No justice, no peace: Why Americans don’t trust insurance companies
by Adonis Hoffman, opinion contributor – 12/16/24 9:00 AM ET
Following the brazen murder of United Healthcare CEO Brian Thompson, many Americans have asked why there is so much hate for insurance companies. While there may be as many reasons as there are denials for millions of claims, it is clear the health insurance system is broken and needs repair.
Nothing underscores the point more than the pursuit of profits over patients by big insurance companies during the COVID-19 crisis.
Although the pandemic exposed glaring inequities in our healthcare system, few were as egregious as the profiteering of America’s largest insurance companies. At the height of the crisis, hospitals were overwhelmed and communities struggled to access care. At the same time, major health insurance companies reaped massive profits and withheld billions in federal relief funds meant for frontline healthcare providers.
In March 2020, the healthcare system buckled under the weight of unprecedented demand. Congress responded quickly by passing the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This sweeping legislation allocated $178 billion for healthcare providers through the Provider Relief Fund, a lifeline designed to support hospitals, clinics and frontline workers confronting the deluge of COVID-19 patients.
In theory, the Provider Relief Fund funds were to flow through insurance companies to healthcare providers, ensuring payment for COVID-19 testing, treatment and care. In practice, some of America’s largest insurers, including UnitedHealth Group and Anthem, delayed disbursing these crucial funds, profiting off taxpayer dollars while hospitals and clinics were left unpaid and under-resourced.
Insurance companies play an integral role in our healthcare system. They act as intermediaries between patients and providers and control the flow of payments that keep the system functional. But during the pandemic, many insurers failed to fulfill their role. Instead, they withheld funds or delayed reimbursements to the providers who needed them most, all while posting record profits for themselves in 2020 and 2021.
In 2020, UnitedHealth Group, the largest U.S. health insurer, reported $15.4 billion in profits, while Anthem boasted $4.6 billion. Across the industry, health insurers collectively earned over $50 billion that year. Meanwhile, hospitals were losing an estimated $323 billion, with small community providers bearing the brunt of the financial strain. Much of this loss was compounded by delayed payments from insurers and the misuse of federal relief funds.
UnitedHealth Group, Anthem and other major insurers reduced their medical payouts by tens of billions during the pandemic. Although most insurers suspended elective procedures and other non-emergency care, many also used the Provider Relief Fund payments as an opportunity to strengthen their balance sheets at the expense of healthcare providers. The consequences of insurance companies withholding payments have been devastating for healthcare providers. Scores of small community hospitals and healthcare providers have been forced to lay off staff and cut services. These providers relied on federal relief to remain viable, but with systematically slow payments — or no payment at all — many faced financial ruin, even to this day.
The delays and denials of claims during the pandemic were not isolated incidents. A study by the Kaiser Family Foundation found that more than 17 percent of COVID-related hospital bills submitted to insurers in 2020 were either denied or unpaid. In a patent display of hubris, insurers not only delayed payments but also challenged providers on coverage eligibility, using bureaucratic red tape to keep funds meant for life-saving care. All while receiving substantial government subsidies and raking record profits.
These actions were not only unethical but arguably illegal. Under the False Claims Act, entities that misappropriate federal funds can be held liable for treble damages (three times the amount of the misused funds) and face hefty penalties for each fraudulent claim. Insurance companies that knowingly held onto COVID-19 funds without passing them on to healthcare providers could face lawsuits that result in billions of dollars in penalties.
While withholding payments from healthcare providers is shameful, profiteering during a global pandemic is downright sinister. It is an affront to those who worked tirelessly to save lives during the crisis and a blatant disregard for the spirit, if not the letter, of the law.
As the nation learns hard lessons from the pandemic, we must address the systemic failures and repudiate the predatory practices of insurance companies that take advantage of that system. Our hospitals and healthcare providers met unprecedented challenges and relied on the full faith and credit of the United States for payment. They answered the call to serve our nation in a time of unknown crisis and consequence. Today, many of those smaller healthcare providers are still waiting to be made whole for the services they provided.
Congress and federal oversight agencies must continue investigating these practices and hold insurers accountable where warranted. Regulators should strengthen oversight of federal healthcare funds to ensure they flow directly to providers in future emergencies. Insurers must not be allowed to prioritize their balance sheets over the lives of patients and the sustainability of our healthcare system. The U.S. government fulfilled its part of the bargain by providing relief funds. It is now time for the major insurance companies to pay what they owe to hospitals and healthcare providers for their life-saving work. Justice delayed is justice denied, and the American people deserve better.
Nothing can justify the senseless murder of Brian Thompson. And yet the public enmity toward health insurers in its aftermath should move the industry to change its ways.