Health insurance is viewed as a necessary evil. No one wants to be faced with thousands of dollars of healthcare costs for an unexpected medical emergency. Firmly entrenched in the health care system are health insurance companies, serving as the intermediary between patients and healthcare providers. In doing so, the administration of health insurance absorbs around 8 percent of every health insurance dollar spent in the U.S.
With health care spending topping $4.5 trillion in 2022, health insurance companies absorb a nontrivial share of this pie.
Given that health insurers collect premiums (either directly from patients, through employers or through government programs), then pay physicians and health care providers for the services they deliver, health insurance companies are motivated to restrict as many health care services as they can. They do this by requiring many procedures to obtain preauthorization, which permits them to override the best judgement of the physicians who treat patients.
There is nothing fundamentally wrong with such oversight. Keeping an eye on excessive medical testing and procedures is a useful checks-and-balance exercise to restrict inappropriate spending that has limited, if any, health benefits.
The problem occurs when it is weaponized to protect profits rather than patients, placing undue strain on physicians and how they practice medicine. This forces physicians and other health care providers to provide detailed documentation to justify their medical judgement and plan for care. Such a process requires administrative time, which is paid for by clinical offices.
Indeed, physicians now have employee staff, medical billers, whose job includes managing preauthorization requests and documentation. These costs are pushed into the costs of medical services, which get paid for indirectly by the insurance companies, who in turn pass along such costs to patients in the form of higher insurance premiums. This creates a vicious cycle that contributes to driving up health care costs.
For patients’ well-being, the extra time required to obtain preauthorization can be critical when patients experience acute health episodes. The unfortunate outcome of such pre-approval processes is that care is delayed to patients, leading to higher health care costs, worsening patient health conditions, avoidable hospitalizations and, in the extreme case, death or permanent disability.
UnitedHealthCare is the largest health insurance company in the nation, with more than 15 percent of the market share in 2022, or more than one in seven people covered (about 50 million people). The next largest insurer, Elevance Health, had less than half as many people covered.
UnitedHealthCare has used its size and reach to keep their shareholders happy. In 2023, it earned a profit of over $16 billion on revenues of $281 billion. Its revenue grew by more than 12 percent from 2022, while its profits grew by more than 14 percent. Its market capitalization is more than $500 billion dollars, ranking it 14th among S&P 500 companies. Its revenue places them third on this list.
By all such measures, UnitedHealthCare is a Wall Street success story. But from a public good perspective, is it?
Every person in this nation will at some point be a patient. As we grow older, our bodies begin to break down, effectively leading to the need for health care services to preserve quality and quantity of life. This means that every person’s health care services will at some point in their life depend on a health insurance company approving what a physician or health care provider deems necessary to treat, cure or manage their health issue.
Not only can preauthorizations serve as time-consuming exercises for health care providers, they can also leads to higher profits for the insurance companies, as health care services are delayed, never get delivered, or are not paid for by the insurer even if they are provided by the physician.
Our nation’s healthcare system is woven together in a network of providers connected through a collection of private and public health insurance organizations. When physicians and healthcare providers are held hostage by insurers, with profits as the objective to appease shareholder, something has to give.
In some cases, patients end up dying.
The next Congress needs to pay attention to what health care is needed for our country, rather than what health insurers want. In 2024, UnitedHealthCare gave over $4 million to candidates, and spent over $16 million in 2023 and 2024 lobbying to protect their interests. As a for-profit organization, this is money well spent. As an organization that facilitates a public good, it is a travesty.
The Affordable Care Act has its deficiencies, but it is a step in the right direction. Yet it did not go far enough. Access to affordable healthcare services must always begin and end with physicians, healthcare providers and their patients. When private health insurance imposes its values on a public need, bad things happen — especially to patients.
As a wealthy country, we can do better. Let’s hope the next Congress acts to make things better for all.
Sheldon H. Jacobson, Ph.D., is a professor of computer science in the Grainger College of Engineering at the University of Illinois Urbana-Champaign. Janet A. Jokela, MD, MPH, is an infectious disease and public health physician and a dean at the Carle Illinois College of Medicine.
