Tag Archives: Politics

The ACA Subsidy Expiration Will Hit Millions Hard

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, ACA, ACA Premiums, Health Insurance Coverage Adequacy, Health Policy, Healthcare Reform, Underinsured, Uninsured • Tagged , , , , • Leave a comment
https://healthcareuncovered.substack.com/p/the-aca-subsidy-expiration-will-hit?utm_source=post-email-title&publication_id=255152&post_id=170756440&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

When Congress passed pandemic-era enhancements to Affordable Care Act (ACA) premium subsidies in 2021, it wasn’t just a policy tweak — it was a lifeline. But unless lawmakers act, those subsidies will vanish on January 1, 2026.

According to KFF, the average ACA enrollee could see premiums spike 75% overnight. For many, that will mean a choice between things like their health coverage and rent or food. The Congressional Budget Office estimates more than 4.2 million people could lose coverage over the next decade as a result. Below is where the expired subsidies will hurt the hardest:

1. Young adults… and their parents’ wallets

Young people who’ve aged out of their parents’ plans and buy coverage through the ACA marketplaces will see some of the steepest jumps. 

If they decide to forgo coverage, as KFF Health News warns: The so-called “‘insurance cliff’ at age 26 can send young adults tumbling into being uninsured.” 

The parents and families of these young adults could be left scrambling to cover unexpected medical bills — the kind that can derail a family’s finances for years.

2. Main street entrepreneurs

The ACA is the only real option for many small-business owners, freelancers and gig workers. These are the folks that conservatives say we should encourage to build and grow their own businesses who make up the backbone of Main Street. Losing the enhanced subsidies means many will face premiums hundreds of dollars higher per month. Some will be forced to close shop and turn to jobs at out-of-town corporations flush enough to afford to offer subsidized coverage to their workers, a direct hit to local economies.

3. States already in crisis

States aren’t in a position to plug the gap. Politico reports that California, Colorado, Maryland, Washington, and others are scrambling to soften the blow, but even the most ambitious state-level plans can’t replace hundreds of millions in lost federal funding.

And this comes right after Medicaid cuts in the One Big Beautiful Bill Act that will hit hospitals, clinics and low-income communities. In Washington state alone, officials expect premiums to jump 75% when the subsidies expire, with one in four marketplace enrollees dropping coverage. That means more uninsured patients showing up in ERs, less preventive care, and more strain on already struggling rural hospitals.

4. (Already) disappearing alternatives to Big Insurance

The ACA marketplaces aren’t just a safety net for individuals but also home to smaller non-profit and regional health plans that give Americans an alternative to the “Big 7” Wall Street-run insurance conglomerates. These community-rooted plans are already facing financial headwinds from shrinking enrollment and Medicaid funding cuts. When premiums spike in 2026, many could lose enough members to be forced out of the market entirely.

And here’s the real danger: The Big 7 can weather this storm. Their huge market capitalizations, government contracts, pharmacy benefit manager (PBM) divisions and sprawling care delivery businesses give them insulation from ACA marketplace losses. In fact, they may see this as an opportunity to buy up the smaller competitors that fail, which would further consolidate their dominance over our health care system. Or they could just decide to flee the ACA marketplace entirely because the population will skewer sicker and older, creating a death spiral that the big insurers will not want to touch. What little consumer choice exists outside the big corporate insurers could vanish, and even that could disappear.

5. <65 year olds

Perhaps the most vulnerable group will be Americans in their 50s and early 60s who lose their jobs or retire early (often not by choice) and find themselves too young for Medicare but facing incredibly high premiums on the individual market. Under ACA rules, insurers can charge older enrollees up to three times more than younger adults for the same coverage. The enhanced subsidies have been the only thing keeping many of these premiums within reach.

Take those subsidies away, and a 60-year-old who loses employer coverage could see their monthly premium shoot into four figures. For those living off severance, savings or reduced income, choosing to gamble with their health and wait it out until 65 may be the only option.

Congress knows the stakes. Will they act?

Making the subsidies permanent would cost $383 billion over 10 years, which would be a political hurdle for a Congress intent on deep budget cuts. But the cost of inaction is far higher, both in human and economic terms. These subsidies have kept coverage affordable for millions, fueled small business growth, and stabilized state health systems during one of the most turbulent economic periods in recent memory. Without them, the hit to many folks could be a Frazier-level K.O.

But let’s face it — what I’m advocating for isn’t perfect either. The prospect of extending these subsidies raises a question: Should taxpayers be footing the bill for health insurance premiums when insurance corporations are reporting tens of billions in annual profits and paying hefty dividends to shareholders?

The short answer, for now, unfortunately, is yes. Because this is the deck we’ve been dealt and we can’t let Americans fall into medical debt, lose their homes – or their lives. Extending the ACA subsidies is not pretty. But for Americans, it’s just a bob and weave.

ACA premiums set to spike 

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, ACA, ACA Premiums, Deferred Healthcare, Health Insurance Coverage Adequacy, Health Policy, Healthcare Reform, High Premiums, High Prices, Medicaid, Uncompensated Care, Underinsured, Uninsured • Tagged , , , , • Leave a comment

https://nxslink.thehill.com/view/6230d94bc22ca34bdd8447c8ofavw.mnb/3a085f61

People who buy health insurance through the Affordable Care Act (ACA) are set to see a median premium increase of 18 percent, more than double last year’s 7 percent median proposed increase, according to an analysis of preliminary filings by KFF. 

