UnitedHealth CEO Brian Thompson was killed in a targeted shooting outside a Hilton hotel in Midtown Manhattan on December 4, 2024, when he was about to speak at an investor conference. While mourning and preoccupation spread among economic and political elites, a mix of celebration and snark dominated social media commentary. There has been an outpouring of empathy for the perpetrator, shirts with the murder scene printed on it, and even a UnitedHealth CEO shooter look-alike contest in Washington Square Park. When a community of internet sleuths was asked to collaborate with the police to find him, they reportedly responded “Absolutely the F– not”. This reaction brings to light a widespread and deep-seated contempt for health insurance companies, who are single-handedly responsible for hundreds of thousands of cases of premature death, disability, and bankruptcy a year.
A profit-driven health system
It is well known that the U.S. healthcare system is the most dysfunctional among high-income countries. Not only do the outcomes pale in comparison to countries with similar levels of economic development (and many less-developed countries), but most notably, the U.S. spends twice as much on healthcare. It is important to note, however, that it is private spending that makes the difference: premiums, copays, deductibles, and other out-of-pocket costs. A study by Papanicolas and colleagues found that, whereas public health spending in Germany, France, or the UK in 2016 were comparable to that in the United States, their private health spending was only about 30 percent of their public spending. In the United States, in contrast, private spending was as high as public spending. At the same time, the U.S. had worse outcomes than any of the other 10 OCDE countries in life expectancy, maternal mortality, infant mortality, uncontrolled asthma, and more.
Why does healthcare in the United States consume so many resources and deliver such ghastly results? The same study points to a unique characteristic of U.S. healthcare: it is the only system where the main source of basic care is private insurance, whether through employer-based or individual plans. This is key to understanding the paradox between poor outcomes and extraordinary spending. If anything characterizes U.S. healthcare, it is extreme commodification: at every step of the way, there is a private actor making a profit. It resembles a government-sponsored hunting reserve, where a number of predatory industries (private hospitals, Big Pharma, and pharmacy benefit managers) prey on defenseless individuals. Each of these predatory industries takes a cut, inflating the final bill, and at the very center are private health insurance companies, connecting patients with all other players in the health system.
How did insurance companies become so big?
The reason why private health insurance plays such a central role in our healthcare system is government policy. It is only because the state does not provide direct access to healthcare, as it does in every other industrialized country, that private companies can play this role. And the reason why this is the case in the U.S. is the relative weakness of the working class at the time when social welfare policy was consolidated.
When President Franklin Delano Roosevelt rolled out Social Security, unemployment insurance, and massive public works programs as part of the New Deal, a public health insurance program was left out of the final bill, largely acquiescing to resistance from the American Medical Association (AMA). Notably, however, the AFL and later the AFL-CIO historically refused to fight for government-sponsored healthcare. AFL national secretary Samuel Gompers had explicitly opposed it in the early 20th century on the grounds that union-negotiated benefits were a major incentive for workers to join a union. A similar logic drove national union leaders to give only formal support to a universal health system in the 1940s but do little to wrest that right against the organized opposition of the AMA, the American Hospitals Association, and a small but growing new actor: insurance companies.
Without a labor party that could represent the interests of the working class (however distorted this translation might have been in other countries), and with a labor movement that was quickly embracing “business unionism” (treating unions as service providers rather than fighting organizations), the prospects of winning universal healthcare looked grim. These were the social and political forces behind the push for universal healthcare in European countries. As a result, a new proposal that would have introduced public universal health insurance, the Wagner-Murray-Dingell bill, was defeated in Congress in 1945.
In the meantime, a tectonic shift was taking place. Since the National War Labor Board froze wages during the Second World War, companies began to offer health insurance as a tactic to attract employees. In 1954, a change in the tax code made employers’ health insurance contributions tax-deductible (a provision that is still in place today) further establishing private insurance’s prominent role in the health system. Between 1940 and 1960, the percentage of people covered by private health insurance skyrocketed from 10 percent to 70 percent.
