Making a profit isn't enough for Wall St.: You are going to have to pay, with your money (and maybe your life!)

Wendell Potter, in his “Health Care Un-Covered” substack, recently (Aug 6, 2025) reports that ‘As Americans Struggled, Health Insurers Made a Record-Breaking $71.3 Billion in Profits. In 2024, seven big insurers posted $71.3 billion in profits and paid their CEOs more than $146 million.’ There are several things being said in that sentence. First is that health insurance companies made a lot of profit. Second is that some people, specifically health insurance CEOs, are doing very well, thank you. Third is the assumption that Americans are struggling, presumably with their health insurance and healthcare. Let’s think about each of these.

These health insurance companies, per the chart that Potter includes, made $71.3B in profits. That seems like a lot to me. For most, it’s also more than the prior year. But not for all. Note that Humana made 33% less than in 2023, a mere $2.7B. 

Fortunately, that was enough to continue to pay it’s CEO over $15M.

At least UnitedHealth, the largest health insurer, is doing fine, right? It increased its profits 6% over the year before, and its CEO Andrew Witty (head of UnitedHealth Group, not to be confused with the assassinated Brian Thompson, CEO of UnitedHealthCare, who worked for him), is the highest-paid health insurance CEO at $26.3M, so I guess he deserves it because the company is doing so well. That shows that I (and possibly you) are not expert in the ways of Wall St. investors. It wasn’t enough for them. Just two days earlier, on Aug 4, Potter posted ‘Inside the Midyear Panic at UnitedHealth’. It makes fascinating reading, although the lessons learned by an MBA student may be different from those learned by, say, a regular person needing healthcare. As far as Wall St. is concerned, it is not enough to stay profitable; corporate profits need to continually go up so that these investors can meet their expectations for their own profit. It is important to understand that, as much as health insurance companies can be seen to be greedy parasites who produce nothing but obstruction and cost for those providing and receiving healthcare which they sell as producing “value”, private investors are a meta-level worse. They don’t even pretend to produce anything; they are, as an old family friend liked to say, “in money”. They invest and expect money back, more money all the time, and don’t care much about how the companies they invest in get it.

Nearly 500 years ago, Shakespeare wrote the “Merchant of Venice”, an excellent but anti-Semitic play about a greedy Jewish moneylender named Shylock.* Shylock has been widely decried for centuries for demanding a pound of flesh as repayment for the loan (how horrible!) But, by today’s standards, particularly in health insurance, he’d be a piker. While a lot of people, including me, could afford to lose a pound (or 20) of flesh, the health insurance companies are being spurred on by their investors (along with their own lack of values), are doing much worse. The actions that they are taking to ensure Wall St. investors make what they believe to be sufficient ROI will end up killing people. Antonio should have been happy to give up his pound of flesh! 

Of course, the financial investors in health insurance companies are not gauche enough to literally demand the killing of their clients. But they did demand changes that will undoubtedly have that result. While UnitedHealth saw an 8% increase in their Medicare Advantage plans, which they generally like because these plans allow them to do what they do with regular insurance, obstruct access, they still had to pay more out in medical claims than the shareholders were happy about. As Potter says, “Those seniors figured out how to get at least some care despite the company’s high barriers to care (aggressive use of prior authorization, “narrow” networks of providers, etc.).” Sounds good if you’re a patient, but if you’re an investor, it’s horrific. Remember what the insurance industry calls the percent of the premiums that they collect which they actually have to pay for medical care? The “medical loss ratio”! They hate it when they make less profit because they are paying for your care! Yes, UnitedHealth made $14.3 billion in profits during the second quarter, but it was less than the $15.8 billion they made in the second quarter of 2024, so something had to be done!

Potter describes what UnitedHealth promised its investors they would do:

• Dump 600,000 or so enrollees who might need care next year  [after all it is much more profitable to collect premiums from people who won’t need care]

• Raise premiums “in the double digits” – way above the “medical trend” that PriceWaterhouseCoopers predicts to be 8.5% (high but not double-digit high)[ie., you, the customer, pay more for less]

• Boot more providers it doesn’t already own out of network [when they work for you, money you pay them goes back to yourself!]

• ·       Reduce benefits [of course]

Yup, these changes most definitely will kill people.