The proposed rates are preliminary and could change before being finalized in late summer. The analysis includes proposed rate changes from 312 insurers in all 50 states and DC. 

It’s the largest rate change insurers have requested since 2018, the last time that policy uncertainty contributed to sharp premium increases. On average, ACA marketplace insurers are raising premiums by about 20 percent in 2026, KFF found. 

Insurers said they wanted higher premiums to cover rising health care costs, like hospitalizations and physician care, as well as prescription drug costs. Tariffs on imported goods could play a role in rising medical costs, but insurers said there was a lot of uncertainty around implementation, and not many insurers were citing tariffs as a reason for higher rates. 

But they are adding in higher increases due to changes being made by the Trump administration and Republicans in Congress. For instance, the majority of insurers said they are taking into account the potential expiration of enhanced premium tax credits. 

Those subsidies, put in place during the COVID-19 pandemic, are set to expire at the end of the year, and there are few signs that Republicans are interested in tackling the issue at all.    

If Congress takes no action, premiums for subsidized enrollees are projected to increase by over 75 percent starting in January 2026, according to KFF. 

But some states are pushing back.  

Arkansas Gov. Sarah Huckabee Sanders (R) on Wednesday called on the state’s insurance commissioner to disapprove the proposed increases from Centene and Blue Cross Blue Shield. The companies filed increases of up to 54 percent and 25.5 percent, respectively, she said.  

“Arkansas’ Insurance Commissioner is required to disapprove of proposed rate increases if they are excessive or discriminatory, and these are both,” Huckabee Sanders said in a statement.

“I’m calling on my Commissioner to follow the law, reject these insane rate increases, and protect Arkansans.”  

As Americans Struggled, Health Insurers Made a Record-Breaking $71.3 Billion in Profits

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Health Insurance Industry, Health Policy, Healthcare Reform, High Premiums, High Prices, Monopoly, Monopoly Behavior, Profit, Profit Margin, Profit Model, Profit Motive • Tagged , , , , • Leave a comment
https://healthcareuncovered.substack.com/p/as-americans-struggled-health-insurers?utm_source=post-email-title&publication_id=255152&post_id=170288533&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

Ahead of my Congressional testimony last week before the Senate HELP committee, I compiled data on the profits, revenues and CEO compensations of big health insurers in 2024. The curiosity from senators on both sides of the aisle signaled, to me, that lawmakers are as interested as I’ve ever seen in the industry’s rampant profiteering.

What I found was that the seven biggest publicly traded health insurance companies collectively made $71.3 billion in profits, up more than half a billion dollars from 2023. All while millions of Americans continued to skip their medications, rationed insulin and delayed care due to insurers’ out-of-pocket demands.

Let’s break it down.

You won’t be surprised to learn that shareholders are not the only ones benefiting from the care-restricting barriers insurers have erected to boost profits. The CEOs of those seven companies took home a combined $146.1 million in 2024 compensation. That’s enough to cover annual premiums for thousands of American families.

Here’s what the top brass made:

Meanwhile, patients across the country report increasing out-of-pocket costs, more aggressive prior authorizations and narrower provider networks. But for these executives, the real measure of success is how high they can push their stock prices and not how many people can afford to see a doctor.

So, What’s Driving the Revenue Surge?

One word: Gouging.

Insurers continued to jack up premiums for their commercial customers and overcharge the government. Despite watchdog warnings, Uncle Sam continues to pour money into private Medicare Advantage plans even as audits and investigations uncover widespread fraud and upcoding. And Medicaid managed care is a gold mine, too. These insurers now dominate state Medicaid contracts and can quietly extract billions through behind-the-scenes ownership of pharmacies, PBMs and providers.

It’s not just health insurance anymore — it’s a monopolized empire.

All that said, to the dismay of shareholders, the big seven insurers have had to admit that so far in 2025, they’ve paid more medical claims than they had expected, which means their profits were down somewhat during the first months of the year. I’ll shed more light on that in a future post. No need for you to shed any tears for them, though, because we’re still talking billions and billions in profits.

So if you’re wondering why your premiums, deductibles and costs at the pharmacy counter keep going up — just look at those 2024 numbers. We all paid more for health insurance and got less for the hard-earned money we had to shovel out for our “coverage.” 

And expect even more financial pain (and difficulty getting the care you need) as these companies do all they can to get their profit margins back to where Wall Street wants them.

Talk Is Cheap: Now Trump Must Deliver On His Healthcare Promises

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Artificial Intelligence, Artificial Intelligence Generative, Artificial Intelligence Investment Funding, Food Health, Health Policy, Healthcare Reform, High Drug Prices, Medicare Drug Price Negotiation, Obesity, Obesity Treatment, Opioid Epidemic, Outcomes, Pharmaceutical Industry, Quality, Quality Measures, Quality of Care, Quality of Life • Tagged , , , , • Leave a comment

https://www.forbes.com/sites/robertpearl/2025/06/09/talk-is-cheap-now-trump-must-deliver-on-his-healthcare-promises/

President Donald Trump has made big promises about fixing American healthcare. Now comes the moment that separates talk from action.