The making of a monster
At the beginning, however, the health insurance market was dominated by not-for-profit companies: Blue Cross and Blue Shield, With the former covering hospital services, and the latter physician care. The “Blues” were born out of rising healthcare costs as medical care became more complex and successful in dealing with health problems and became extremely popular, for good reason. The Blues were organized on a principle of solidarity: they accepted everyone, and they charged the same premiums to all individuals, no matter how sick or how old.
The increasing need for health insurance and the tax benefits provided by the government with little regulation created fertile ground for profit-making. For-profit insurance companies, such as Cigna and Aetna, grew rapidly in the 1970s and 1980s through aggressive marketing and leveraging their close ties with businesses. The lack of regulation allowed them to deny coverage to high-risk individuals and focus on healthier people, and this in turn allowed them to charge lower premiums while still maintaining high profits. It didn’t take long until the Blues, burdened with the most sick and still committed to inclusion and solidarity principles were driven out of business.
When the Blues went bankrupt, private insurance companies cannibalized them They bought their state brands (e.g. Texas Blue Cross) and kept their name with the hope of squeezing some gains from the good reputation attached to them. With the conversion of the Blues into for-profit corporations, a large share of the premiums went into executives’ and investors’ pockets: the percentage of revenues allocated to paying for medical care fell from 95 percent of premiums to 80 percent.
The business of denying healthcare
Health insurance’s business model is straightforward: given an agreed upon premium, all medical expenses they cover represent a loss for the company. In fact, the percentage spent on healthcare is explicitly called the “medical loss ratio.” In order to reduce this cost, they have engineered a number of strategies. Up until the early 2000s, they continued to deny insurance to high-risk individuals: anyone with “pre-existing conditions” such as diabetes or a kidney disease, could be rejected. Although outright insurance denial is no longer allowed since the passage of the Affordable Care Act (ACA), the next favorite strategy is very much in place today: coverage denial.
Michael Moore’s documentary Sicko made a splash in 2007 by exposing health insurance companies’ modus operandi. When a beneficiary incurs costly treatments, like cancer therapies or surgery, an army of bureaucrats is ready to scrutinize the case and find causes for denial — sometimes before, but oftentimes after care was provided. The film shows how medical reviewers working for the company, in charge of ultimately approving or denying care, were given bonuses if they reached high denial rates. Dr. Linda Peeno, former medical reviewer at Humana, is featured giving testimony before Congress in 1996 where she explains that she “denied a man a necessary operation that would have saved his life and thus caused his death.” By doing this, Peeno saved the company half a million dollars, and was promoted to medical executive, securing a six-figure salary.
Another former insurance company employee explains, “It’s not unintentional, it’s not a mistake, it’s not an oversight. You’re not slipping through the cracks. Somebody made that crack and swept you towards it. And the intent is to maximize profits.” That is the bottom line: To maximize profits, health insurance companies do anything they can to deny care. But this is only the most brazen tactic in a vast repertoire.
Health insurance companies have an even more insidious way to reduce healthcare costs: discouraging insurance holders from seeking care. The most effective way to do this is to penalize them every time they do. Copays, coinsurance, deductibles — these are all cost-sharing mechanisms justified as necessary provisions to avoid “overuse.” Yet “overuse” is a marginal problem in any healthcare system and it is overblown both by the health insurance industry and by pro-market research groups like the RAND Corporation to justify market-friendly restrictions.
The main reason these cost-sharing mechanisms exist is to discourage individuals from seeking care. The second reason is to unload part of the cost on the patient. There is overwhelming evidence that when people face copays and coinsurance, they forgo medical visits even if they dearly need them. Of course, lower-income families are hurt the most. Many of them are forced to seek care only when they think it’s a potentially serious condition — the problem is that, in most cases, it is the healthcare professional who can tell whether a situation is severe, life-threatening, or nothing to worry about. This, along with the millions of people who are still uninsured, is a key explanation for embarrassing U.S. health indicators.
