Growing Medicare Privatization Is Boosting Big Insurance Profits, Report Shows

A brand new evaluation launched Monday exhibits that insurance coverage giants are benefiting vastly from the accelerating privatization of Medicare and Medicaid, which for-profit firms have infiltrated by way of authorities packages similar to Medicare Benefit.

In keeping with the report from Wendell Potter, a former insurance coverage government who now advocates for systemic healthcare reform, authorities packages at the moment are the supply of roughly 90% of the well being plan revenues of Humana, Centene, and Molina.

Over the previous decade, Potter discovered, the seven high for-profit insurance coverage firms within the U.S. — the three talked about above plus UnitedHealth, Cigna, CVS/Aetna, and Elevance — have seen their mixed revenues from taxpayer-backed packages soar by 500%, reaching $577 billion in 2022 in comparison with $116.3 billion in 2012.

“The large insurers now handle most states’ Medicaid packages — and make billions of {dollars} for shareholders doing so — however many of the insurers have discovered that promoting their privately operated Medicare alternative plans is much more financially rewarding for his or her shareholders,” Potter wrote. “Along with their deal with Medicare and Medicaid, the businesses additionally revenue from the beneficiant subsidies the federal government pays insurers to cut back the premiums they cost people and households who don’t qualify for both Medicare or Medicaid or who work for an employer that doesn’t provide sponsored protection.”

Potter famous that the highest insurance coverage giants, a gaggle he dubbed the Large Seven, now management greater than 70% of the Medicare Benefit market, which has grown quickly lately. In keeping with the Kaiser Household Basis, more than 28 million people had been enrolled in a privately run Medicare Benefit plan final yr—practically half of the Medicare-eligible inhabitants.

An ardent critic of Medicare Benefit, Potter said in an interview with The American Prospect on Monday that this system “is an enormous contributor to the extreme spending” in Medicare.

“It must be ended,” Potter, government director of the Middle for Well being and Democracy, mentioned of Medicare Benefit, whose main gamers incessantly overbill the federal government and deny patients necessary care. The program is run by non-public insurers with authorities cash.

In his evaluation, Potter noticed that Medicare Benefit enrollment among the many Large Seven elevated 252% between 2012 and 2022.

Having deeply entrenched themselves within the Medicare program by way of Medicare Benefit, insurance coverage giants at the moment are seeking to acquire a foothold in conventional Medicare by means of a Biden administration pilot program often called ACO REACH, which has drawn mounting criticism from physicians and progressive lawmakers.

“We should struggle the privatization of Medicare with each instrument we’ve got,” Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, said in an announcement final month.

When counting each their industrial companies and participation in authorities packages, the Large Seven introduced in $1.25 trillion in income final yr and their earnings rose to $69.3 billion, in line with Potter, who emphasised {that a} rising share of insurance coverage giants’ revenues now comes from “the comparatively new and little-known intermediary between sufferers and pharmaceutical drug producers” often called pharmacy profit managers (PBMs).

“Cigna now will get way more income from its PBM than from its well being plans,” Potter famous. “CVS will get extra income from its PBM than from both Aetna’s well being plans or its practically 10,000 retail shops.”

Potter lamented that “policymakers, regulators, employers, and the media have up to now proven scant curiosity” in carefully inspecting the taxpayer-reliant enterprise practices of huge insurance coverage firms, which wield substantial lobbying energy that they deploy in opposition to any effort to rework the US’ fragmented healthcare system.

“They’ve basically been bailed out by taxpayers,” Potter said of for-profit insurance coverage giants. “And members of Congress, and numerous administrations, have been simply standing on the sidelines, not listening to what’s been happening.”

In the meantime, tens of tens of millions of individuals in the US are either uninsured or inadequately insured, and greater than 100 million are saddled with healthcare-related debt.

A latest study by The Commonwealth Fund discovered that the US spent near twice as a lot as the common OECD nation on healthcare whereas attaining worse outcomes in important areas similar to life expectancy at delivery and loss of life charges for treatable circumstances.

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