With the 2026 midterms fast approaching and congressional attention soon shifting to electoral strategy, the window for legislative results is closing quickly. This summer will determine whether the administration turns promises into policy or lets the opportunity slip away.

Trump and his handpicked healthcare leaders — HHS Secretary Robert F. Kennedy Jr. and FDA Commissioner Dr. Marty Makary — have identified three major priorities: lowering drug prices, reversing chronic disease and unleashing generative AI. Each one, if achieved, would save tens of thousands of lives and reduce costs.

But promises are easy. Real change requires political will and congressional action. Here are three tests that Americans can use to gauge whether the Trump administration succeeds or fails in delivering on its healthcare agenda.

Test No. 1: Have Drug Prices Come Down?

Americans pay two to four times more for prescription drugs than citizens in other wealthy nations. This price gap has persisted for more than 20 years and continues to widen as pharmaceutical companies launch new medications with average list prices exceeding $370,000 per year.

One key reason for the disparity is a 2003 law that prohibits Medicare from negotiating prices directly with drug manufacturers. Although the Inflation Reduction Act of 2022 granted limited negotiation rights, the initial round of price reductions did little to close the gap with other high-income nations.

President Trump has repeatedly promised to change that. In his first term, and again in May 2025, he condemned foreign “free riders,” promising, “The United States will no longer subsidize the healthcare of foreign countries and will no longer tolerate profiteering and price gouging.”

To support these commitments, the president signed an executive order titled “Delivering Most-Favored-Nation (MFN) Prescription Drug Pricing to American Patients.” The order directs HHS to develop and communicate MFN price targets to pharmaceutical manufacturers, with the hope that they will voluntarily align U.S. drug prices with those in other developed nations. Should manufacturers fail to make significant progress toward these targets, the administration said it plans to pursue additional measures, such as facilitating drug importation and imposing tariffs. However, implementing these measures will most likely require congressional legislation and will encounter substantial legal and political challenges.

The pharmaceutical industry knows that without congressional action, there is no way for the president to force them to lower prices. And they are likely to continue to appeal to Americans by arguing that lower prices will restrict innovation and lifesaving drug development.

But the truth about drug “innovation” is in the numbers: According to a study by America’s Health Insurance Plans, seven out of 10 of the largest pharmaceutical companies spend more on sales and marketing than on research and development. And if drugmakers want to invest more in R&D, they can start by requiring peer nations to pay their fair share — rather than depending so heavily on U.S. patients to foot the bill.

If Congress fails to act, the president has other tools at his disposal. One effective step would be for the FDA to redefine “drug shortages” to include medications priced beyond the reach of most Americans. That change would enable compounding pharmacies to produce lower-cost alternatives just as they did recently with GLP-1 weight-loss injections.

If no action is taken, however, and Americans continue paying more than twice as much as citizens in other wealthy nations, the administration will fail this crucial test.

Test No. 2: Did Food Health, Quality Improve?

Obesity has become a leading health threat in the United States, surpassing smoking and opioid addiction as a cause of death.

Since 1980, adult obesity rates have surged from 15% to over 40%, contributing significantly to chronic diseases, including type 2 diabetes, heart disease and multiple types of cancers.

A major driver of this epidemic is the widespread consumption of ultra-processed foods: products high in added sugar, unhealthy fats and artificial additives. These foods are engineered to be hyper-palatable and calorie-dense, promoting overconsumption and, in some cases, addictive eating behaviors.

RFK Jr. has publicly condemned artificial additives as “poison” and spotlighted their impact on children’s health. In May 2025, he led the release of the White House’s Make America Healthy Again (MAHA) report, which identifies ultra-processed foods, chemical exposures, lack of exercise and excessive prescription drug use as primary contributors to America’s chronic disease epidemic.

But while the report raises valid concerns, it has yet to produce concrete reforms.

To move from rhetoric to results, the administration will need to implement tangible policies.

Here are three approaches (from least difficult to most) that, if enacted, would signify meaningful progress:

  • Front-of-package labeling. Implement clear and aggressive labeling to inform consumers about the nutritional content of food products, using symbols to indicate healthy versus unhealthy options.
  • Taxation and subsidization. Impose taxes on unhealthy food items and use the revenue to subsidize healthier food options, especially for socio-economically disadvantaged populations.
  • Regulation of food composition. Restrict the use of harmful additives and limit the total amount of fat and sugar included, particularly for foods aimed at kids.

These measures will doubtlessly face fierce opposition from the food and agriculture industries. But if the Trump administration and Congress manage to enact even one of these options — or an equivalent reform — they can claim success.

If, instead, they preserve the status quo, leaving Americans to decipher nutritional fine print on the back of the box, obesity will continue to rise, and the administration will have failed.

Test No. 3: Are Patients Using Generative AI To Improve Health?

The Trump administration has signaled a strong commitment to using generative AI across various industries, including healthcare. At the AI Action Summit in Paris, Vice President JD Vance made the administration’s agenda clear: “I’m not here this morning to talk about AI safety … I’m here to talk about AI opportunity.”

FDA Commissioner Dr. Marty Makary has echoed that message with internal action. After an AI-assisted scientific review pilot program, he announced plans to integrate generative AI across all FDA centers by June 30.

