Coverage is the core failure, driven by the insurance industry’s profit-first approach to denying care.
It’s a textbook case of “market failure.” Instead of healthy competition lowering prices and improving services, what we have is an oligopoly that drives up costs and leaves millions uninsured.
So here we are, regardless of politicians’ rosy narratives or avoidance of the topic. Politicians on both sides of the aisle should be motivated to take on this scandalous state of affairs, but, as journalist Ken Klippenstein pointed out, presidential nominees Kamala Harris and Donald Trump barely acknowledged healthcare, mentioning it only twice, between them, in their convention speeches. “This is the first election in my adult memory that I can recall healthcare not being at the center of the debate,” Klippenstein remarked, recalling Biden’s 2020 nod to the public option and Bernie Sanders’ strong calls for universal healthcare in 2016.
Meanwhile, Americans are crushed by skyrocketing premiums, crippling medical debt, and denial of care that devastates millions of lives. It should be no surprise that frustration has reached a boiling point, igniting a fierce, widespread demand for real, systemic change. Ordinary people are clear that insurance companies don’t exist to protect their health, but to protect and maximize profits for shareholders.
Economist William Lazonick points out that we have every right to expect quality at a fair price, noting that a good health insurance policy should ensure accessible care with the insurer covering the costs—something a single-payer system could deliver. “A for-profit (business-sector) insurer such as UnitedHealthcare could make a profit by offering high-quality insurance,” Lazonick told the Institute for New Economic Thinking, “but they have chosen a business model that seeks to make money by denying as many claims as possible, delaying the payment of claims that they cannot avoid paying, and defending their positions in the courts, if need be.”
This is capitalism run amok.
And the profits are rolling in. Lazonick notes that in 2023, UnitedHealthcare enjoyed an operating profit margin of 8% on revenues of an eye-popping $281.4 billion, insuring 52,750,000 people, which equals revenues (premiums) of $5,334 per insured. The insured, meanwhile, pay not only the premiums, but deductibles, copays, and things like surprise billing. He argues that while the cost of medical care is artificially inflated, health insurers strategize to keep costs in check by enrolling young, healthy people—a windfall provided by the Affordable Care Act’s individual mandate, which forced consumers into the system while allowing insurers to keep operating as usual, engaging in their profit-maximizing schemes. In his view, the inflated costs of medical care are partly thanks to financialization—a process where healthcare companies prioritize financial strategies like stock buybacks and dividend payouts over actually improving patient care, investing in useful innovations, or lowering premiums.
Alongside his colleague Oner Tulum, Lazonick has shown that the biggest health insurance companies have been on a stock buyback binge, padding their profits and lining the pockets of executives and shareholders: classic Wall Street greed in action. They note that of the top four companies by revenues over the most recent decade, UnitedHealth, CVS Health, Elevance, and Cigna, average annual buybacks were a stunning $3.7 billion. “Ultimately, the manipulative boosts that these buybacks give to the health insurers’ stock prices come out of the pockets of U.S. households in the form of higher insurance premiums,” they write.
It’s easy to see why health insurance executives are obsessed with stock buybacks. Lazonick and Tulum point out that from 2000 to 2017, Stephen J. Helmsley, the CEO of UnitedHealth Group, raked in an annual average of $37.3 million—86% of it coming from stock-based compensation. His successor, Andrew Witty, wasn’t exactly slumming it either, pulling in $17 million a year (79% stock-based) between 2018 and 2023. And then there’s the assassinated Brian Thompson, former CEO of the UnitedHealth subsidiary UnitedHealthcare, who bagged $9.5 million a year (73% stock-based) from 2021 to 2023. It’s a deadly scam, to be sure—inflate the stock price with buybacks, fatten the paychecks for executives (not rank-and-file employees), and deny patients the care they need.
Lazonick observes that the more profits that UnitedHealth Group makes, the more extra cash is available to distribute to shareholders as dividends and buybacks, “and, generally, the higher the stock price, the potential for higher top executive pay.” The unpleasant reality, according to him, is that “given UHC’s predatory business model, Thompson was incentivized by his stock-based pay to rip off customers, and he ascended to the United Healthcare CEO position because he was good at it.”
Perhaps this helps explain why many Americans are not exactly mourning his passing.
