Congress challenges health insurers saying they put profits over patients

UnitedHealth Group will rebate its profits this year to the 1 million people who receive healthcare coverage through its Affordable Care Act (ACA) exchange plans, Chairman and CEO Stephen J. Hemsley told Congress during a hearing today.

Hemsley was among several insurers who testified before the House Committee on Energy and Commerce, Subcommittee on Health, to address access and costs of healthcare. National health expenditures increased by 7.2% to $5.3 trillion in 2024, according to CMS. Hospital expenditures grew 8.9% to $1.6 trillion in 2024, compared with a 3.2% growth rate in 2022, and prescription drug spending increased 7.9% to approximately $467 billion in 2024, according to data presented in a memorandum by the subcommittee.

High costs and access to healthcare are bipartisan concerns, but Republicans and Democrats in Congress and insurance companies all differ on why they think those costs are high and how to help consumers and patients.

Hemsley’s prepared remarks with information about the rebate on its profits for the ACA plans were released yesterday ahead of the meeting.

Several committee members accused insurers of putting profits ahead of patients, and several called out how vertical integration provides perverse incentives. Some members even pointed to the high salary packages of executives.

David Cordani, president, CEO, and chairman of the board at The Cigna Group, during his opening remarks, put the blame for high healthcare costs on hospitals and pharmaceutical companies, while at the same time insisting that “health plans, hospitals, drug manufacturers, physicians and policymakers work together with the patient at the center.” His testimony followed the trade association for health plans, AHIP, which just yesterday issued a release that said 40% of every premium dollar is used to cover hospital-related costs.

Prior authorization

But what sparked bipartisan anger was prior authorization and claims denials by insurers. The 2023 Medicare Advantage data showed that insurers partially or fully denied 3.2 million prior authorization requests, reflecting 6.4% of total healthcare claims for the year.

Hemsley, in particular, faced pointed questions about specific patients who were denied medication and hospital stays. Kim Schrier, M.D., a Democrat from Washington, during questioning, pointed to a patient in her district who had a UnitedHealth Medicare Advantage plan, saying the plan refused to pay for that hospitalization because it was medically unnecessary, overriding the doctor’s own medical decision.

“I’m sure this is not a news flash for you, but people are pretty pissed off at their insurance companies because they are paying more every single year, and they feel like they are not getting the value for it, and like you are not living up to your end of the bargain,” Schrier said. “To the rest of us, this looks like your business model. It looks like you bet on wearing patients down, and then they either decide to just eat the cost, or they die before they get the care they need. My constituents are sick of it. Doctors are sick of it. People deserve better.”

Nanette Barragan, a Democrat from California, displayed a chart from KFF, which showed that UnitedHealth Group had an in-network denial rate of 33% for claims in the ACA marketplace in 2023. Hemsley: The company’s overall claim denial rate is less than 2%.

Barragan also talked about a specific constituent with a three-year-old daughter with a tumor in the bladder who faced bankruptcy because of a a $1 million claim that UnitedHealth said was medically unnecessary. She said House members were talking about specific cases to make it real for the insurance executives.

Hemsley, while expressing sympathy, did not address these situations specifically.

David Joyner, chairman and CEO of CVS Health, said the company is working to automate the prior authorization process. He indicated in his opening statement that 77% of authorization requests are approved in near real time and expects that number to be 80% by the end of the year. In a separate news release, the company said they approve more than 95% of all eligible prior authorizations within 24 hours, with many completed instantaneously. The company also bundles prior authorizations for certain conditions into a single request that would provide approval for a series of future tests and interventions for a line of care.

Vertical integration

Both Republicans and Democrats also questioned insurers' company executives about vertical integration that leads to market concentration. Consolidation within healthcare has led to “a system of haves and have-nots where market power is concentrated, where competition is weakened, independent providers are squeezed out and families are forced to pay more,” said Lori Trahan, a Democrat from Massachusetts. “The lack of real checks and balances is bad for patients. It’s bad for innovation, and it’s bad for affordability.”

She challenged Hemsley to identify where competitive pressure is supposed to come from when the UnitedHealth insurer, the doctors, the pharmacy benefit managers and the care delivery system are all owned by the same company.

Hemsley defended vertical integration, saying it brings a better care experience and more value to the healthcare environment in total, with better coordination of care, better use of data, and more engagement in critical areas in healthcare, including how drugs are made available and integrated into therapies.

Alexandria Ocasio-Cortez, a Democrat from New York, posed a similar question to CVS Health’s Joyner. She pointed to the CVS’s own strategy as outlined in a recent investor call where company executives outlined a “fully engaged” member as someone who has an Aetna health insurance plan, which is owned by CVS Health, sees a doctor at Oak Street Health, also owned by CVS, who prescribes her medication, which is filled by a CVS Pharmacy.

“It’s great marketing. A fully engaged member unlocks sizable value for payers and CVS Health because the health insurance company gets a cut, the pharmacy benefit manager gets a cut, the drug manufacturer gets a cut, and the patient gets screwed,” Ocasio-Cortez.

Joyner defended the approach, saying it is a model that works well for the consumer.

Ocasio-Cortez suggested there was a need in healthcare for a law similar to the Glass-Steagall law. (The Banking Act of 1933, known as Glass Steagall, separated insurance, commercial banking and investment banking and created the Federal Deposit Insurance Corporation.)