But internal efficiency alone won’t improve the nation’s health. The real test is whether the administration will help develop and approve GenAI tools that expand clinical access, improve outcomes and reduce costs.

To these ends, generative AI holds enormous promise:

  • Managing chronic disease: By analyzing real-time data from wearables, GenAI can empower patients to better control their blood pressure, blood sugar and heart failure. Instead of waiting months between doctor visits for a checkup, patients could receive personalized analyzes of their data, recommendations for medication adjustments and warnings about potential risk in real time.
  • Improving diagnoses: AI can identify clinical patterns missed by humans, reducing the 400,000 deaths each year caused by misdiagnoses.
  • Personalizing treatment: Using patient history and genetics, GenAI can help physicians tailor care to individual needs, improving outcomes and reducing side effects.

These breakthroughs aren’t theoretical. They’re achievable. But they won’t happen unless federal leaders facilitate broad adoption.

That will require investing in innovation. The NIH must provide funding for next-generation GenAI tools designed for patient empowerment, and the FDA will need to facilitate approval for broad implementation. That will require modernizing current regulations. The FDA’s approval process wasn’t built for probabilistic AI models that rely on continuous application training and include patient-provided prompts. Americans need a new, fit-for-purpose framework that protects patients without paralyzing progress.

Most important, federal leaders must abandon the illusion of zero risk. If American healthcare were delivering superior clinical outcomes, managing chronic disease effectively and keeping patients safe, that would be one thing. But medical care in the United States is far from that reality. Hundreds of thousands of Americans die annually from poorly controlled chronic diseases, medical errors and misdiagnoses.

If generative AI technology remains confined to billing support and back-office automation, the opportunity to transform American healthcare will be lost. And the administration will have failed to deliver on this promise.

When I teach strategy at Stanford’s Graduate School of Business, I tell students that the best leaders focus on a few high-priority goals with clear definitions of success — and a refusal to accept failure. Based on the administration’s own words, grading the administration on these three healthcare tests will fulfill those criteria.

However, with Labor Day just months away, the window for action will soon close. The time for presidential action is now.

July 2025 Actions are the Turning Point for U.S. Healthcare

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Health Insurance Coverage Adequacy, Health Policy, Healthcare Reform, Medicaid Cuts, Medicaid Funding, Medicare Cuts, State of the Union, Turning Point • Tagged , , , , • Leave a comment
July 2025 Actions are the Turning Point for U.S. Healthcare

July 2025 will be the month U.S. healthcare leaders recognize as the industry’s modern turning point. Consider…

  • On July 4, the One Big Beautiful Bill Act was signed into law setting in motion $960 billion in Medicaid cuts over the decade and massive uncertainty among those most adversely impacted—low income and under-served populations dependent on public programs, 8 to 11 million who used now-suspended marketplace subsidies to buy insurance coverage, and hundreds of state and local health agencies left in funding limbo.
  • On July 15, the Bureau of Labor Statistics reported the June Consumer Price Index rose .3% bumping the LTM to 2.7% (lower than LTM of 3.4% for medical services). Prices have edged up.
  • On July 31, President Trump issued an Executive Order to 17 drug companies ordering them to reduce prices on their drugs by September 29 or else. And CMS issued final rules for FY2026 Medicare payments to hospitals, rehab and other providers reflecting increases ranging from 2.5-3.3% effective October 1.
  • And on the same day, the Bureau of Labor issued its July 2025 jobs report that showed a disappointing net gain of 73,000 jobs plus downward revisions for May and June of 258,000 sparking Wall Street anxiety and President Trump to call the results “rigged” before firing BLS head Erika McEntarfer. Note: healthcare added 55,000 in July—the biggest of any sector and more than its 42,000 average monthly increase.

Collectively, these actions reflect rejection of the health industry by the GOP-led Congress.

It follows 15 years of support vis a vis the Affordable Care Act (2010) and pandemic recovery emergency funding (2020-2021). In that 15-year period, the bigger players got bigger in each sector, investment of private equity in each sector became more prevalent, costs increased, affordability for consumers and employers decreased, and the public’s overall satisfaction with the health system declined precipitously.

For the four major players in the system, the passage of the “big, beautiful bill” was a disappointment. Their primary concerns were not addressed:

  • Physicians wanted relief from annual payment cuts by Medicare preferring reimbursement tied directly to medical inflation. And insurer’ prior authorization and provider reimbursement was a top issue. Status: Not much has changed though adjustments are promised.
  • Hospitals wanted continuation of federal Medicaid funding, protection of the 340B drug purchasing program, rejection of site-neutral payment policies, higher Medicare reimbursement and relief from insurer prior authorization frustrations. Status: Medicaid funding is being cut forcing the issue for states. CMS payment increases for 2026 are lower than operating cost increases. Insurers have promised prior-auth relief but details about how and when are unknown. And Congress posture toward hospitals seems harsh: price transparency compliance, safety event reporting, and cost concerns are bipartisan issues.
  • Insurers wanted sustained funding for state Medicaid and Medicare Advantage programs and federal pushback against drug prices and hospital consolidation. Status: Congress appears sympathetic to enrollee complaints and anxious to address insurer “waste, fraud and abuse” including overpayments in Medicare Advantage.
  • Drug companies oppose “Most Favored Nation” pricing and want protections of their patents and limits on how much insurers, pharmacy benefits managers, wholesalers, online distributors and other “middlemen” earn at their expense. Status: to date, little action despite sympathetic rhetoric by lawmakers. Status: to date, Congress has taken nominal action beyond the Inflation Reduction Act (2022) though 23 states have passed legislation requiring PBMs, insurers and manufacturers to disclose drug prices and 12 states have established Prescription Drug Affordability Boards to monitor prices.

