How to fix the health insurance industry everybody seems to hate
The Dec. 3 murder of UnitedHealthcare CEO Brian Thompson has garnered ugly cheers from frustrated Americans who feel he had it coming. Social media swelled with tales of people denied healthcare coverage from insurers such as UNH, who seemed to view Thompson’s slayer as a kind of health-justice folk hero.
Whoever killed Thompson is a criminal, not a hero. But the fury felt by health insurance haters derives from problems that are real and widespread, including denied coverage, steep out-of-pocket costs, dizzying complexity, and poor service. Those problems are also fixable, if policymakers would only address them as they have prior fissures in the way Americans get coverage.
The original sin of the US health insurance industry is its establishment as a largely for-profit enterprise dominated by private-sector companies. This is a quirk of history. Wage controls during World War II led many companies to offer health insurance as a way of recruiting workers. In 1954, Congress exempted health insurance from taxation as federal income. This established health insurance as a perk of employment rather than an essential service offered or required by the government.
As people lived longer and medical technology advanced, the US healthcare system evolved into a convoluted patchwork of for-profit providers, government programs such as Medicare and Medicaid, and state and federal regulations meant to protect consumers. If you were designing a national healthcare system from scratch, you’d never build it this way. But we’re stuck with a hydra-headed behemoth that actually works in several crucial ways.
About half of all Americans get coverage through an employer plan, according to KFF data. Others get coverage through Medicaid, Medicare, or the military. About 6% buy coverage directly from an insurer, including plans offered through the Affordable Care Act. Roughly 8% of the US population remains uninsured.
UnitedHealthcare is the largest insurer in the United States, and it participates in most types of coverage. For all the venom directed at insurers, a majority of people who get coverage through an employer plan say they’re satisfied with their coverage, according to the Employee Benefits Research Institute.
Yet obvious problems remain. In a recent survey by the Commonwealth Fund, 17% of respondents said their insurer denied coverage for a procedure recommended by a doctor within the last year. Of those, nearly half said their health worsened as a result of denied coverage. And 45% of overall respondents said they received a bill within the past year for something they thought should have been covered.
Denial of coverage seems to be emerging as the biggest point of tension between insurers and patients. A 2023 expose by ProPublica highlighted the industry practice of keeping denial rates secret. Some regulatory agencies have access to this corporate data, but very little is publicly available, so it’s hard to grasp the full extent of the problem. The fusillade of anger targeted at the industry following Thompson’s murder suggests there are a lot of unhappy customers.
New Yorkers gather in Washington Square Park for a UnitedHealth care shooter look-alike contest. (Katie Godowski / MediaPunch /IPX) ·Katie Godowski / MediaPunch/MediaPunch/IPx
It’s certainly plausible that Congress could impose further reforms on insurers. As a first step, the Commonwealth Fund recommends that the federal government track denial rates for all commercial insurers. Publishing such data could subject insurers to tougher public scrutiny. The government could also issue fines or penalties for insurers wrongfully denying coverage. A few states have passed legislation to this effect and more are considering it.
Patients aren’t helpless. The Commonwealth Fund survey found that 38% of people who challenged an unexpected medical charge got some kind of relief from their insurance company. But only 45% who got an unexpected bill challenged it.
There was a similar pattern for people denied coverage. Of people who challenged an insurer decision to deny coverage, half said the insurer ultimately relented and covered the procedure. But only 43% said they or their doctor challenged the insurer’s decision in the first place. Fighting the insurers can make a difference, but some patients don’t seem to know that or feel too intimidated to try.
The complexities of the healthcare system inevitably invite political demagoguery, given how personal and emotional some of the issues are. But partisans with simple-sounding solutions are usually peddling fantasies.
The Bernie Sanders Medicare for All plan would, in theory, cover every American through a government plan, with no CEOs trying to boost profitability by cheaping out on care. In reality, the Sanders plan would be unspeakably expensive and massively disruptive. When presidential candidate Kamala Harris endorsed the Sanders plan in 2019 and recommended abolishing employer-provided care, there was immediate backlash that forced Harris into an awkward retreat.
It’s true that other advanced nations, such as Canada and the UK, have government-run healthcare systems not driven by profit. They also tend to have longer wait times for procedures and other problems that their own enrollees are angry about. Were the United States ever to adopt a European-style healthcare system, it would necessitate sharply lower payments to doctors and other providers and force a revamp of medical education, starting with how to pay for it.
Republicans’ main idea in recent years has been to repeal the ACA, even though the law is now broadly popular. That’s precisely backwards. The ACA, while clearly imperfect, has helped roughly 45 million Americans get coverage and lowered the uninsured rate from 16% in 2010 to 7.7% in 2023. There are still 10 mostly Republican states that haven’t adopted all of the ACA’s provisions, limiting the options for low-income residents of those states to get coverage.
Those subsidies are an unsatisfying piecemeal solution for patching one hole while leaving others unattended. Wouldn’t some sort of universal overhaul be more efficient and more effective? Sure, if insurance companies, doctors, hospitals, drug companies, regulators, Republicans, Democrats, and patient-advocacy groups could all agree on a set of reforms that leaves everybody better off on the whole. Until that happens, a piecemeal solution here and there may be as good as it gets.
