Private health insurance market in the US

Last week, the CEOs of several of the nation’s largest health insurance companies testified before two committees of the U.S. House of Representatives. The fact that these hearings occurred at all is significant. The conversations were, at times, insightful—and at other times, deeply frustrating. The U.S. health care system is made up of an extraordinary range of physicians, clinicians, hospitals, and other health professionals serving a diverse population of patients. Yet despite the number of participants, the system largely functions through a single gatekeeper: the health insurer. Fairly or not, most people’s experiences with the health care system—whether as patients or as physicians—are, in reality, experiences with their insurance company. (And yes, other parts of the system fail patients as well.) At its core, health insurance is meant to protect individuals and families from catastrophic financial loss during serious illness or injury. But, there are strong arguments for why we need a well-functioning health insurance system and how that benefits everyone. Insurers can support effective networks, timely claims processing, and rational pricing for health care services, all of which can make care more accessible and efficient for patients and those who care for them. However, this is increasingly not the role health insurers are playing today. Many have lost sight of what many consider to be their fundamental purpose. Instead, they have evolved into large, vertically integrated organizations that are difficult to navigate, punitive toward both patients and physicians, and driven more by short-term financial performance than by the long-term health of the people they serve. In doing so, insurers have become the dominant force in the health care marketplace, shaping coverage and payment policies in ways that too often prioritize business interests over patient care. The reality is that responsibility for the state of our health care system is shared by many, including physicians and hospitals. But meaningful improvements will require an honest reckoning with the outsized influence insurers now exert over how care is accessed, delivered, and valued. https://lnkd.in/gnb3axjK

There's a growing force that's impacting the growth of the workforce this year, and it isn't AI or interest rates. It's the cost of small group healthcare premiums, and it's hitting businesses with less than 50 employees extra hard right now. In 2025, the average premium per employee was ~$18,000/year, with employers covering ~$12,000 and employees covering ~$6,000 through payroll deductions. Now it's getting worse. The median proposed premium increase for small group health insurance in 2026 is 11% across 318 insurers in all 50 states and the District of Columbia. But that’s just the median. About 10% of insurers are requesting premium increases of 20% or more. For a 20-person company contributing ~$12,000 per employee annually that's $240,000 spent on providing health insurance. An 11% increase means an additional $26,400 in health insurance costs. A 20% increase? That’s $48,000 more per year, money that could have helped to fund an additional hire. On the employee side, their ~$6,000/year contribution would jump $660-$1,200/year in the same circumstances. Welcome to the 2026 small group health insurance renewal crisis. If you find yourself sweating these costs as a leader, there's a couple of common options to consider if you haven't already. Option 1: Use a PEO (Professional Employer Organizations) PEOs aggregate multiple small businesses into large pools, giving you access to enterprise-level rates and plan options. How PEOs handle renewals differently: PEOs spread risk over a large number of employees among many clients and can offer better health insurance plans at lower costs compared to options available in the open market. They also provide higher levels of predictability and flatten the renewal curve. Option 2: Individual Coverage Health Reimbursement Arrangements (ICHRA) Instead of offering traditional group coverage, you provide employees with a tax-advantaged stipend to purchase individual marketplace plans. Why this is gaining traction in 2026: ACA premiums in some regions now closely mirror employer-sponsored plan costs. While the overall coverage is typically stronger with a PEO, the ICHRA model is useful for businesses who want a fixed costs that won't fluctuate with the market, and for employees who want more flexibility to suit their individual situation. How it works: - The employer sets a monthly allowance per employee (e.g., $500/month) - Employees shop for individual marketplace plans - You reimburse employees tax-free for their premiums - The employee can choose to put any underutilization of the monthly allowance towards other health and wellness costs. Through a bunch of conversations with leaders on this topic lately, I've found that there's a significant disparity in knowledge in this area, and it's not surprising. For a lot of leaders focused on growth, these details have been an afterthought beyond the traditional "we need to offer good benefits" conversation. I think that's starting to change.

