Why health insurance upsets Americans

The deadly, targeted shooting of UnitedHealthcare CEO Brian Thompson has unleashed a torrent of pent-up anger and resentment toward the insurance industry, renewed calls for reform and reignited a debate over health care in the U.S. 

Almost no expert, provider, or patient would say U.S. health care works as it should for patients. The problem is deciding how to improve it.

Luigi Mangione, 26, is accused of fatally shooting Thompson outside the Hilton hotel in midtown Manhattan on Dec. 4, as the CEO headed to the annual investor day of his company’s parent, UnitedHealth Group. Investigators have said Mangione was a critic of UnitedHealthcare and the broader health-care industry.

The killing sparked a flood of social media posts voicing negative experiences with insurers, morbid praise and justification for Thompson’s killing and threats toward other insurance executives – igniting frustrations that have bubbled for years. Those reactions drew rebukes from others who condemned them as inhumane after Thompson’s death. 

U.S. patients spend far more on health care than anywhere else in the world, yet have the lowest life expectancy among large, wealthy countries, according to the Commonwealth Fund, an independent research group. Over the past five years, U.S. spending on insurance premiums, out-of-pocket co-payments, pharmaceuticals and hospital services has also increased, government data shows.

Many patients, advocacy groups and experts say the industry and U.S. health-care system are flawed or broken entirely, often burdening Americans who simply need care with exorbitant costs and daunting hurdles. But there is less consensus on the root cause of the insurance issues and how exactly to fix American health care, a complicated and entrenched system for delivering services and treatments that costs the nation more than $4 trillion a year. 

Some experts acknowledged that insurers play a valuable role and must deal with a larger system where multiple stakeholders balance providing care with profit motives. Other experts also noted that insurers have had to grapple with pressures on their businesses, such as lower government reimbursement rates for private Medicare plans and higher medical costs among enrollees in those programs. UnitedHealthcare in particular is also grappling with the fallout from a massive ransomware attack in February targeting its company, Change Healthcare, which processes medical claims.

But patients and advocacy groups stressed that those companies’ decisions often come at the expense of patients. Insurers’ moves to rein in costs for services can often lead to denied or delayed claims, higher premiums and unexpected bills, which can leave patients without care and be the difference between life or death.

The U.S. insurance industry is dominated by private-sector companies such as UnitedHealth Group, CVS Health and Cigna, and operates as a largely for-profit enterprise — in contrast with most other wealthy countries. That means the industry’s primary goal is to generate profit by charging premiums to customers and managing claims to minimize payouts while complying with regulations and satisfying customers.

That leads insurers to weed out care that’s not medically necessary or not backed by scientific evidence, which helps increase their profit margins. But companies can also deny reasonable and necessary claims, preventing patients in genuine need of care from getting it or leaving them with hefty medical charges. 

Tactics include delaying or denying valid claims to limit payouts, increasing premiums in a way that disproportionately burdens lower-income patients and people of color, and requiring prior authorization, which makes providers obtain approval from a patient’s insurance company before administering specific treatments. Insurers increasingly rely on technology, including AI, to review claims, which can lead to inaccurate denials or improper payouts. 

Roughly half of insured adults worry about affording their monthly health insurance premium, according to a March survey from KFF, a policy research organization. The survey added that large shares of adults with employee-sponsored plans and government market coverage rate their insurance as “fair” or “poor” in terms of their monthly premium and out-of-pocket costs to see a doctor. 

A separate KFF survey from 2023 showed that nearly one in five adults had claims denied in the past year. People who used more health services were more likely to have claims rejected, according to the poll. 

No one knows exactly how often private insurers deny claims, since they are generally not required to disclose that data. But UnitedHealthcare, which as the largest private health insurer in the U.S. posted more than $281 billion in revenue last year, is a frequent target for criticism over how it handles claims. 

For example, UnitedHealthcare last year settled a case brought by a severely ill student at Penn State University who claimed the company denied coverage for drugs his doctors determined were medically necessary, leaving him with a bill of more than $800,000. An investigation by ProPublica outlined the lengths UnitedHealthcare went to reject claims, including by burying medical reports. UnitedHealthcare has since settled the case.

Families of two now-deceased customers also sued UnitedHealthcare last year, alleging the company knowingly used a faulty algorithm to deny elderly patients coverage for extended care deemed necessary by their doctors. In court filings earlier this year, UnitedHealth Group said it should be dismissed from the lawsuit because the patients and their families did not finish Medicare’s appeals process for claims.

Some people aired their frustrations with the company’s practices on social media when reacting to Thompson’s death.

One Instagram user wrote in a post that “My condolences are out-of-network.” Another user commented under a CNBC Instagram post about the killing, “Sorry but with the way they be denying coverage for everyday patients.. no comment.”