The roots of this mess trace back to the neoliberal, market-driven ideology that underpins the system. Neoclassical economics, the theory behind this philosophy, is all about maximizing profit and trusting the market to sort things out—like some magical invisible hand. In reality, it’s a blueprint for inequality: The rich, like insurance CEOS, get richer, and everyone else is subject to exploitation. Healthcare is a perfect example of why this system doesn’t work. When you turn human health into a business, where access is determined by how much you can pay, only the wealthy can count on top-notch, reliably available care. The fundamental contradiction at the heart of the U.S. system is simple: health is treated as a commodity, not a human right.
This current system make sense to the economists still clinging to their outdated, flawed neoclassical principles, but for regular folks? It’s crystal clear: our system is untenable.
The myth that the U.S. health insurance system runs efficiently in a competitive market is just that—a myth. In reality, a handful of for-profit insurers dominate, focused not on providing care, but on extracting profits. It’s a textbook case of “market failure.” Instead of healthy competition lowering prices and improving services, what we have is an oligopoly that drives up costs and leaves millions uninsured. Let’s go over three examples of this failure.
1. Information Asymmetry: In a real competitive market, you’d have clear, straightforward information to make good choices. But in the U.S. health insurance system? Not happening. Insurers deliberately obscure policy details, leaving you to guess the true costs and coverage—even the percentage of claims denied. This gives them all the power while you’re stuck with confusing, impenetrable contracts. They know exactly what they’re doing—and it’s not about helping you.
Say you’re self-employed and stuck buying private insurance on the Health Insurance Marketplace. You don’t qualify for subsidies, so you figure the best you can do is a silver plan with a $1,000 monthly premium. It’s steep, but at least it lists a $45 co-pay for an in-network doctor visit—and it’s got to be in-network because the plan won’t cover a dime of out-of-network care. You sign up for the plan, and then you go to the doctor for a respiratory infection. Surprise! You’re hit with a $200 bill. Why? Because co-pays only apply after you meet your $2,200 deductible—that was in the fine print.
At this point, avoiding the doctor sounds like the best plan.
But wait, isn’t the Health Insurance Marketplace a government-driven system? How could it be so unfair and deceptive? Well, it isn’t exactly a government-driven system. The Marketplace is government-run in name, thanks to the Affordable Care Act, with the feds running HealthCare.gov—but let’s be clear: It’s controlled by private insurers. The government sets some rules, but the real power lies with for-profit companies pulling the strings. What’s sold as a consumer-friendly system is really just a cash cow for the insurance industry.
2. Adverse Selection: Let’s go back to that self-employed person hit with a $200 doctor bill. The next time they get sick, they decide to skip the doctor—why risk a bigger bill? The insurance companies love this—they don’t have to pay a thing while you must keep paying your premium. This is adverse selection in action. Healthy people forgo care to save money, while the sick are stuck with costly plans. Insurers raise premiums, pushing even more people out of the system. The result? A vicious cycle where prices keep climbing, and care becomes harder to access.
3. Externalities: The U.S. health insurance system’s failure to provide universal coverage creates what economists call “negative externalities.” Our self-employed person who didn’t go to the doctor to save money has ended up in the emergency room, where the costs quickly balloon. What started as a simple issue becomes a preventable hospitalization, driving up healthcare costs for everyone and straining public health resources. These added costs don’t just hit the individual—they’re a drag on society as a whole, with taxpayers and the healthcare system picking up the tab. And on top of it all, the person has missed work and spread their illness to others, amplifying both the social and economic damage.
If you want to see information asymmetry, adverse selection, and externalities really come together, look no further than Medicare Advantage, which economist Eileen Appelbaum plainly calls a “scam”—and one that is liable to expand under Trump’s second term.
As Appelbaum explains, Medicare Advantage is neither Medicare nor is it to anyone’s advantage except insurance companies.
Medicare Advantage is actually a private insurance program that is sold as an alternative to traditional Medicare, advertised to combine hospital, medical, and often prescription coverage, and offer perks such as gym membership coverage. It was originally created in 1997 as part of the Balanced Budget Act under President Bill Clinton to allow private insurers to manage Medicare benefits with a focus on cost control and efficiency.
Proponents claim that privately-run Medicare Advantage plans, which now enroll over half of all people eligible for Medicare, offer good value, but Appelbaum notes this is only the case if you manage not to get a chronic condition—you’d better not get cancer or get too sick.
A 2017 report by the Government Accountability Office found that sicker patients not only don’t benefit from these plans, they are worse off than they would be under Medicare, barred from access to their preferred doctors and hospitals.