My take:

The landscape for U.S. healthcare is fundamentally changed as a result of the July actions noted above. It is compounded by public anxiety about the economy at home and global tensions abroad.

These July actions were a turning point for the industry: responding appropriately will require fresh ideas and statesmanship. Transparency about prices, costs, incentives and performance is table stakes. Leaders dedicated to the greater good will be the difference.

Expect More Hunger in America with Big New Rips to the Safety Net

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Health Policy, Healthcare Cuts, Healthcare Reform, Hunger, Medicaid, Medicaid Cuts, Medicaid Eligibility, Medicaid Funding, Medicaid Work Requirements, Public Good, Public Health, Public Interest, Public Welfare, Safety Net, Supplemental Nutrition Assistance Program (SNAP) • Tagged , , , , • Leave a comment

https://healthcareuncovered.substack.com/p/expect-more-hunger-in-america-with

The recently passed One Big Beautiful Bill Act, which makes deep cuts to the Medicaid program, also puts the food assistance that 41 million low-income Americans rely on in jeopardy. Many of the families currently getting food provided by  the Supplemental Nutrition Assistance Program (SNAP) stand to lose that support.  

SNAP may well disappear for some families as the federal government moves to trim it. “The cuts are massive and extremely cruel when families need more support, not less,” says Signe Anderson, senior director of nutrition advocacy, at the Tennessee Justice Center in Nashville. 

Government food assistance was established during the Great Depression, but it wasn’t until 1977 that the program became more accessible when the requirement that recipients had to pay for a portion of their food stamps was ended. Throughout its history, foes of the program have tried to dismantle it and may have succeeded as a result of provisions in the bill President Trump signed on July 4. 

The new legislation calls for cutting spending for food stamps by $186 billion through 2034. “Everyone on food stamps will be affected in some way, and many will lose benefits,” Anderson says. “I don’t think the Congress understands the level of necessity in the community for food, health care and mental health treatment, some for the rest of their lives.” 

One major change is being made to work requirements that have historically been part of the Medicaid program, which is administered and partially funded by the states. Anderson points out that under the new arrangements, participants may find the task of enrolling and staying enrolled more onerous. “We see a lot of people cut off already because too many life circumstances make it difficult for them to meet work requirements.”  

Indeed when you look at the changes to SNAP, the first word that might come to mind is ‘draconian.’

To receive benefits those new to the program, and those already on it who are between 55 and 64 and do not have dependent children or who have children 14 and older, will have to prove they work. Or they will have to volunteer at least 20 hours a week or enroll in training programs. Parents of school-aged children will now be required to work.

Some five million people, including about 800,000 children and about a half million adults who are 65 and older, could lose their food benefits.  

The programs the new law targets have been a lifeline for some. Nikole Ralls, a 43-year-old woman in Nashville, who was once a drug addict but now counsels others who need help, says, “I got my life turned around because of Medicaid and SNAP.”  

In a recent memo to state agencies administering the SNAP program, Agriculture Secretary Brooke Rollins said she was concerned about what was described as abuse of the waiver system by states, noting that the new approach for the SNAP program would prioritize work, education and volunteering over what the department characterized as “idleness and excessive spending.” 

Anderson said, “The public doesn’t understand what hunger looks like and are misinformed about how well-run and streamlined the SNAP program is.”   

“Most of the people who can, do work.  We have parents working two and three jobs,” Anderson said. For families in this predicament food banks, which have become default grocery stores, may be of little help.  They, too, are stretched thin. The Wall Street Journal reported food banks across the country are already straining under rising demand, and some worry there won’t be enough food to meet demand.

How Drug Prices Got So Bloated

Posted on by • Posted in Health Policy, Healthcare Reform, Hidden Fees, High Drug Prices, Optum Rx, Pharmaceutical Industry, Pharmacy Benefits Management, Profit, Profit Margin, Profit Model, Profit Motive, Shareholder Expectations, UnitedHealthcare, Wall Street • Tagged , , , , • Leave a comment
https://healthcareuncovered.substack.com/p/how-drug-prices-got-so-bloated?utm_source=post-email-title&publication_id=255152&post_id=169171522&utm_campaign=email-post-title&isFreemail=true&token=eyJ1c2VyX2lkIjo4ODU1Nzg5LCJwb3N0X2lkIjoxNjkxNzE1MjIsImlhdCI6MTc1MzQ0OTUxNiwiZXhwIjoxNzU2MDQxNTE2LCJpc3MiOiJwdWItMjU1MTUyIiwic3ViIjoicG9zdC1yZWFjdGlvbiJ9.duxGPDH1QMjULHWG9_pg6FQdsvj19UocpbArG67oe7Q&r=59t65&triedRedirect=true&utm_medium=email

It’s no secret the brand name prescription drug costs are high. The rising costs have been blamed by health care analysts on kickbacks within the drug supply chain demanded by the federal government, drug distributors (wholesalers), health insurance companies and pharmacy benefit managers (PBMs).