Celebrating or justifying the death of anyone is “appalling,” said Caitlin Donovan, senior director of Patient Advocate Foundation, which provides case management services and financial aid to Americans with serious illnesses. But she said it is not surprising that people are frustrated with the health-care system. 

“People just want the system to be fair,” Donovan said. “They want to pay a reasonable amount and have their health care covered, and they want to be able to access what their trusted provider is prescribing them.”

Though the issues are well understood, parsing out which stakeholders are to blame is a complicated task.

Some industry experts argued it is necessary for insurers to control costs under the current health-care system. Insurers are mostly paid by employers and government agencies, which set many of the rules around the coverage they offer. 

If insurers paid out every claim they received, premiums would likely skyrocket, said Evan Saltzman, professor in the department of risk management/insurance, real estate and legal studies at Florida State University’s College of Business.

“If you want to keep premiums reasonable, you do need the insurer to police some of the claims being filed,” Saltzman said. He acknowledged insurers sometimes deny “perfectly reasonable claims” and not just unnecessary or fraudulent care. 

He said insurers can also help police bad actors in the health-care system, such as some doctors who attempt to prescribe unnecessary treatments to patients to increase profits. 

Saltzman said one of the underlying causes of insurance issues is “information asymmetry” between insurers and patients. Patients often know more about their personal health risk than their insurance company, but the insurer often knows far more about the health-care networks and coverage details, Saltzman said.

UnitedHealth Group CEO Andrew Witty similarly blamed a lack of transparency in the insurance industry in a New York Times opinion piece on Friday, his first public remarks since the shooting. He said insurers, together with employers, governments and other payers, need to better explain what is covered and how those decisions are made. 

Still, he defended the way insurers make claim decisions, saying behind them “lies a comprehensive and continually updated body of clinical evidence focused on achieving the best health outcomes and ensuring patient safety.”

But Donovan said Witty’s column “missed the mark.” While the health-care system needs more transparency, Donovan said Witty’s proposed solution “puts the onus on patients when that’s not where it should be.” 

Insurance policies are often written with technical language that is difficult to understand. Patients could become confused about what is covered, and may not realize the limitations of their coverage until they try to file a claim, she said.

Donovan believes the root issue is cost — a system built around maximizing prices and revenue, rather than helping patients. 

For example, the industry has limited competition after consolidation, and its traditional payment model reimburses providers based on each service they perform, which can lead to overtreatment and higher costs. 

Drug middlemen called pharmacy benefit managers — which negotiate drug discounts with manufacturers on behalf of insurance plans — also put pressure on other parts of the system. For example, lawmakers and drugmakers have accused PBMs of charging insurers more for drugs than they reimburse pharmacies, pocketing the difference as profit. 

Donovan acknowledged that insurers attempt to negotiate with providers to cut prices for services and products. But she said insurers are often more focused on managing costs for their business than advocating for patients. 

Industry experts don’t expect insurance companies to make material changes to their policies in response to the killing. 

Policy changes at companies alone won’t drastically improve care for patients, according to Veer Gidwaney, the founder and CEO of Ansel Health. His private company offers simplified supplemental insurance for members diagnosed with more than 13,000 conditions

Gidwaney said there will need to be structural changes to the entire industry, which will require harder, longer-term legislative efforts. That may prove difficult with Republicans set to take control of a closely divided Congress for the next two years.

To decrease costs and barriers to access for patients, Donovan said the government could more heavily scrutinize the health-care consolidation that eats up independent providers. She also said legislators could pass more laws to protect patients from surprise ambulance bills and address shortages across the health-care system that drive up costs, such as the limited supply of certain drugs or clinicians. 

The incoming administration under President-elect Donald Trump could also push for more transparency in the health-care industry, according to Stephen Parente, an insurance professor at the Carlson School of Management at the University of Minnesota. Parente served in two different health policy roles in the first Trump administration and has worked directly with UnitedHealthcare’s Thompson. 

He noted, for example, that the Trump administration issued a rule that required most employer-based health plans and issuers of group or individual plans to disclose price and cost-sharing information for covered items and services, which went into effect in July 2022. 

“There might be fresh pressure for denial rates to be put out. I’d like for insurers and Medicare to be transparent about their denial rates,” Parente said. 

Until any significant changes occur, patients can “really try to take control of their own health,” said Michael Hinton, a patient who was diagnosed with a chronic digestive disease called gastroparesis more than 14 years ago. He said that could look like taking notes and asking questions during appointments, tracking insurance payments, learning more about the condition they suffer from and turning to third parties for help.

In Hinton’s case, the Patient Advocate Foundation helped him navigate coverage for a critical surgery that was denied twice by his insurance. 

“I find it so disturbing and sad. It’s just unbelievable,” Hinton said, referring to the fatal shooting earlier this month. “There are other methods of change — and that could look like trying to be your own advocate.”