Appelbaum notes that the Medicare Advantage program is really a patchwork of private plans run by for-profit companies that rake in billions in taxpayer subsidies while finding new ways to deny care—like endless preauthorizations and rejecting expensive post-acute treatments. Unlike traditional Medicare, which directly pays for services, these private insurers are paid per subscriber, boosting their profits by upcoding and cherry-picking healthier clients. The result: Taxpayers lose $88 to $140 billion a year. But what a boon to the insurers: Appelbaum notes that they now make more from Medicare Advantage than from all their other products combined.
In a 2023 report, Appelbaum and her colleagues noted that recent evidence reveals that Medicare Advantage insurers have been denying claims at unreasonably high rates, particularly for home health services. They point to a 2022 report from the Office of the Inspector General for the U.S. Health and Human Services, which found that in 2019, 13% of prior authorization requests for medically necessary care, including post-acute home health services, were denied despite meeting Medicare coverage rules. These services would have been covered under traditional fee-for-service Medicare. Though some denied requests were later approved, the delays jeopardized patients’ health and imposed administrative burdens. On top of that, a 2021 Centers for Medicare & Medicaid Services study showed that over 2 million of 35 million prior authorization requests were denied, with only 11% appealed. Of those, 82% of appeals were successful, highlighting a high rate of incorrect denials.
Appelbaum points out that, despite the similar names, Medicare and Medicare Advantage are worlds apart. Medicare is a trusted public program, while Medicare Advantage is really just private insurance that’s marketed to look like the real thing, luring people in with misleading ads and false promises. The goal of Medicare Advantage supporters is to replace traditional, publicly funded Medicare with private, for-profit insurers—pushing for market competition and cost-cutting at the expense of direct, government-provided healthcare. It’s a prime example of what happens when neoclassical economics gets its way.
“It goes back to the Affordable Care Act,” she explained in a conversation with the Institute for New Economic Thinking. “The ACA introduced many beneficial reforms, but it also required Medicare to experiment with Medicare Advantage plans as part of a broader push for “value-based” care, where providers are going to be incentivized to skimp on your care.” She stressed that this isn’t just financially harmful for patients—it can be deadly. It’s not merely about denying care; it’s about using delaying tactics that put lives at risk: “Widespread delay is a serious problem—when someone has cancer, two weeks of delays waiting for coverage to be approved can be deadly.”
The reality is that with value-based care, providers are rewarded for reducing costs, rather than being paid for the volume of services they deliver, which can encourage cost-cutting measures that potentially compromise care quality.
And as to that much-touted competition that neoclassical economists insist will lower costs and boost efficiency among insurers—good luck finding an example of that. The administrative costs of private insurers are staggering compared to single-payer systems. According to a 2018 study in The Lancet, the U.S. spends 8% of total national health expenditures on activities related to planning, regulating, and managing health systems and services, compared to an average of only 3% spent in single-payer systems. The excess administrative burden in the U.S. is a direct consequence of having to navigate a fragmented system with multiple insurers, each with its own rules, coverage policies, and approval processes.
Beyond the outrageous administrative costs, the U.S. healthcare system’s reliance on employer-based insurance is a relic of 20th-century policy decisions that are downright outdated in today’s gig economy. It ties access to care to your job, effectively locking out millions of gig and part-time workers, freelancers, and the unemployed. The notion that people can “shop around” for insurance plans like they’re picking a toaster is absurd when the stakes are life and death.
The exorbitant cost of this flawed approach to healthcare is borne by society—through higher overall health spending, worse outcomes, and a public system buckling under the weight of the uninsured and underinsured. The system doesn’t just fail to provide equitable care; it deepens social and economic inequality. Health should be a public good, with care guaranteed for all—regardless of income, job, or pre-existing conditions.
Many argue that the solution isn’t patching the system with small reforms but rethinking it entirely—or, as documentary maker Michael Moore recently put it, “Throw this entire system in the trash.” That means embracing models like single-payer, where the state ensures health for all and care is based on need, not profit.
Until the U.S. abandons its current insurance model, we’ll remain stuck with a system that enriches a few while exploiting the many—and the many are well and truly sick of it.
America is ready to say goodbye to the Grinches that operate 365 days a year.
NOW READ: America's dark past and the key to stopping Trump's authoritarian rule
A framed photo print signed by former President Jimmy Carter (left center) and addressed to author Rob DeRocker. Carter and DeRocker are pictured working on a Habitat for Humanity project in New York City during July 1985. Rob DeRocker/courtesy
A hammer used by former U.S. President Jimmy Carter in his role at Habitat for Humanity is displayed at the Plains High School Jimmy Carter National Historical Park February 22, 2023 in Plains, Georgia. Win McNamee/Getty Images