Most insurance involves has you betting against yourself; you pay premiums to protect you if something happens that you do not want (or expect) to happen, but might. You have homeowner’s insurance, but you hope your house doesn’t burn down. You have auto insurance, but you hope you are not in a car accident. Originally, health insurance followed the same idea; it was not intended to pay for routine care, but to protect you if you had to be hospitalized and or have surgery for something you didn’t expect. But then it began covering (or hopefully covering) regular medical care, visits, treatments, and drugs. It was paying for what you wanted – regular care, not unexpected and unanticipated “major medical” care. This is different from what insurance usually is. Actually, though, insurance companies preferred as it is predictable and relatively low cost. With Medicare Advantage plans, for example, they take money from Medicare to cover seniors who are happy to have coverage for prevention, doctor visits, drugs, and even gym membership without having to pay separately for a Part D plan, a Medicare Supplement plan (to cover the 20% of hospital costs Medicare Part A doesn’t pay for), etc.

When those people get sick, however, they want their bills paid, and not infrequently United and the others were denying it. But as Potter points out, not often enough to please their investors. People were sometimes, increasingly, getting their bills paid – indeed CMS, the Center for Medicare and Medicaid Services, was requiring that they be paid. That is what infuriated investors – all that money going to pay for medical care rather than profit and shareholder dividends! So, they will reduce benefits, increase premiums, further limit the doctors you can see and hospitals you can use, and make being sick more unpleasant than it already is. Tough luck.

But that’s what you get when you have a “healthcare” system that exists primarily to make profit, not to provide healthcare. When you live in the United States. Why do we put up with this?

 

 

* Jews were moneylenders because it was an area open to them; in those quaint days Christians actually thought they had to abide on the Biblical prohibition on earning interest from lending money. It’s complicated; most of the prohibitions are actually in the Old Testament, but this was often interpreted as not lending money to other Jews; Christians were OK. Of course, they were presumably lending to other Jews when New Testament describes Jesus turning over the tables of the moneylenders in the Temple, saying per Matthew 5:42 ‘Give to the one who asks you, and do not turn away from the one who wants to borrow from you’. Anyway, both Jews and Christians lend money – “invest” – now.

 

"Reforming" Medicaid, or Cutting Medicaid: No shortage of folks to cast the first stone

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Jeff Colyer, MD, the Lieutenant-Governor of Kansas, has been leading an effort for Governor Sam Brownback to “reform” Medicaid for the state. This is of concern because the state faces the same budget crunches that are faced by most states and the relatively high cost of Medicaid as a percent of the state budget (about 22% in Kansas). Gov. Brownback wants to cut $200-400 M in Medicaid expenditures and is looking for ideas on how to do so. In the Fiscal Times, Blair Briody’s piece Medicaid’s Ticking Bomb Could Wipe Out State Budgets discusses the challenges states face with increased enrollment in Medicaid (6.5% in 2009) because of job losses resulting from the same economic crisis that has state revenues down. Of course, there is another solution, but (like most new Republican governors) Gov. Brownback and his legislature are firmly opposed to increasing revenues (ie, taxes)

Dave Ranney, reporting for the Kansas Health Institute, covered the second of two (so far) public forums, held in Wichita and led by Lt Gov. Colyer and attended by Secretary of the Department of Health and Environment Bob Moser, MD (Moser is a family physician; Colyer is a plastic surgeon). In Medicaid forum generates long list of reform ideas Ranney lists many of the ideas identified by working groups. They include:

• Enact policies that discourage non-emergency visits to emergency rooms.
• Remind families of their moral obligation to at least share in the costs of caring for frail elders.
• Reward behaviors that improve health. Discourage those that do not.
• Increase the numbers of nurse practitioners in the state’s rural areas.
• Let Medicaid beneficiaries know how much their services cost.
• Do more to promote “living wills” and hospice care, less to promote nursing home care.
• Limit families' ability to switch managed care providers more than once a year.
• Do more to encourage businesses to hire disabled people.
• Approach companies like Home Depot and Lowe’s about helping people with disabilities make their homes accessible; installing wheelchair ramps, for example.
• Foster home-like homes for frail seniors or disabled people who might otherwise move to a nursing home.
• Reduce the potential for fraud and abuse by not allowing family members to be paid for caring for elderly relatives.
• Close one or both of the state hospitals for people with severe developmental disabilities.
• Find ways to better coordinate patient care.

Something is missing from this list. That would be any suggestion that the state has a responsibility to provide quality health care to Medicaid recipients. Of course, that might cost a lot more, not less money. Some of these ideas are reasonable, like asking Home Depot and Lowe’s to help people, encouraging businesses to hire the disabled, and developing “home-like homes” (I love that; as opposed to ‘non-home-like homes’, or ‘home-like non-homes’?) for frail seniors and disabled people. They might even help some folks, but they are unlikely to save Medicaid much money.  Others, such as increasing the number of nurse practitioners in rural areas, are good ideas, but without a strategy that addresses how are of little use. Nurse practitioners do not locate in rural areas for the same reasons that physicians do not: because they are often from urban areas and can make more money in urban areas, particularly working in subspecialties rather than primary care. Paying them more to work in rural areas might be effective, but that also would cost more money.

