In 2023, the top six health insurers collectively earned over one trillion dollars in revenue, a staggering figure that has raised questions about whether the current healthcare dynamic is sustainable and serving all stakeholders effectively.

There's no question that health insurance provides a valuable service to millions of Americans. But when that much money winds up concentrated in such few hands, things are probably not working within the healthcare marketplace as they should. At a time when many hospitals are struggling to stay afloat and private health insurance premiums have reached a record high, such strong financial numbers from insurers suggest an imbalance that requires attention. 

In a well-functioning insurance market, premiums paid should maintain a reasonable proportion to claims reimbursed. However, if this equilibrium becomes skewed -- as appears to be the case today -- it can lead to negative consequences for Americans of all stripes. A solution is needed for this pressing issue.

One of the major causes contributing to these challenges has been what appears to be a singular focus by health insurers to enhance their pricing power. This issue, which emerged as a concern in the wake of the passage of the Affordable Care Act has now turned into a full-blown crisis as some health insurance companies continue to vertically integrate their operations. 

This is not to say that all vertical integration, including that of healthcare systems, is not without promise. As someone who has worked within several such systems, both public and private, I have seen how the care of patients can be improved through tighter integration of various points along the healthcare value chain. It can serve to lower barriers to clinician communication, incentivize high quality practice patterns, and reduce inefficiencies in an extremely complicated and expensive delivery system. But this is only the case when the most important of all stakeholders is the patient. 

Conversely, recent restructuring efforts by insurers, which appear geared to further consolidate their control over rate-setting and skirt federal rules that cap how much they can retain in premiums for administrative costs and profits seem to go beyond this. It has not only garnered the attention of the Department of Justice (DoJ) but has also jeopardized resiliency in the healthcare system more broadly.

The recent scrutiny surrounding UnitedHealthcare, the largest health insurer in America, illustrates this point. Reports indicate that the DoJ has launched an investigation into the company for a range of anticompetitive practices stemming from its acquisition of Optum Health, a division that now controls a network of providers including 90,000 physicians, as well as surgery centers, health data and technology units, and a pharmacy-benefit manager. Investigators have expressed concerns that this network has been used to prevent rival physicians from accessing beneficial payment arrangements and to unfairly disadvantage health insurers that compete with UnitedHealthcare, among other things, demonstrating how such efforts to shift operations have allowed insurers to increase their profit margins and limit competition. 

The recent cyberattack on UnitedHealth's Change Health subsidiary further highlights the additional risks of concentrated market power. The company -- which was acquired by UnitedHealth in 2022 over DoJ objections – is the nation’s largest health care payment system and handles billions of transactions annually. Labeled “the most significant cyberattack on the U.S. health care system in American history,” the ensuing service disruptions have caused financial chaos for a broad spectrum of providers and demonstrate the hazards of vertically integrating such an array of services under one potential point of failure such as a health insurer like UnitedHealth.

Such incidents show how concentrating too many parts of the healthcare supply chain under one company can wreak havoc on the entire system. Unfortunately, these issues are not unique to UnitedHealth or any one insurer but reflect broader dynamics that are worthy of examination, especially against the backdrop of nearly 200 rural hospital closures since 2005 and major affordability issues for patients. 

Thoughtful solutions will be needed to lower the cost of health insurance to protect patient access to care and to ensure fair reimbursement for providers, and insurance companies, policymakers, and regulators should all have a shared interest in building a more balanced, resilient, and equitable healthcare system. There will also be a role to play for patient advocate groups, some of which including Arnold Ventures and Power to the Patients, have been vocal in Washington in opposition to necessary hospital mergers but have been curiously silent to date on the issue of consolidation in the health insurance industry.

Ultimately, the path to a better healthcare future starts with open and honest conversations. By acknowledging both the challenges and the opportunities before us, we can begin to bridge divides and find workable solutions. It will take creativity, compromise and a willingness to adapt -- but a healthcare system that delivers quality, affordable care to all Americans is possible if we work together in good faith. The time to start is now.

Dr. William Strimel, DO, is the Founder of Tulio Health, a specialty medical practice that provides a proactive approach to health and wellness for men, and the former President of a regional physicians network.

Image: UnitedHealthcare