One year ago, UnitedHealthcare's CEO was shot and killed, in an act of violence that ignited a consumer reckoning over the U.S. health care system. But one year later, the crisis in U.S. health care has gotten even worse — in ways both obvious and hidden. People increasingly can't afford health insurance. The costs of both Obamacare and employer-sponsored insurance plans are set to skyrocket next year, in a country where health care is already the most expensive in the developed world. Yet even as costs surge, the companies and the investors who profit from this business are also struggling financially. Shares in UnitedHealth Group, the giant conglomerate that owns UnitedHealthcare and that plays a key role in the larger stock market, have plunged 43% from a year earlier. The company and its entire industry are facing regulatory scrutiny, tightening margins, and investor skepticism ... and many of UnitedHealth's top competitors have also seen their shares suffer in the past year, at a time when the stock market in general has been hitting tech-driven record highs. "We're really at an inflection point ... every segment of the health insurance business right now is stressed," says Katherine Hempstead, a senior policy officer at the Robert Wood Johnson Foundation and the author of a book about the insurance industry. Read my analysis for NPR of the past year in the business of health care, and listen to me discuss it on yesterday's All Things Considered: https://lnkd.in/giTFihM4

In 2025, the seven largest health insurers generated nearly $1.7 trillion in revenue and more than $54 billion in profit. They covered 10 million fewer people. Let’s talk about what that actually means for physicians and healthcare administrators. Employer-sponsored family premiums now average $26,993 a year. Deductibles and patient cost sharing are up more than 50% over the past decade. At the same time, insurers are under pressure to lower their medical loss ratio, or MLR. In simple terms: when more claims are paid, margins tighten. When fewer claims are paid, earnings per share improve. That incentive structure drives behavior. • More prior authorization • More claim denials and downcoding • Narrower networks • Lower reimbursement rates • Higher patient cost sharing Now layer in vertical integration. When the insurer owns the PBM, the specialty pharmacy, the ambulatory clinics and sometimes the physician groups, premium dollars do not just pay claims. They move within the same corporate structure. That changes contract dynamics. That changes referral patterns. That changes independent practice viability. Add another shift: a growing percentage of insurer revenue now comes from Medicare Advantage and Medicaid. This is not pure commercial risk anymore. This is publicly funded healthcare flowing through private, vertically integrated systems. So I want to hear directly from this community. Physicians: Where are you feeling the most operational pressure right now — prior authorization, denial rates, network restrictions or Medicare Advantage utilization management? Administrators: What is hitting your margin hardest — reimbursement compression, delayed payments, payer mix shifts or internal competition from payer-owned entities? COMMENT 👇🏻👇🏻👇🏻 #healthcare #physicians #healthcareadministration #MedicareAdvantage #priorauthorization #PBM

🚨 “This is the most destabilizing period in American healthcare I’ve seen in my entire career.” — That’s what an SVP at a major health insurer told me this month. They’re right. 3 tectonic forces are reshaping healthcare as we head into 2026: ⚠️ 1. Massive pullback in government health spending The federal government is pulling back nearly $1 trillion in healthcare funding — mostly from Medicaid, and some from ACA subsidies. The ripple effects are enormous: - More uninsured Americans - Hospitals stuck with unpaid ER visits (aka “uncompensated care”) - Insurers making less money in government markets — and shifting pressure to employer-sponsored plans - Small businesses feeling pressure from employees to offer affordable coverage, even if they’re not legally required to ⚠️ 2. Level-funding is hollowing out the small-group risk pool Small businesses used to band together in the community-rated small-group market. That model only works when the risk is pooled. But now? Level-funded plans have been letting small groups (even 2–5 employees) get underwritten like big companies, pulling all the healthy, or “good risk,” out of the pool. What’s left in the regulated market is sicker, costlier groups. Premiums rise, more groups leave, the pool shrinks. Costs rise again. In states like Ohio, small-group premiums are already spiking. This trend is accelerating — and the days of the fully insured small-group plan may be numbered. ⚠️ 3. Healthcare cost inflation is at a multi-decade high For most of the 2010s, healthcare cost inflation sat at ~4–6%. Now? - Utilization is up (post-COVID catch-up care) - Medical supply costs are up (tariffs, supply chain) - Pharmacy costs are up (GLP-1s, specialty drugs) - General inflation is up All at once. Which leads us to a perfect storm, unlike anything that’s been seen in decades. 💡And yet… there’s hope. Every major innovation in U.S. healthcare — from Medicare to HMOs to PPOs — was born in a moment like this. Crisis breeds change. We’re entering one of the most entrepreneurial windows in healthcare in a generation. Some of the most talented people I’ve ever met are breaking into healthcare. If there was ever a time to care, to build, and to make a dent in this system… It’s now. Let’s go. 

