I’m sure it’s completely coincidental that insurance profits for 2025 weren’t released until after the entertaining (but probably performative) Congressional hearing that took place on January 22nd, where the CEO’s of Anthem BC/BS, United, Cigna, Aetna, and Blue Shield California faced a congressional panel who skewered them. None was more vehement than Dr. Greg Murphy (R-NC).
It was 9 hours of political theater, covering everything from bloated CEO salaries, high premiums and denial rates, pharmacy scams, and prior authorization.
And then there’s the medical-loss ratio profit schemes resulting from vertical integration (where the insurers own doctors, hospitals & pharmacy benefit managers in addition to being the insurer). Here’s AOC cheerfully telling the Aetna/CVS CEO that she’s fully aware of what’s going on:
“…the health insurance gets a cut, the pharmacy benefit manager gets a cut, the drug manufacturer gets a cut, and the patient gets screwed.”
Can’t put it more plainly than that! If you think vertical integration and medical-loss ratio money shenanigans don’t apply to us in mental health, think again!
The 2025 profit reports trickled out over the following two weeks (2025 CEO compensation isn’t yet available).
But apparently Wall Street isn’t impressed by these insurance profits?
Everyday people would be thrilled with $2.9 billion. But investors are underwhelmed as they probe beneath the surface of the reported insurance profits and look ahead to future insurance profits. In 2025, the percentages of premium payments reported by these 4 payers that were used to pay claims (the “medical loss ratio”) were quite a bit higher than last year.
- Aetna 94.8% (2025) — 92.5% (2024)
- Anthem 90% (2025) — 88.5% (2024)
- Cigna 83.7-84.7% (2025) — 83.2% (2024)
- United 88.9% (2025) — 85.5% (2024)
(Of course, no one’s talking about how much of that money is going into another pocket – to overpay wholly-owned subsidiaries, or entities in whom they have an investment relationship. But that’s a different blog!)
Higher medical loss ratios are great for us as clinicians and clients – it means claims are being paid. Not so for Wall Street. Health insurers aren’t like most “products,” where companies get richer the more the product is used. It’s the exact opposite – insurance profits most when we don’t use the product, i.e. file a claim.
Publicly-traded companies in all industries are expected to generate healthy year-over-year profits. And in the last 10-15 years, American health insurers performed to expectations. They gobbled up pharmacy benefit managers, created profitable health services divisions such as Optum, Evernorth, and Carelon, bought physician practices and facilities. It’s often been asserted that United HealthGroup employs, either directly or indirectly, about 10% of American physicians currently in practice.
But that unchecked expansion appears to be reaching its limit.
Failure to renew the expanded ACA subsidies, and the resulting astronomical premium increases, is likely to result in healthier people deciding to risk not being insured. Or to scale back to Bronze or Catastrophic policies to keep premiums “affordable.” People who may have initially enrolled in the Marketplace for 2026 may begin to drop coverage as the year progresses -so keep re-verifying your clients’ eligibility!
These developments in 2026 Marketplace coverage are likely to impact insurance profits negatively:
- Fewer enrollees paying less in total premiums.
- Medical loss ratio soars higher, as remaining ACA enrollees are people with more serious health conditions who can’t risk being uninsured. Claims will be more expensive, from a smaller pool of revenue.
The “One Big Beautiful Bill,” with its focus on imposing Medicaid work requirements and reducing the numbers of people eligible for Medicaid, will also heavily impact payers whose focus has been on Medicaid managed care. The people most likely to remain insured through Medicaid will be those most in need of expensive care. Again: fewer insurance profits as higher and higher percentages of premium dollars are (gasp!) actually having to be spent paying claims.
Then there’s “Medicare not-such-an-Advantage-after-all.” For years, taxpayers have been defrauded to the tune of about $75 billion per year in overpayments, thanks to those pesky risk adjustment audits you keep getting. How is it, then, that there have been no clawbacks for almost 20 years – since 2007? Each time the feds have tried to claw back, they’re met with lawsuits or appeals from the insurance payers, and have backed down. Supposedly, this time, clawbacks from payers will begin “soon.” Being originally from Missouri, I’ll believe it when I see it happen.
Medicare “Advantage” has been a gravy train with billions in insurance profits for over 2 decades. But the train may finally have reached the end of the line: on January 26, CMS announced that for 2027, there would only be a 0.09% rate increase to the payers, compared to the 5% jump from 2025 to 2026. Wall Street reacted accordingly. Stock prices tanked, dropping 5-13% in a single day.
These numbers are incomprehensible to most of us. A billion is an almost inconceivable amount. If I had a million dollars (I wish, right?), and I spent $1,000 per day, it would take me 3 years to spend it all. But if I had a billion dollars and spent $1,000 per day, I’d need more than several lifetimes to spend it: 2,739 years and 7 months, to be exact.
So how much is enough? How much longer can our healthcare system function under the status quo before it implodes on us?
The latest development: on February 10, two senators from opposite ends of the political divide announced that they’d joined forces, introducing a bill to “Break Up Big Medicine.”
I guess we’ll see what develops.
