them online as if they were real alternatives to traditional, comprehensive insurance.
Before the ACA, junk plans were not just short term, they were everywhere. The ACA outlawed much of what these STLDI plans do including refusing to cover basic medical services, excluding people with preexisting conditions, and spending only a fraction of policyholders’ premium dollars on care. There is a reason that the provisions preventing those abuses were some of the most popular in the ACA: They led to better care and lower costs for millions. These STLDI plans don’t cover needed care and only spend an average of 65% of the money patients pay in premiums on medical care, with some plans spending as little as 34% on care and keeping the other 66%. Expanding plans that do not adhere to patient protections in the ACA is not the way to fix our health care system.
As American Lung Association explains, most of these plans keep premiums low by cutting out what most of us think of as essential care: prescription drugs, hospital stays, mental health treatment, maternity care and more. They often cap how much they’ll pay in benefits, leaving families on the hook for huge bills if someone gets sick or injured. Unlike plans that comply with patient protections under the Affordable Care Act, they can deny coverage to people with asthma, diabetes, cancer or any other pre-existing condition.
Anti-junk plan history
Simply put, junk plans are the snake oil of the health insurance business, and advocates, including myself, have been sounding the alarm for years. On June 24, 2009, I testified before the Senate Committee on Commerce, Science, and Transportation and, for the first time, blew the whistle on how my old industry confuses their customers and dumps the sick. But I wasn’t alone on the dias. Nancy Metcalf, then senior program editor at Consumer Reports, sat to my left. Metcalf had much to say about junk insurance plans. In her written testimony, she wrote:
“As consumers, we are trained to look for a bargain. Buying a car or a flat-screen TV, we’re proud if we can get it for less than our friend paid. People think insurance works the same way. They never consider that if they are 55 years old, and have diabetes and heart disease, that no insurer could possibly stay in business selling them a comprehensive policy for $150 a month. That’s why so many of the junk policies we’ve looked at are marketed as “affordable.”
“Yet another scheme to shift costs to consumers and away from insurers and employers is to enroll them in limited-benefit plans. The big insurers have spent millions of dollars acquiring companies that specialize in these plans, often providing such skimpy coverage that some insurance brokers refuse to sell them.”
“There are so many restrictions built into limited-benefit contracts that there is always reduced risk to insurers, who appear only too happy to sell these policies to people who don’t realize they could be ill served.”
“Limited-benefit plans, coupled with high deductibles, represent the ultimate in cost shifting and are among the fastest growing health insurance products. They’re the future that insurers had in mind as they fought bitterly against reform that could jeopardize their profits.”
This isn’t the right move
The Biden administration tried to put an end to this dangerous bait-and-switch. In March 2024, the Centers for Medicare & Medicaid Services (CMS) issued rules to once again limit short-term plans to a maximum of four months and require clearer disclosures so people would know what they were buying. As CMS Administrator Chiquita Brooks-LaSure put it:
“By making short-term plans truly short term, people will be more informed about the risks associated with these types of coverage and their options for comprehensive coverage.”
The Trump administration’s move to undo that rule means these plans can proliferate again and, as Protect Our Care noted in a statement, more than 100 million Americans with pre-existing conditions could be put at risk as insurers are once more allowed to deny coverage or drop people when they get sick.
This isn’t about politics. No matter who is in office, promoting junk plans is a bad idea. Families can get ruined when they think they’re covered — only to find out in the middle of a crisis that what they thought was a real insurance plan won’t pay for what they need. Short-term, limited benefit plans are the riskiest bet you can place in the U.S. health insurance casino. The house will always win.
Evernorth’s new latest investment in Shields Health Solutions ties its parent company, Cigna, even closer to hospitals and the fast-growing specialty drug market.
Regular readers will know that we’ve harped on UnitedHealth Group’s vertical integration into care delivery, pharmacy benefits and nearly every other corner of the health care landscape. But UnitedHealth isn’t the only company guilty of vertical integration: Cigna is playing the same game.
Shields partners with more than 80 health systems and over 1,000 hospitals and clinics across nearly all 50 states. That reach gives Cigna another way to weave itself into the daily operations of hospitals – and the lives of millions of patients.
From insurer to health services conglomerate
When I was an executive at Cigna, the company was primarily what’s known as a third-party administrator. We sold some health and group life policies as an insurer, but our bread-and-butter was administering health benefits for large employers. Our “value proposition” back then was keeping costs under control — at least as we defined them. Evernorth didn’t exist. At the time, to me, the idea that Cigna would one day be pouring billions into specialty pharmacies and drug distributors would have seemed far-fetched.
In 2018, though, Cigna bought the huge pharmacy benefit manager Express Scripts. And soon after that, it created Evernorth to oversee its non-insurance health services operations, not only its PBM but also specialty pharmacies, and now investments like Shields. Cigna is no longer just deciding what care to cover, but it’s increasingly involved in how drugs are dispensed and priced. In fact, the company now gets the great majority of its revenues from the pharmacy business. Of the $195 billion in revenues Cigna took in last year, $154 billion came from Evernorth.