This month we got a look at just how bloated brand-name drug prices have become in the United States thanks to an analysis from the Drug Channels Institute (DCI).

How about $356 billion worth of pure glut in the prescription drug supply chain, according to the analysis by DCI. Simply put, the market price established for these drugs by manufacturers has $356 billion worth of markups that mainly accommodate the financial demands (i.e. kickbacks or rebates) of groups that profit off the prescription drug system in the United States, health insurers and their PBMs in particular.

 And that’s an all-time record.

Why?

Get ready to choke on your popcorn.

In the 1990s the federal government mandated in the Medicaid program that drug manufacturers offer a minimum rebate of 23% off the purchase price of brand name drugs. The feds also mandated that if drug manufacturers offer a better rebate on those drugs to someone else, the government also gets that same rebate.

The thought was no one gets a better deal than the federal government.

Medicaid then began to expand in the 2000s and the rebates and the demands increased.

Rebates expanded again as PBMs continued to gain more control over the drug supply chain. The PBMs now force drug manufacturers to offer significant concessions in order to get on the list of approved medications – known as a formulary – available to patients with health insurance.  

To account for these demands, drug manufacturers set the list price for their brand name drugs with these price concessions baked into the number.

DCI’s analysis found that baking is $356 billion of goodies for health care companies paid for by the government and you.

It’s the same kind of concept as a U.S. popular clothing retailer that displays inflated retail costs on the tags of goods and then right below displaying a lower “sale” price to make the consumer think they got a deal.

Here’s another way of thinking of it: Just like Congress has a lot of “pork” in its spending bills, there’s also a lot of pork in prescription drug costs that have very little to do with anything, other than increase profits for the health care industry.

Though the federal government intended to create a better system for taxpayers back in the 1990s when it demanded rebates in the Medicaid system, it instead created a feeding frenzy for companies in the drug supply chain.

In the year 2000 just a handful of companies in the drug supply chain dotted the Fortune 100 list of most financially successful companies. Today there are four such companies in the top 10.

The Minnesota-based health care conglomerate UnitedHealth leads that pack. The company’s profits have soared in the last two decades largely due to increasing medical costs and prescription drug costs paid by Americans. It has leaped over companies like Exxon Mobile and Apple to become the third largest company in America. Only Walmart and Amazon take in more revenue.

The company employs more than 400,000, including doctors and clinicians and has its own pharmacy benefits manager called Optum Rx.

We reported last month that Americans spent $464 billion last year on prescription drugs. That was also an all-time record, which will likely be set again and again and again until reforms are enacted.

How Health Insurance Monopolies Affect Your Care

Posted on by • Posted in Competition, Competition on Price, Competitive Bidding, Health Insurance Denial, Health Insurance Industry, Health Insurance Pre Authorization, Market Consolidation, Market Failure, Market Power, Market Share, Monopoly, Monopoly Behavior, Profit, Profit Margin, Profit Model, Profit Motive • Tagged , , , , • Leave a comment
https://time.com/7302346/health-insurance-monopolies-patient-care/?utm_source=beehiiv&utm_medium=email&utm_campaign=newsletter-health-matters&_bhlid=b8ef51635479257a1d1d099c9581345a28c94b91

Not long ago, Dr. Richard Menger, a neurosurgeon, was ready to operate on a 16-year-old with complex scoliosis. A team of doctors had spent months preparing for the surgery, consulting orthopedists and cardiologists, even printing a 3D model of the teen’s spine.

The surgery was scheduled for a Friday when Menger got the news: the teen’s insurer, Blue Cross Blue Shield of Alabama, had denied coverage of the surgery. 

It wasn’t particularly surprising to Menger, who has been practicing in Alabama since 2019. Alabama essentially has one private insurer, Blue Cross Blue Shield of Alabama, which has a whopping 94% of the market of large-group insurance plans, according to the health policy nonprofit KFF. That dominance allows the insurer to consistently deny claims, many doctors say, charge people more for coverage, and pay lower rates to doctors and hospitals than they would in other states.

“It makes the natural problems for insurance that much more magnified because there’s no market competition or choice,” says Menger, who in 2023 wrote an op-ed in 1819 News, a local news site, arguing that ending Blue Cross Blue Shield of Alabama’s health insurance monopoly would make people in the state healthier.

Blue Cross Blue Shield of Alabama also has the largest share of individual insurance plans in the state, according to data from the Centers for Medicaid & Medicare Services. Perhaps not coincidentally, Alabama also had the highest denial rates for in-network claims by insurers on the individual marketplace in 2023, according to a KFF analysis: 34%. Neighboring Mississippi, where the majority insurer has less of the market share at 81%, has an average denial rate of 15%.

Alabama is an extreme case, but people in many other states face health insurance monopolies, too. One insurer, Premera Blue Cross Group, has a 94% share of the large-group market in Alaska, and Blue Cross Blue Shield of Wyoming has a 91% market share in that state. In 18 states, one insurer has 75% or more of the large-group health insurance marketplace, according to KFF data.

These monopolies drive up costs, says Leemore Dafny, a professor at Harvard Business School and Harvard Kennedy School who has long studied competition among health insurance companies and providers.