Zeke Emanuel’s most controversial take isn’t single payer. It’s this: If the U.S. copied one system, it should be the Netherlands. Why? Because it keeps private insurance — and still crushes costs. Here’s the core logic, stripped down. The Dutch model = “Managed Competition.” Private insurers compete, but only inside strict rules set by government. Contrast that with the U.S.: We don’t have a free market. We have a risk-avoidance market — insurers win by dodging sick people, denying claims, and burying consumers in complexity. What Emanuel says actually works 1. Standardized benefits (apples-to-apples shopping) Every insurer must offer the same core benefit package. Result: Competition shifts from confusion → price + service. Consumers can compare instantly. Expensive plans lose. Premiums fall. 2. Risk adjustment (no more cherry-picking) Insurers get paid more for sick members and less for healthy ones. Result: Profit comes from managing care well, not avoiding diabetics or cancer patients. The incentive finally aligns with health outcomes. 3. Primary care gatekeeping No specialist without a GP referral. Result: Fewer unnecessary tests, procedures, and specialist visits. Massive downstream cost control. The real cost killer no one talks about: admin waste U.S. admin spend: ~$2,500 per person Netherlands: ~$500 Why the gap? Standardized rules, billing, and benefits. Providers don’t need armies of coders to fight 50 different insurer rulebooks. Lower overhead → lower prices. Emanuel’s shorthand: “Medicare Advantage for All.” Government funds it. Private insurers run it. Rules are tight enough to prevent abuse. No hospital nationalization. No UK-style NHS. Just regulated competition that actually competes on value. That’s the uncomfortable part of this debate: The problem may not be private insurance. It may be that we’ve never forced it to compete honestly.

Every year, I dig into the earnings reports of the seven largest for-profit health insurance conglomerates. Here’s what they show for 2025: • Nearly $1.7 trillion in revenue — $175 billion more than in 2024 • More than $54 billion in profits • 10 million fewer people covered than the year before At the same time, these companies continued steering more patients — and their premiums — into physician practices, clinics, and pharmacy operations they now own. They also took in record amounts of taxpayer dollars. Consider this: UnitedHealthcare now gets more than 77% of its revenue from government programs — even though it covers almost twice as many people in commercial plans. All of its enrollment growth since 2015 has come from Medicare Advantage and Medicaid. Commercial enrollment? Down. Meanwhile, UnitedHealth Group now classifies about 27% of its revenue as “intercompany eliminations” — a percentage that rises each year as more care is funneled into its Optum subsidiaries. Revenue and government dependence up but commercial enrollment down. If you want to understand where American health care is headed, start with the financial filings. I’ve broken it all down in my latest pieces. Yesterday's piece here: https://lnkd.in/eVhwymy5 Today's here: https://lnkd.in/eXhisqdq

