The Alarming State of the American Healthcare System: Profits, Insurers, and the Rural Hospital Crisis

Ben H.

Ben H.

Sep 15, 20233 min read

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The Alarming State of the American Healthcare System: Profits, Insurers, and the Rural Hospital Crisis

Introduction:

The American healthcare system has long been a topic of debate and concern. In the first half of 2023, seven big health insurers raked in an astounding $683 billion in revenues, primarily through taxpayer-supported programs and the pharmacy supply chain. However, this profitability comes at a cost, as Wall Street's dissatisfaction has led to double-digit premium increases for American employers and families. Moreover, insurers are resorting to AI and other tactics to deny coverage and reject legitimate claims, causing further distress. On the other hand, the rural hospital crisis looms large, with over 600 medical centers at risk of closure due to operating losses. This article aims to shed light on these interconnected issues and explore potential solutions.

The Profitability of Health Insurers:

During the first six months of 2023, for-profit health insurers witnessed staggering profits, exceeding $40 billion, with revenues surpassing two-thirds of a trillion dollars. Compared to the previous year, their profits increased by 8.1%, while revenues saw an 11% surge. However, the stock market did not respond favorably to these insurers, as evidenced by the decline in share prices for Molina, Humana, UnitedHealth Group, Elevance, Cigna, Centene, and CVS/Aetna. These declining stock prices, in turn, contribute to the rising premiums that American employers and families will face in 2024.

Enrollment Trends and Manipulation:

Despite the stock market challenges, some insurers experienced growth in their enrollment numbers. UnitedHealth's Medicare Advantage enrollment increased by 10%, while Cigna, CVS/Aetna, Elevance, and Humana also witnessed notable growth in their Medicare Advantage and Medicaid enrollments. However, three dominant players in the market, Cigna, CVS/Aetna, and UnitedHealth, leverage their control over the pharmacy benefit management (PBM) market to manipulate their medical loss ratios (MLRs). This manipulation enables them to keep their MLRs deceptively low, ultimately benefiting their financial standings.

The Rural Hospital Crisis:

Over 600 rural hospitals, accounting for approximately 30% of all rural medical centers, face imminent closure due to operating losses. Disturbingly, nearly half of these hospitals lack the financial reserves to sustain losses beyond two to three years. This dire situation is particularly prevalent in states like Connecticut, Hawaii, Kansas, and Vermont. The primary reason for these closures is the underpayment by private insurance plans, which fails to cover the cost of delivering services to patients. Consequently, healthcare disparities in underserved rural populations intensify, highlighting the urgent need for action.

Connecting the Dots:

The profitability of health insurers, the manipulation of enrollment numbers, and the rural hospital crisis are all interconnected facets of the American healthcare system. The pursuit of profits by insurers and the inadequate reimbursement rates imposed by private insurance plans have dire consequences for healthcare accessibility and quality. While Wall Street celebrates soaring revenues, rural hospitals struggle to stay afloat, leading to potential closures and exacerbating healthcare disparities.

Actionable Advice:

  • 1. Advocate for Policy Changes: It is crucial to advocate for policy changes that prioritize fair reimbursement rates for rural hospitals. This includes pushing for legislative reforms that address the underpayment issue and ensure the financial stability of these vital medical centers.
  • 2. Support Rural Hospital Initiatives: Consider supporting initiatives and organizations working towards the preservation and revitalization of rural hospitals. Donations, volunteering, and spreading awareness can all play a role in combating the crisis.
  • 3. Promote Universal Healthcare: The alarming disparities within the American healthcare system highlight the need for a comprehensive and inclusive approach. By advocating for universal healthcare, we can strive towards a system that prioritizes patient care over profits and ensures equal access to quality healthcare for all citizens.

Conclusion:

The American healthcare system's flaws are evident in the profitability of health insurers and the impending closure of rural hospitals. As we navigate these challenges, it is crucial to recognize the interconnectedness of these issues and work towards comprehensive solutions. By advocating for policy changes, supporting initiatives, and promoting universal healthcare, we can strive towards a more equitable and accessible healthcare system for all.

Resource:

  1. "First half of 2023: 7 big health insurers pulled in $683 billion in revenues – largely through taxpayer-supported programs and the pharmacy supply chain", https://wendellpotter.substack.com/p/first-half-of-2023-7-big-health-insurers?r=23hgat&utm_source=substack&utm_medium=email (Glasp)
  2. "LinkedIn", https://www.linkedin.com/news/story/30-of-rural-hospitals-could-close-5306761/ (Glasp)

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