Another way health insurance companies cut costs is by restricting the network of providers under coverage. Out-of-network care may be outright denied, or may be subject to steep copayments. In certain specialties, such as mental health, finding an in-network provider may prove nearly impossible. This is because insurance companies have recently resorted to “ghost networks,” where most of the professionals listed in their directories are no longer taking patients, have dropped the insurance years ago, or don’t even exist.
It is worth noting that, despite the overwhelming evidence showing the bankruptcy of our health system, up to these days, the AMA has not endorsed any form of universal healthcare, whether under the label of a single-payer national program or Medicare for All. Most tragically, the AFL-CIO and most major national unions have refused to endorse, much less push for, universal healthcare. This is a great gift to employers, who love to have the power to give or take away workers’ insurance. They leverage this power by threatening to fire (and thus leave uninsured) employees involved in union drives, and they effectively use this power when they suspend health insurance to striking workers, as Boeing did this year.
Integration and consolidation: The age of monopolies
The ACA was an attempt to tweak the healthcare system to address its most dystopian aspects (like those featured in Moore’s film) without changing any of the fundamental problems. With regards to health insurance, it introduced minor regulations in exchange for a big boost. The regulations were simple: insurance companies could no longer deny care based on preexisting conditions, and they were also prevented from charging an outrageous amount on premiums based on the individual’s risk (which is almost equivalent to denying insurance). Why did they accept this change? Because they were given two generous gifts. The most obvious one was the “individual mandate,” a provision by which every adult individual was required to buy health insurance, or they would face a penalty. This was a boon for insurance companies, since most people who choose to be uninsured are young and healthy. The second gift were the premium subsidies, which were presented as a benefit for individuals buying health insurance directly in the marketplace (as opposed to having it through their jobs), but which were in fact a direct flow of federal cash to the insurance industry.
There is a less-known provision in the ACA that had unintended consequences. In an effort to reduce overhead costs, the bill mandated that 80 to 85 percent of premiums be spent on medical care, effectively capping profits rates for the health insurance industry. This pushed insurance companies to “vertically integrate,” that is, acquire clinics, doctors’ practices, and other providers to increase their profit margins. If the insurance part of a health conglomerate can’t collect more than a 20 percent in profits, now they can pay themselves handsomely for the services they cover, and reap the profits at the end of the pipeline.
This change accelerated a trend of mergers and consolidations that was already underway. UnitedHealth Group has been a pioneer in this practice. Over the past decade, its prescription and medical services arm, Optum, has steadily increased its share of revenue and now accounts for more than half of the company’s earnings. Apart from being one of the largest pharmacy benefit managers, Optum owns or has a direct relationship with over 90,000 doctors’ offices across the country. Other insurance companies and pharmacies have followed suit, in a frenzy of consolidations that has few precedents.
The result is a higher consolidation of a handful of monopolistic health conglomerates that colonize new spheres of healthcare, set prices, restrict coverage, and render the whole system more opaque to increase their profits at the expense of our health.
To say that U.S. healthcare is in crisis would be a serious understatement. The American people have learned to naturalize a deeply corrupt, inhumane, and deleterious system that allows business people to reap lofty profits even if it brings death, disability, and pain onto millions of families every day. This is why the murder of Brian Thompson is being read by so many as an act of social justice, or revenge of the oppressed. The incident, and the massive display of support for the shooter, are forcing the country to reckon with one of the worst aspects of American capitalism.
Our best hope is that this conversation spreads among union members and labor activists. The bureaucratic union leadership will not willingly take up this demand, but the rank and file can organize to force this onto the agenda, vote on a concrete plan of action, and build coordination with other unions. The only chance to overcome the powerful lobby of the medical industrial complex is if the demand for universal healthcare is taken up by a revitalized and militant labor movement, one that can set the record straight, refuse to settle for employer-based benefits, and shows the hegemonic potential of the working class by securing free healthcare for all.
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