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.

 

Insurers in trouble for the wrong reason: Wall St. wants them to rip you off for even MORE!

There is good news and bad news regarding health/medical insurance. Let’s start with the good:

In his Substack, “Health Care Uncovered” from August 8, 2024, Wendell Potter reports that “Wall St. is disenchanted with Medicare Advantage Plans”. This is good news in the sense that it is good when anyone is disenchanted with these plans, or any aspect of the for-profit health insurance industry. Potter notes that both CVS/Aetna and CIGNA disappointed Wall St. investors with inadequate (from their point of view) profits, compared to a year ago. I also am disenchanted, but for different reasons than Wall St. I am upset that these for-profit insurers continue to rake off such a huge amount of money that was intended, by the workers and employers who paid it, to be spend on actually delivering health care. Investors are upset that these health insurers are not raking in even more.

Potter notes that Aetna president Brian Kane resigned as a result, but appropriately writes:

I am much more concerned about the health and well-being of the 4.3 million people enrolled in CVS’s MA plans and the 6.2 million in Humana’s plans. Sadly, most will find they’re trapped in a circle of hell created by the insurance industry, unable to stay in their current Medicare Advantage plan but also unable to return to traditional Medicare because of what for them will be unaffordable Medicare supplemental policies (most of which are sold by the same big insurers that sell MA plans). Seniors have six months from the date they’re eligible for Medicare to buy a supplemental (Medigap) policy to cover out-of-pocket expenses. If they’ve been enrolled in an MA plan longer than six months, they’ll have to go through medical underwriting. That means that if they’re being treated for much of anything or, God forbid, have a “preexisting condition,” they’ll have to pay an arm and a leg for Medigap policy.

A similar piece of good news is not particularly about Medicare Advantage plans, but the overall health insurance industry/scam, in a story about data-analytics firm MultiPlan (‘Revenues Down and Stock Battered as Data Firm Faces Scrutiny’, NY Times, August 16, 2024). This one is a little harder to understand than the CVS/Aetna and CIGNA stories. They are about the fact that while they are making beaucoup bucks, it is not as much as investors would like. In the MultiPlan case, we have a company that worked for insurers to get reimbursements down (that is, to pay doctors and other healthcare providers less) and made money from it. For example, if a doctor billed $100 and MultiPlan told the insurer to only pay $50, that’s more money for the insurer (and MultiPlan), and the patient can be on the hook for the other $50. (Of course, it’s never only $100, or $50.) Since they do this mainly for “out of network” care the amount that you (the patient) can get stuck with having to pay can be – a great deal. (This can happen even when you choose an “in-network” doctor and hospital, since other doctors – like in the ER, or radiology, or even the “assistant surgeon” – can be out of network. And the ambulance almost always is).

This article was a follow-up to an earlier exposé in the NY Times ‘Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill.,’ April 24, 2024, in which the amount the patient could get stuck having to pay was as much as $100,000 – or more. The good result of this first article was a lot of opprobrium aimed at MultiPlan, resulting in some insurers being more reluctant to use them (because of the bad publicity, not because they save them money; apparently they can use other less-notorious data analytics firms to save them money), so MultiPlan is in trouble as the more recent NY Times article documents. Good. I love to see them in trouble.

The bad news is that it is likely to be you and other regular people who are screwed. There is already evidence that the pressure from investors to go back to making not just great but obscene profit margins is affecting CIGNA, CVS/Aetna, and other insurers, who are denying more claims, making it even harder to get the care that you need. Potter notes that

Humana said last week it planned to jettison “a few hundred thousand” of its Medicare Advantage enrollees that have become unprofitable. CVS says it will get rid of about 10% of its MA enrollment, which would be around 430,000 of America’s seniors and disabled people.

That’s a lot of seniors who will lose their medical coverage. I have often been critical of Medicare Advantage plans (sometimes called, more accurately, Medicare Dis-Advantage), which are NOT Medicare but are private insurance plans, usually HMOs or PPOs, paid for by Medicare funds. One of the major reasons for my criticism is that because they are private insurance, they can (and often do) deny coverage for care even when the care is approved by Medicare. Recent legislation has required these MA plans to cover Medicare-approved care, but in fact they still often deny claims. Indeed, it is often the modus operandi for these companies. They may approve the claim if you appeal, but the vast majority of clients do not appeal, and probably don’t even know that they can. If fined by the Center for Medicare and Medicaid Services (CMS) it becomes a “cost of doing business.”

But the “jettisoning” of hundreds of thousands that Potter refers to illustrates another big problem with MA. As with all insurance – not just medical – companies make money by collecting premiums and paying as few claims as possible (although medical insurance companies seem to have taken this to the extreme). One effective way to do this for healthcare is to insure healthy people. They, or their (usually former, if they’re on Medicare) employer pay the premiums but they don’t cost much money in claims. And they love getting free eyeglasses and hearing aids and gym memberships, which cost the insurance companies very little. The problem is that sometimes previously healthy people get sick, and this becomes more and more common as they age. Remember that in any given year approximately 5% of the people account for about 50% of healthcare costs, but they are not necessarily the same people the next year. Some folks get better, some folks get worse, and some really sick people die. MA plans have long “encouraged” their sickest (= most costly) patients to consider switching to traditional Medicare. Now they will be more than encouraging; they’ll drop those high-cost “losers”. Maybe you.

The MultiPlan case got good (that is, bad) coverage from the original April NY Times investigation, which resulted in it losing business as reported by that newspaper in August. But the insurers will get another data analytics firm to try to screw doctors and other providers, and the patient, you, will still be caught on the hook for many of those dollars. The system is not set up to help or protect you, and it has relatively few sanctions against companies whose business model is to find any way to screw you that will make them more money, and to use that money to hire lawyers and others to find the loopholes and to pay the politicians to ensure that they are not closed too tightly.

It’s kind of like a sport where one team able and willing to bring in ringers, violate the rules, commit all sorts of fouls and infractions, and at worst get a slap on the wrist for it. Not a fair game, but heck, that team’s owners are paying off the referees and the league.

There’s another way to do it. Absolutely strict regulation to ensure the interests of patients are the ones that are protected, and protecting the profits of the insurers is given zero weight. Penalties that are strictly enforced, and draconian and include going out of business. Even better: prohibiting profit making in any healthcare endeavor. In some countries, like Switzerland, there are private insurers, but they all have to offer the same comprehensive product, charge the same rates, and be non-profit. So how do they compete? Customer service, can you imagine!?

I like that approach!