The same old consolidation story
According to Reuters, Evernorth’s investment in Shields was structured as preferred stock and, according to the company, won’t affect its 2025 profit forecast. But make no mistake: This is part of the same playbook we’ve seen before from companies Americans have been led to believe are primarily insurers.
UnitedHealth buys physician practices, rehab centers, and home health companies. CVS Health owns Aetna, the PBM Caremark, and a sprawling pharmacy business. Cigna, for its part, is also planting stakes across the drug supply chain. In addition to Express Scripts, it also owns Accredo, one of the nation’s largest specialty pharmacies, and now Shields.
Cigna CEO David Cordani, who I once worked with during my time at Cigna, framed the deal as a way to “deliver exceptional care across healthcare settings – from home to physician’s office or clinic, to hospital”. In a statement on Evernoth’s website, Cordani said:
“Demand for specialty medications continues to grow at an accelerated pace, and Evernorth is uniquely positioned to serve the rapidly expanding number of individuals living with complex and chronic conditions and the doctors who care for them.”
Specialty medications, as Cordani mentioned, are among the fastest-growing and most expensive parts of the pharmaceutical market and include medications for cancer, multiple sclerosis, rheumatoid arthritis and other complex and chronic conditions. Research indicates that spending on specialty drugs will make up more than half of all U.S. drug spending in the coming years.
That’s why Evernorth already owns Accredo. Now, by getting into bed with Shields, Evernorth is tying itself even closer to the hospitals and health systems that rely on specialty pharmacies to serve patients.
What can be done about it?
When insurers buy into the businesses that are supposed to compete for contracts (like pharmacies and physician practices) it gives the insurer almost all the cards because they are able to both set the rules of the game and profit from it. Competition suffers, and costs for patients and employers can rise.
Fortunately, Washington is starting to wise up to these tactics. The Patients Over Profits Act, soon to be introduced by Sen. Jeff Merkley (D-Oregon) and Rep. Val Hoyle (D-Oregon), would prevent insurers from owning most doctors offices and medical providers. In addition, The Patients Before Monopolies Act, introduced by Sens. Elizabeth Warren (D-Massachusetts) and Josh Hawley (R-Missouri), prevents pharmacy benefit managers and/or health insurers from owning pharmacies. Given a divided Congress, these bills wont be easy to pass, but seeing strange bedfellows like Warren and Hawley taking the lead brings me great hope.
I saw firsthand during my years inside Cigna how Wall Street’s pressure for constant growth drives these decisions.Insurers and their shareholders aren’t satisfied with premiums alone. They want to control the entire pipeline — from the doctor’s prescription pad to patients’ wallets.
So the next time you hear about vertical integration in health care, don’t just think about UnitedHealth Group. Remember that Cigna is moving just as aggressively. With this latest $3.5 billion bet, it’s clear that the insurer I once worked for has transformed into something much larger — and far concerning — than the insurance company most folks believe it to be.
Since the murder of UnitedHealth executive Brian Thompson in New York City December 4, 2024, attention to health insurers has heightened. National media coverage has been brutal. Polls have chronicled the public’s disdain for rising premiums and increased denials. Hospitals and physicians have amped-up campaigns against prior authorization and inadequate reimbursement. For many health insurers, no news is a good news day. Here’s ChatGPT’s reply to how insurers are depicted:
“Media coverage of US health insurers focuses heavily on the challenges consumers face due to high costs, coverage denials, and complicated policies, often portraying insurers as profit-driven entities that hinder care access. Investigations reveal insurers using technology to deny claims and push for denials during prior authorization, while other reports highlight market concentration and the increasing influence of large companies like UnitedHealth Group and Centene. Media also covers the marketing efforts of insurers, particularly for Medicare Advantage plans, and public frustration with the industry. “
In some ways, it’s understandable. Insurance, by definition, is a bet, especially in healthcare. Private policyholders—individuals and employers– bet the premiums they pay pooled with others will cover the cost of a condition or accident that requires medical care. In the 1960’s, federal and state government made the same bet on behalf of seniors (Medicare) and lower-income or disabled kids and adults (Medicaid). But they’re bets.
But the rub is this: what healthcare products and services costs and their prices are hard to predict and closely-guarded secrets in an industry that declares itself the world’s best. Claims data—one source of tracking utilization—is nearly impossible to access even for employers who cover the majority of U.S. population (56%).
Spending for U.S. healthcare is forecast to increase 54% through 2033 from $5.6 trillion to $8.6 trillion— the result of higher costs for prescription drugs and hospital stays, medical inflation, technology, increased utilization (demand) and administrative costs (overhead). Insurers negotiate rates for these, add their margin and pass them thru to their customers—individuals, employers and government agencies. It’s all done behind the scenes.
The public’s working knowledge of how the health system operates, how it performs and what key players in the ecosystem do is negligible. For most, personal experience with the system is their context. We understand our personal healthiness if so inclined or fortunate to have a continuous primary care relationship. We understand our medications if they solve a problem or don’t. We understand our hospitals if we or a family member use them or occasionally visit, and we understand our insurance when we enroll choosing from affordable options that include the doctors and hospitals we like and when we’re denied services or billed for what insurance doesn’t cover.
