Private health insurance companies became a main provider of health coverage with the stated goal to help people live healthier lives and access high-quality health care. Over the past decades, these corporations have not stayed accountable to those goals. Instead, health insurance companies have shifted to focus on one goal, maximizing profits. This profit focus has led to record growth in revenue and dividends and decreasing quality of health care.
Profits/stock buybacks
In the past ten years, the seven largest for-profit insurers (UnitedHealth, CVS/Aetna, Humana, Elevance, Centene, Cigna, and Molina) have made $1.39 trillion in revenue. To put that into perspective, that is roughly equal to the GDP of Spain. In 2022, these companies repurchased $26.2 billion of their own stock to increase its value, paid out billions to shareholders, and paid their CEOs over $136 million. This is money generated from people paying health insurance premiums, and tax dollars for care under Medicare and Medicaid. Instead of these funds going to pay for health services, they have been diverted to profits with little to no oversight.
To make matters worse, health insurance companies are aiming to further increase their profits. Humana announced that they are planning ‘“larger benefit reductions” to boost margins’ in Medicare Advantage plans for 2025. Similarly, CVS/Aetna is planning cuts to benefits with their self-described goal for 2025 of “[profit] margin over membership.” These companies are accountable to their stakeholders, not their patients.
Waste, Fraud, and Abuse
Health insurance companies have developed methods of increasing profits using improper billing as well as denials of care. In the case of Medicare Advantage, the private Medicare plans run by private insurance companies, insurers add more medical diagnoses to a patient’s chart because it yields higher payments from the government. These diagnoses have included adding prostate cancer to a woman’s chart simply because her husband had it. Upcoding and similar actions lead to $140 billion in overpayments to insurance corporations from the Medicare Trust Fund each year. If an insurer is investigated or prosecuted for these actions, the most they receive is a small fine in comparison to the profits they made from that strategy.
Health insurance companies have also implemented tactics to avoid paying for the medical care they are required to. These tactics include denying over 200 million medical claims from patients each year and requiring, then denying, an increasing number of prior authorizations. They accelerate claims denials using artificial intelligence. This mechanism led to one doctor denying 60,000 claims in one month at Cigna. 60.5% of denials that are appealed in Medicare Advantage are eventually overturned, meaning that the denials by insurance companies are not precise nor are they accurate, with more than half being overturned once patients or providers advocate for themselves. After an inappropriate denial, patients find it nearly impossible to navigate the confusing process of appealing and getting the claim paid for, leading them to give up and pay out of pocket or skip the medical care they need.
Private Equity Encroachment
Some health insurance companies have begun to utilize private equity and venture capital offshoots to increase profits even more. UnitedHealth’s Optum Ventures and Aetna’s private equity holdings represent just some of the infestation of private equity in health care. In efforts to maximize profits, private equity owned health facilities cut staff and resources which causes harm and death to patients. Studies show that adverse events, such as bloodstream infections, are 25% higher in private equity owned hospitals. Even worse, mortality is 10% higher in private equity-owned nursing homes leading to more than 1,000 excess deaths each year.
Consolidation
Aside from private equity acquisitions, insurance companies are also driving consolidation of the health industry to monopolistic levels. For example, UnitedHealth has begun to buy up hospitals and physician practices to vertically consolidate business and increase profits. Right now, 1 out of every 10 physicians in the U.S. works for Optum, a subsidiary of UnitedHealth, and they are adding roughly 20,000 physicians per year as of 2023. Health care consolidation leads to higher costs and spending. These companies have also used consolidation to force other insurers out of network at the hospitals they own, thus increasing their profits even more and leaving thousands of patients without access to their doctors. This consolidation has been spreading quickly, largely unchecked by regulatory bodies.
Decreasing health indicators
Despite spending large amounts of money as a country on health care, the U.S. has the lowest life expectancy among peer countries. Maternal and infant mortality in the U.S. are also much higher than peer nations. Sadly, these low health indicators are not due to lack of facilities or resources, they are due to the lack of accountability of health insurance companies to patients.