“More competitors tend to drive lower premiums and more generous benefits for consumers,” she says. “There’s a lot of concern from analysts like myself about concentration in a range of sectors, including health insurance.”

Bruce A. Scott, the immediate past president of the American Medical Association, has said that when the dominant insurer in his state of Kentucky was renegotiating its contract with his medical group, it offered lower rates than it had paid six years before. “This same type of financial squeeze play is found nationwide, and its frequency has been exacerbated by health insurance industry consolidation,” he wrote in The Hill in 2023.

What happened to competition? There used to be a lot more regional health insurers, Dafny says. But as costs started to rise, they didn’t have enough leverage to negotiate prices down with providers and stay profitable. As a result, many were happy to be acquired by larger companies. Then hospitals and doctor’s offices merged to get more leverage against the bigger insurers. Now, there’s a lot of concentration among both provider groups and insurers.

“None of this had anything to do with taking better care of patients,” she says. “It had to do with trying to get the upper hand.” 

In a statement to TIME, Blue Cross Blue Shield of Alabama said that it was working to make the prior authorization process more transparent and reverse the requirement of prior authorization for certain in-network medical services. It will attempt to answer at least 80% of requests for prior authorization in near real-time by 2027, it says. (A coalition of major health insurers recently vowed to fix their prior authorization processes under pressure from the federal government.)

The insurer also says it welcomes competition. “We know Alabamians have a choice when it comes to choosing their health insurance carrier and we don’t take that for granted,” a spokesperson said in the statement. In the commercial and underwritten market—which represents the bulk of its business—Blue Cross Blue Shield Alabama competes with four other companies that sell individual, family, and group plans, the company says, and it competes with 68 companies who sell Medicare plans in Alabama. Its success in the state is partly because it sells policies in every county in Alabama, the insurer says, while others do not. 

Other casualties of such a concentrated health-insurance marketplace are rural hospitals and providers. Small rural hospitals are often independent and have not merged with other systems like many of their large urban counterparts, so they have an even harder time negotiating with the one big insurer in the state, says Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, a national policy center that studies health-care costs. That means big insurers will often refuse to cover procedures or pay lower prices for services.

“I’ve had rural hospitals tell me they can’t even get the health plan on the phone,” Miller says.

In the past decade, the Department of Justice has stopped some mergers, but has not been very aggressive at stopping consolidation in the health-care industry, Dafny says. That may be in part because the courts require a high standard of evidence to block a transaction, and the government might have been worried it would have lost whatever cases it brought.

A few factors prevent insurers with a monopoly from driving costs too high, says Benjamin Handel, an economics professor at the University of California, Berkeley who studies health care. One is a regulation called minimum loss ratio that essentially requires insurers to spend a certain share of what they earn from premiums on medical care. Another is that an insurer with a monopoly that angers consumers might attract attention from regulators, he says.

Of course, there’s not a whole lot regulators can do to make a marketplace more competitive. A state could try to incentivize more insurers to enter their states with tax breaks or other sweeteners, but it’s very hard to enter a market and offer low rates right away. The establishment of the health-care marketplaces in the Affordable Care Act allowed new entrants, Dafny says, but many of them did not survive.

Menger, the Alabama doctor, says that he and his colleagues—and therefore their patients—are basically stuck. His staff has to spend 10-15 hours a week negotiating with the insurer to get prior authorizations that sometimes don’t come, even while patients pay higher premiums. 

The teenage boy eventually got approved for the scoliosis surgery, but not after the family went through a lot of stress with postponements and uncertainty. “I think it’s pretty clear that the more competition, the better things are,” Menger says. “This prior authorization nonsense is really hurting patients.”

DOJ Questions UnitedHealth Doctors Re: Medicare Advantage Upcoding

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I’ve been at this for so long and have seen so much. And it’s hard to overstate how significant the latest revelations from The Wall Street Journal are. According to its reporting, the U.S. Department of Justice’s criminal health care-fraud unit is questioning former UnitedHealth Group employees about the company’s Medicare billing practices regarding how the company records diagnoses that trigger higher payments from taxpayers.

For years, independent policy experts and *some* regulators have warned that the private Medicare Advantage program has become a breeding ground for upcoding and tax dollar waste. The tactic being scrutinized by the DOJ is called “upcoding.” Essentially, Medicare Advantage companies have an incentive to “find” new illnesses — even among patients who might not need additional treatment because the more serious the diagnoses, the bigger the government payouts to the company.

According to the Journal, prosecutors, FBI agents, and the Health and Human Services Inspector General have been asking ex-employees about special training for doctors, software that flags profitable conditions, and even bonuses for physicians who recode patient files. One former UnitedHealth doctor told the Journal that prosecutors inquired about pressure to use certain diagnosis codes and bonus pay for certain health care decisions that financially favored UnitedHealth. 

The Journal’s data shows that UnitedHealth’s members received certain lucrative diagnoses at higher rates than patients in other Medicare Advantage plans — billions of extra dollars that ultimately come from taxpayers. In one example, they reportedly pulled in about $2,700 more taxpayer dollars per patient visit when nurses went into seniors’ homes to hunt for additional conditions.

In a statement, UnitedHealth insists they “remain focused on what matters most: delivering better outcomes, more benefits, and lower costs for the people we serve.”

