Affordable Care Act made profits surge for America’s big health insurance companies

Affordable Care Act made profits surge for America’s big health insurance companies

While the average family premium approaches $26,000 a year, America’s largest health insurers have seen a dramatic profit surge since the Affordable Care Act (ACA) was enacted in 2010, according to financial data reviewed by The Lever.

The latest rise in profits followed a bumpy ride as Covid-19 exposed gaping flaws in the nation’s public health and medical care systems, but insurance companies appear to consider the pandemic a one-time event, with limited, if any, impact on their costs. 

Over the past 14 years, the top five health insurers have amassed over $371 billion in profits, with UnitedHealth Group capturing more than 40% of that total. UnitedHealth Group’s profits alone have skyrocketed nearly 400%, while reports indicate that it denies nearly one in three claims made by its policyholders.

The surge in insurer profits comes at a time when the cost of health care for American families continues to rise. The average annual premium for a family with employer-sponsored insurance now exceeds $26,000, a 52% increase since 2014, outpacing inflation.

This is part of a broader trend in the U.S. health care market, where total revenue for the largest insurers has reached over $9 trillion since the ACA’s passage.

Insurers like Cigna, Kaiser Permanente, Elevance Health (parent company of Anthem Blue Cross Blue Shield), and CVS Health (which acquired Aetna in 2018) have all seen substantial growth, much of it spurred by a combination of mergers and subsidies provided under the ACA.

The financial data, sourced from the insurers’ annual reports and SEC filings, shows a sharp increase in profits starting in 2014, when the ACA’s provisions fully went into effect.

The law required Americans to purchase insurance while offering government subsidies to make private coverage more accessible. Despite these subsidies, however, the gap between the cost of health insurance and what many Americans can afford continues to grow.

In a recent poll by Gallup, Americans’ satisfaction with health care quality reached a 24-year low, with 62% of respondents saying it is the federal government’s responsibility to ensure all Americans have access to health care coverage.

This sentiment follows the December 4th murder of UnitedHealthcare CEO Brian Thompson, which has fueled anger and criticism of the insurance industry’s practices, particularly its focus on profit over patient care.

The five companies—UnitedHealth Group, Cigna, Kaiser Permanente, Elevance Health, and CVS Health—collectively control over half of the U.S. health insurance market. With such high market concentration, critics argue that competition is reduced, allowing insurers to charge higher premiums.

Jesse Ehrenfeld, president of the American Medical Association, has warned that reduced competition often leads to premiums rising above competitive levels, which can harm patients.

Despite the increased revenues of health insurers, many Americans continue to struggle with rising costs and inadequate care.

According to the U.S. Government Accountability Office, spending on private health coverage is set to surpass $1.5 trillion this year. However, the quality of care in the U.S. continues to deteriorate, with rising mortality rates and increasing levels of premature deaths and disability.

UnitedHealthcare, the largest U.S. insurer with more than 50 million policyholders, reported $23 billion in profits last year alone. Meanwhile, CEO compensation for the heads of the five largest health insurers reached a combined total of $75 million annually, further highlighting the growing disparity between insurer profits and the financial burden placed on consumers.

The rising cost of health insurance has also left millions of Americans grappling with medical debt. Nearly one in every 12 Americans now carries medical debt, with around three million people owing more than $10,000. The Consumer Financial Protection Bureau (CFPB) estimates that $88 billion in medical debt is reflected on individual credit reports. As insurance companies continue to deny claims, many Americans are forced to pay out of pocket or go without care. According to the Centers for Medicare and Medicaid Services (CMS), nearly 17% of in-network claims were denied in 2021, with UnitedHealthcare reportedly rejecting one in three claims—the highest rate among major insurers.

The issue of insurance denials has become a key point of frustration for consumers. A recent study by ValuePenguin, a consumer analytics group, found that UnitedHealthcare had the highest claim denial rate of any major insurer. “UnitedHealthcare is the worst insurance company for paying claims,” the report concluded.

On December 9, just days after the murder of UnitedHealthcare’s CEO, police arrested a suspect reportedly carrying a manifesto that criticized health insurers for prioritizing profits over patient care.

The incident has added fuel to the ongoing debate over the role of private insurers in the U.S. healthcare system and whether their growing profits are worth the rising financial burden on American families.

Still, there are dim prosects for the incoming Republican Trump administration to enact any universal health insurance program.

Medicare for All spending would be approximately $37.8 trillion between 2017 and 2026, according to a study by the Political Economy Research Institute (PERI) at the University of Massachusetts Amherst.

That amounts to about $5 trillion in savings over that time. These savings would come from reducing administrative costs and allowing the government to negotiate prescription drug prices.

Other studies by think tanks and government agencies have analyzed single-payer proposals at the state and federal levels. Most found Medicare for All would reduce our total health care spending.

Even a study by the Koch-funded Mercatus Center found that Medicare for All would save around $2 trillion over a 10-year period. Republicans meanwhile, seem set on eliminating Social Security, Medicare and Medicaid, so the nation’s health is in peril.


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