Insurance companies aren't the main villain of the U.S. health system

It's mostly the providers overcharging you, not the middlemen.

Photo by Marcelo Leal on Unsplash

“I’d rather die than owe the hospital til I get old” — Courtney Barnett

When UnitedHealthcare CEO Brian Thompson was gunned down in the street in cold blood the other day, a bunch of people on the internet gloated and cheered:

The jokes came streaming in on every social-media platform, in the comments underneath every news article. “I’m sorry, prior authorization is required for thoughts and prayers,” someone commented on TikTok, a response that got more than fifteen thousand likes. “Does he have a history of shootings? Denied coverage,” another person wrote, under an Instagram post from CNN. On X, someone posted, with the caption “My official response to the UHC CEO’s murder,” an infographic comparing wealth distribution in late eighteenth-century France to wealth distribution in present-day America…On LinkedIn, where users post with their real names and employment histories, UnitedHealth Group had to turn off comments on its post about Thompson’s death—thousands of people were liking and hearting it, with a few even giving it the “clapping” reaction. The company also turned off comments on Facebook, where, as of midday Thursday, a post about Thompson had received more than thirty-six thousand “laugh” reactions.

In general, I think it’s a very bad look to endorse murder. And I think this kind of thing is a sign of how stressed-out and mentally unbalanced our country is after an era of unrest. (The chief suspect, who was just apprehended, looks like a random crazy guy rather than a leftist ideologue.)

But more fundamentally, I think the outpouring of schadenfreude¹ at Thompson’s killing reflects some deep-seated popular misconceptions about the U.S. health care industry. A whole lot of people — maybe even most people — seem to regard health insurance companies as the main villains in the system, when in fact they’re only a very minor source of the problems.

All my life, Americans have been raging at health insurers. Who could forget this clip from the 1997 movie As Good as It Gets?

It’s not hard to understand why people hate health insurers. When you interact with the U.S. health care system, the providers — the hospital staff, the doctor, the nurses, the technicians — all just take care of you. The only time they ask you for money during your doctor visit is when you pay your copay at the front desk, and that’s usually not that big — if the bill is big, they’ll send it to you later. So for the most part, your interaction with the providers is just you walking up and asking to be taken care of, and them taking care of you.

Your interaction with the health insurer, on the other hand, feels like a struggle against an enemy who wants to destroy you. If you get a big hospital bill days after your visit, it’s because the insurer wouldn’t cover the whole cost. If the bill is a surprise because the provider didn’t tell you they were out of network, that also feels like the insurance company’s fault — why wasn’t that provider in their network?

Even more terrifying is when insurers deny coverage completely, which happens to about 10-20% of claims. It feels like you’ve been robbed. You paid this company a hefty premium every month, and in exchange you expected them to pay for your health care if you needed it. And now you needed it, and they won’t even uphold their end of the bargain? Why were you even paying them the premium in the first place?

Everyone knows that denying claims is in the insurance company’s financial interest. The more they can get away with taking your monthly premium and then weaseling out of their end of the bargain, the more their shareholders and executives can walk away with giant bags of money. They’re the ones buying huge houses and yachts and whatever on the money they made from finding some technical reason to send you and thousands upon thousands of people like you into medical bankruptcy after your chemotherapy. Who wouldn’t be mad?

And yet when we take a hard look at the question of why Americans pay so much more for their health care than people elsewhere in the developed world, insurance companies and their profits just aren’t that big of a piece of the story.