This latest criminal investigation joins at least two other DOJ probes into UnitedHealth’s billing and potential antitrust violations. And it’s yet another reminder that the Medicare Advantage program — which, much to many advocates alarm, now covers more than half of all Medicare enrollees – is desperately in need of real oversight.

If there’s any silver lining, it’s that courageous former employees are speaking up. They know what I know: This “profit-maximizing” through “upcoding” and “favorable selection” drains billions that could be better spent on actual patient care and pad Wall Street profits.

Gut Punches for Healthcare and Hospitals

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Bankruptcy, Center for Medicare and Medicaid Services (CMS), Deferred Healthcare, Financially Distressed, Health Insurance Coverage Adequacy, Health Policy, Health System, Healthcare Industry, Hospital, Hospital Industry, Medicaid Cuts, Medical Debt, Out of Pocket Expenses, Politics, Profit, Profit Margin, Profit Model, Profit Motive, Public Opinion, Public Perception, Shareholder Expectations, Sign of the Times, Underinsured, Uninsured, Wall Street • Tagged , , , , • Leave a comment
Gut Punches for Healthcare and Hospitals: The One Big Beautiful Bill Act and the CMS Proposed Rule

The healthcare industry is still licking its wounds from $1 trillion in federal funding cuts included in the One Big Beautiful Bill Act (OBBBA) signed into law July 4.

Adding insult to injury, the Center for Medicare and Medicaid services issued a 913-page proposed rule last Tuesday that includes unwelcome changes especially troublesome for hospitals i.e. adoption of site neutral payments, expansion of hospital price transparency requirements, reduction of inpatient-only services, acceleration of hospital 340B discount repayment obligations and more.

The combination of the two is bad news for healthcare overall and hospitals especially: the timing is precarious:

  • Economic uncertainty: Economists believe a recession is less likely but uncertainty about tariffs, fear about rising inflation, labor market volatility a housing market slowdown and speculation about interest rates have capital markets anxious. Healthcare is capital intense: the impact of the two in tandem with economic uncertainty is unsettling.
  • Consumer spending fragility: Consumer spending is holding steady for the time being but housing equity values are dropping, rents are increasing, student loan obligations suspended during Covid are now re-activated, prices for hospital and physicians are increasing faster than other necessities and inflation ticked up slightly last month. Consumer out-of-pocket spending for healthcare products and services is directly impacted by purchases in every category.
  • Heightened payer pressures: Insurers and employers are expecting double-digit increases for premiums and health benefits next year blaming their higher costs on hospitals and drugs, OBBBA-induced insurance coverage lapses and systemic lack of cost-accountability. For insurers, already reeling from 2023-2024 financial reversals, forecasts are dire. Payers will heighten pressure on healthcare providers—especially hospitals and specialists—as a result.

Why healthcare appears to have borne the brunt of the funding cuts in the OBBBA is speculative: 

Might a case have been made for cuts in other departments? Might healthcare programs other than Medicaid have been ripe for “waste, fraud and abuse” driven cuts? Might technology-driven administrative costs reductions across the expanse of federal and state government been more effective than DOGE- blunt experimentation?

Healthcare is 18% of the GDP and 28% of total federal spending: that leaves room for cuts in other industries.

Why hospitals, along with nursing homes and public health programs, are likely to bear the lion’s share of OBBBA’ cut fallout and CMS’ proposed rule disruptions is equally vexing.  Might the high-profile successes of some not-for-profit hospital operators have drawn attention? Might Congress have been attentive to IRS Form 990 filings for NFP operators and quarterly earnings of investor-owned systems and assume hospital finances are OK? Might advocacy efforts to maintain the status quo with facility fees, 340B drug discounts, executive compensation et al been overshadowed by concerns about consolidation-induced cost increases and disregard for affordability? Hospital emergency rooms in rural and urban communities, nursing homes, public health programs and many physicians will be adversely impacted by the OBBBA cuts: the impact will vary by state. What’s not clear is how much.

My take:

Having read both the OBBBA and CMS proposed rules and observed reactions from industry, two things are clear to me:

The antipathy toward the healthcare industry among the public  and in Congress played a key role in passage of the OBBBA and regulatory changes likely to follow. 

Polls show three-fourths of likely voters want to see transformational change to healthcare and two-thirds think the industry is more concerned with its profit over their care: these views lend to hostile regulatory changes. The public and the majority of elected officials think the industry prioritizes protection of the status quo over obligations to serve communities and the greater good.

The result: winners and losers in each sector, lack of continuity and interoperability, runaway costs and poor outcomes.

No sector in healthcare stands as the surrogate for the health and wellbeing of the population. There are well-intended players in each sector who seek the moral high ground for healthcare, but their boards and leaders put short-term sustainability above long-term systemness and purpose. That void needs to be filled.

The timing of these changes is predictably political. 

Most of the lower-cost initiatives in both the OBBBA changes and CMS proposals carry obligations to commence in 2026—in time for the November 2026 mid-term campaigns. Most of the results, including costs and savings, will not be known before 2028 or after. They’re geared toward voters inclined to think healthcare is systemically fraudulent, wasteful and self-serving.

And they’re just the start: officials across the Departments of Health and Human Services, Justice, Commerce, Labor and Veterans Affairs will add to the lists.

Buckle up.