Closing the state hospitals for people with severe developmental disabilities would probably save money, but only if adequate services can be provided for them in the community. Whoops, that will also cost more money. And that money will be vulnerable every year, especially when there is a budget shortfall. We have experience in this area. Several decades ago, across the country, we closed state mental hospitals because we could provide better mental health care in community mental health centers while giving the patients a better shot at a higher quality of life. Unfortunately, after “de-institutionalization” (as it was called), federal and state governments ratcheted down funding for community mental health services. The result? Lots of homeless, under-treated, mentally ill people. It is not clear to me that those with severe developmental disabilities will even do as well.

Doing more to promote “living wills” and hospice care might be good for many people, Medicaid or not, as would finding ways to better coordinate patient care. Of course, nursing homes are businesses, and state government wants to be business-friendly.

The most obvious characteristic of the list is that most of the suggestions fall squarely in the category of “blaming the victim”. They are mean-spirited and reflect a definite sense that the people who are receiving Medicaid are, by and large, irresponsible, manipulative, and wasteful. Certainly they are not anything like the people making the suggestions! Thus, we should limit their ability to change providers and we should emphasize the importance of families taking care of their elders (whether those families have any resources or not; whether they have families or not). In the cases where they do have families we need to reduce the potential for fraud and abuse by not allowing family members to be paid for caring for elderly relatives, enact policies that discourage non-emergency visits to emergency rooms, let beneficiaries know how much their services cost. How these would save money without hurting the health of beneficiaries is not made clear. What if the providers are not meeting the patients’ health needs? What if the frail elders (and here I assume that we are talking about people who receive both Medicare and Medicaid, known as “dual-eligibles”) do not have families, or if their families are without resources? What if they do have families and now those family members cannot go out and get a job because they are caring for frail elders but we won’t pay for it? And what is the point of reminding them what their benefits cost? It is presumably health care providers who order the tests and treatments, and these are based, presumably, on medical need.

It is actually, by and large, a pretty ugly list. Maybe we should remind the members of these citizens’ panels what their benefits cost. Are they paying out of their pockets for their health care, or do they have insurance? Is there anything more morally acceptable about receiving inappropriate, medically unjustified, non-evidence-based health care if one is insured by something other than Medicaid? Or is not receiving appropriate, medically justified, evidence-based health care more acceptable if one is on Medicaid? In my last post I cited the June 28, 2011 NY Times article, “New prostate cancer drugs extend lives but raise costs”, in which Andrew Pollack notes that Medicare is going to look into whether to pay for drugs that may extend life for a few months but cost upwards of $90,000 per course of treatment, but that “…some patient advocates and politicians portrayed the review as a step toward rationing.”  I hope that these are not the same people who are advocating rationing for those who are poor.

Because that is what Medicaid patients are. Poor. Not all poor people get on Medicaid, of course. In most states, including Kansas, only poor people who are children and their mothers, severely disabled people, or people in need of long-term care, are on Medicaid. Not undocumented people, not childless adults no matter how poor or in need of health care. But everyone on Medicaid is poor. If there were any poor people on these panels, whether or not they were Medicaid recipients, you can be sure that these suggestions did not come from them. There is not a single working-class, middle-class, professional or upper-class member of any of these panels who would want to change places with these poor people so that they can get Medicaid. It is so much easier to judge others.

The reality is that the most useful suggestions will not save much if any money, and most of the rest are mean. In an Op-Ed in the Wichita Eagle, state Rep. Jim Ward (D-Wichita) suggests that the cuts first “Do no harm”. He states it is from the Hippocratic Oath, which it is not really (see Physician Oaths and Social Responsibility, July 7, 2011), but it is a good idea. Another really good idea is close management of the sickest, highest-cost, highest-risk patients using health coaches or promotoras (such as those described by Dr. Atul Gawande in The hot spotters: can we lower medical costs by giving the neediest patients better care?” and discussed by me in Freedom abroad, health at home: experiments in preventive health care, February 13, 2011).

The necessary step to both maximizing health and minimizing cost is to have a single-payer system so that we are all in the same program, so that cutting your benefits cuts mine. Then we can make wise decisions on the most medically appropriate, as well as cost-effective, way to spend that money.

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