Executives from the nation's largest health insurers are set to testify before Congress soon in a hearing on healthcare affordability.
It's about time.
From Medicare Advantage to Obamacare exchanges to prescription drug benefits, insurers have been extracting ever-greater amounts of public funds while passing costs and risk on to patients and taxpayers.
A new report from Sen. Chuck Grassley, R-Iowa, provides the latest evidence of insurers' bad behavior.
It found that UnitedHealth Group engaged in what's known as "upcoding" throughout its Medicare Advantage (MA) plans.
The insurance giant aggressively diagnosed patients with multiple health problems in order to take advantage of Medicare Advantage's risk-adjustment provisions.
Medicare pays the private insurers that administer MA plans higher amounts for sicker enrollees in order to encourage insurers to sign them up.
And UnitedHealth took advantage, according to the Grassley report.
Among the techniques UnitedHealth employed was "pay-for-coding" --- an arrangement in which the insurer incentivized physicians to assess patients for certain diagnoses and submit the corresponding codes.
In a press release announcing the report, Sen. Grassley's office said that UnitedHealth Group was "turning risk adjustment into its own business and siphoning off taxpayer money in breach of the program’s original intent."
Insurers have proven equally adept at securing unearned federal dollars through Obamacare's exchanges.
Consider that, in 2024, nearly 12 million people who were enrolled in exchange plans filed no medical claims.
That's three times the number from three years earlier, before more generous pandemic-era subsidies approved by the Biden administration took effect.
Roughly 40% of enrollees with fully subsidized plans filed no claims in 2024, according to Brian Blase, founder and president of the Paragon Health Institute. That's double the share from three years earlier.
It's likely that some of those folks were signed up for health plans without their knowledge in an attempt by unscrupulous brokers to secure commissions.
It's in insurers' interests to pay those commissions.
After all, they receive federal subsidies for each additional enrollee they capture.
And if those enrollees file no claims, those subsidies are essentially pure profit.
In the end, the federal government likely paid $40 billion in subsidies for people who received no care, Blase estimates.
This creates fertile ground for fraud.
Yet the industry has not been held to account.
And then there's the insurance industry's use of pharmacy benefit managers to warp the market for prescription drugs — and saddle patients with higher out-of-pocket costs.
Insurers employ PBMs to negotiate drug prices with pharmaceutical manufacturers.
These middlemen use their control over insurers' formularies, or lists of covered drugs, to extract substantial discounts off list price and rebates from manufacturers.
But patients do not see those savings when they pick up their drugs at the pharmacy.
Insurers generally calculate patient co-pays and coinsurance as a percentage of a medicine's undiscounted list price. In some cases, patients end up paying more in cost-sharing than their insurer paid for the drug.
In 2024, the difference between list prices and net prices, or what drug makers actually received after discounts and rebates, was $356 billion.
Patients capture little, if any, of that value.
PBMs' manipulation of the drug market is a major reason why well over one-fourth of Americans struggle to afford their medications.
Health insurers collect billions of dollars from taxpayers through Medicare Advantage, the Obamacare exchanges, and Medicare's Part D prescription drug benefit each and every year.
And they're asking for more, in the form of a three-year extension of pandemic-era enhanced subsidies for exchange coverage.
The tab for that ask?
More than $80 billion over the ten-year budget window.
From upcoding in Medicare Advantage to lax oversight in the exchanges to PBM practices that inflate drug costs, insurers have shown that they cannot be trusted to police themselves.
Congress should not extend another dollar in subsidies without insisting on transparency, rooting out abuse, and ensuring that taxpayer dollars actually benefit patients — not insurers' bottom lines.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It." Follow her on X @sallypipes. Read more of Sally Pipes Insider articles — Click Here Now.
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