Today, corporate names like UnitedHealth Group, Humana, Cigna, Elevance, CVS Aetna and Centene are the health insurance industry’s big brands, corralling more than 60% of the industry’s private and government enrollment with the rest divided among 1,149 smaller players. Today, the public’s perception of health insurers is negative: most consider insurance a necessary evil with data showing it’s no guarantee against financial ruin. Today, it’s an expensive employee benefit for employers who are looking for alternative options for workforce stability. And only 56% of enrollees trust their health insurer to do what’s best for them.
Ours is a flawed system that’s not sustainable: insurers are part of that problem. It’s premised on dependence:patients depend on providers to define their diagnosis and deliver the treatments/therapeutics and enrollees depend on insurers to handle the logistics of how much they get paid and when. At the point of service, patients pay co-pays and after the fact, get an “explanation of benefits” along with additional out of pocket obligations. Hospitals and physicians fight insurers about what’s reasonable and customary compensation, and patients unable to out-of-pocket obligations are handed off to “revenue cycle specialists” for collection. Wow. Great system! Mark it up, pass it thru and let the chips fall where they may—all under the presumed oversight of state insurance commissioners who are tasked to protect the public’s interests.
Do insurers deserve the animosity they’re facing from employers, hospitals, physicians and their enrollees? Yes, but certainly some more than others. Facts are facts:
Since 2020, health insurance premium costs have increased 2-4 times faster than household necessities and wages for the average household. Affordability is an issue.
Denials have increased.
Enrollee trust and satisfaction with insurers has plummeted.
And industry profits since 2023 have taken a hit due to post-pandemic pent-up demand, pricey drugs including in-demand GLP-1’s for obesity and increased negotiation leverage by consolidated health systems.
Most Americans think not having health insurance is a bigger risk than going without. But most also think healthcare is fundamental right and the government should guarantee access through universal coverage.
Having private insurance is not the issue: having insurance that ensures access to doctors and hospitals when needed reliably and affordably is their unmet need.
In the weeks ahead, employers will update their employee health benefits options for next year while facing 9-15% higher costs for their coverage. States will decide how they’ll implement work requirements in their Medicaid programs and assess the extent of lost coverage for millions. Insurers who sponsor market place plans suspended by the Big Beautiful Bill will raise their individual premiums hikes 20-70% for the 16 million who are losing their subsidies.
Medicare Advantage (Medicare Part C) insurers will skinny-down the supplements in their offerings and raise premiums alongside Part D increases, And, every insurer will inventory markets served and product portfolio profitability to determine investment opportunities or exit strategies. That’s the calculus every insurer applies every year, adjusting as conditions dictate.
Most private insurers pay little attention to the 8% of Americans who have no coverage; those inclined tend to be smaller community-based plans often associated with hospitals or provider organizations.
Most are concerned about continuity of care for their enrollees: they know 12% had a lapse in their coverage last year, 23% are under-insured and 43% missed a scheduled appointment or treatment due to out-of-pocket costs involved.
And all are concerned about the long-term financial viability of the entire health insurance sector: margins have plummeted since 2020 from 3.1% to 0.8%%, medical loss ratio’s have increased from 98.2% in 2023 to 100.1% last year, premiums increase grew 5.9% while hospital and medical expenses grew $8.9% and so on. The bigger players have residual capital to diversify and grow; others don’t.
Criticism of the health insurance industry is justified for the most part but the rest of the story is key. The U.S. system is broken and everyone knows it. But health insurers are not alone in bearing responsibility for its failure though their role is significant.
The urgent need is for a roadmap to a system of health where the healthiness and well-being of the entire population is true north to its ambition. It’s a system that’s comprehensive, connected, cost-effective and affordable. Protecting turf between sectors, blame and shame rhetoric and perpetuation of public ignorance are non-starters.
PS: Two important events last week weigh heavily on U.S. healthcare’s future:
In Verona, WI, the Epic User Group Meeting showcased the company’s plans for AI featuring 3 new generative AI tools — Emmie for patients, Art for clinicians and Penny for revenue cycle management. Per KLAS, the private company grew its market share to 42% of acute care hospitals and 55% of acute care beds at the end of 2024.
In Jackson Hole, WY, the Federal Reserve Bank of Kansas City’s annual economic symposium where Fed Chair Jay Powell signaled a likely interest rate cut in its September 16-17 meeting and changes to how the central bank will assess employment status going forward.
Healthcare is labor intense, capital intense and 26% of federal spending in the FY 2026 proposed budget. The Fed through its monetary policies has the power and obligation to foster economic stability. Epic is one of a handful of companies that has the potential to transform the U.S. health system. Transformation of the health system is essential to its sustainability and necessary to the U.S. economic stability since healthcare is 18% of the country’s GDP and its biggest private employer.
HENRY KOTULA 