6 of 7 major health insurers paid out more in medical claims from 2021-2025. They cut administrative staff to offset the costs. Providers absorbed that burden. Medical loss ratio (MLR) measures how much of every premium dollar goes to actual medical care. An MLR of 90% means 90 cents goes to care, 10 cents to everything else: salaries, buildings, technology, profit. From 2021-2025, 6 of 7 major insurers saw rising MLR trends. CVS/Aetna: +6.8 points. Biggest jump (86.0% → 92.8%). 1,000+ employees laid off since October 2023. 30% of prior authorizations automated by 2024. $20B investment in AI and digital systems. Margin compression = aggressive cost cuts. UnitedHealth: +6.5 points. 82.6% → 89.1%. Billions quarterly on AI and automation. Late 2025 deployment of AI-powered prior authorization tools. Largest insurer, largest absolute margin squeeze. Elevance Health: +5.8 points. 87.7% → 93.5%. Highest MLR in the industry. Keeps only 6.5% of premiums. Blue Cross/Blue Shield plans. Provider appeals volume up 140%. Humana: +4.0 points. 87.1% → 91.1%. Medicare Advantage-focused. Margin compression from older, higher-cost patients. Centene: +4.9 points. 87.8% → 92.7%. Medicaid-heavy. Revenue grew 41.5% to $167B but MLR climbed faster. Molina: +4.5 points. 86.8% → 91.3%. Medicaid specialist. Revenue grew 65.8% to $44.6B. Strong growth but rising MLR. Cigna: -1.9 points. Only decrease. 86.7% → 84.8%. Keeps 15.2% of premiums: more than double Elevance. $200M+ quarterly on digital health. Early automation = margin protection while others scrambled. Provider impact: Industry administrative costs hit $67.4B annually in 2025, up 6.2%. Prior authorization volume per physician grew from 39 requests weekly (2021) to 43 requests (2024). Processing averaged 3-14 days in 2021. From 2021-2025, all major carriers deployed widespread automation. CVS cut 1,000+ administrative jobs while automating 30% of prior authorizations. Same pattern across all seven: MLR pressure → staff cuts + automation → provider burden increased. 28.7% of Medicare Advantage denials get reversed on appeal. External appeals: 64-83%. When most denials get reversed, it means the initial denial shouldn't have happened. Automated systems flag more cases, but fewer staff are available to review them. Prior authorization burden falls heaviest on radiology and imaging. High authorization exposure, declining reimbursement, 3-4 week approval delays. Each authorization costs providers $11-20 in administrative expenses. Some imaging centers dedicate full-time staff just to managing prior auth queues.

𝗬𝗼𝘂’𝗿𝗲 𝗽𝗮𝘆𝗶𝗻𝗴 $𝟮,𝟮𝟬𝟬 𝗺𝗼𝗻𝘁𝗵𝗹𝘆 𝗳𝗼𝗿 𝗮 𝗳𝗮𝗺𝗶𝗹𝘆 𝗵𝗲𝗮𝗹𝘁𝗵 𝗽𝗹𝗮𝗻 𝘁𝗵𝗮𝘁 𝗰𝗮𝗻’𝘁 𝗲𝘃𝗲𝗻 𝗰𝗼𝘃𝗲𝗿 𝗮𝗻 𝘂𝗿𝗴𝗲𝗻𝘁 𝗰𝗮𝗿𝗲 𝘃𝗶𝘀𝗶𝘁. Meanwhile, non-profit health systems are accumulating billions, tax-free, and driving up prices for everyone. Since the ACA, more Americans have been insured, but what about affordability? It’s gotten worse. Here’s why: Massive non-profit health systems — not scrappy rural hospitals, but billion-dollar empires — have weaponized a financial system that makes healthcare more expensive for everyone while protecting their power. How they did it: Tax Immunity: No federal, state, or property taxes — they expand while contributing almost nothing to their communities. Government Subsidies Turned Profit Centers: Programs like 340B and DSH were meant to help vulnerable patients. Instead, they boost operating margins. Market Domination: Health systems consolidation wipes out independent doctors and small clinics, killing competition and increasing prices. Emotional Branding: “Mission-driven” messaging and university partnerships create a halo effect that hides corporate behavior. The result? * Higher premiums * Higher deductibles * Fewer independent choices * Bloated healthcare bureaucracies * Billions in surplus operating margins for “non-profit” systems Non-profit health systems aren’t broken charities. They’re powerful corporate machines and your wallet is funding their expansion. The premium death spiral will only continue until we demand competition, transparency, and accountability. #HealthcareReform #InsurancePremiums #NonProfitHealthSystems #HealthcareCosts #PolicyChange #ACA #WakeUpCall