When UnitedHealthcare’s chief executive Brian Thompson was murdered in December 2024, thousands of people flooded the internet to make jokes and rejoice over his death, as if he were some tyrant. In some ways, he was. He represented the imposing system that exploited and killed thousands, while still posing as the beacon of safety and support: the health insurance industry.
The CEO’s murder raised many important questions about the industry’s morally questionable practices which have hurt thousands before someone decided to protest by shooting the CEO. But what is the health insurance industry? How has it caused so much hardship that people are laughing at a man’s murder?
What are insurance companies and how do they make money?
Insurance companies base their framework on assuming the risk of an event on behalf of their customer. Basically, customers pay these firms to insure them financially in the case an event triggering this need happens. There are two main ways in which firms make money from this business: Charging premiums for coverage; and reinvesting these in assets which generate interest.
As the burden of information asymmetry is on the firm due to the moral hazard of customers being more reckless after an insurance purchase, or having a problem prior to purchasing the product, insurance firms should be more vulnerable than their customers. They counter this problem by pooling riskier customers with more reliable customers, meaning that the healthier customers are also paying for the issues of the more high-risk customers.
Morally questionable business practices
In order to prevent consumers from taking advantage of the insurance firm, as well as to maximise profits; these firms came up with the idea of “consumerism”. This would make consumers more accountable for their insurance costs by shifting hundreds to thousands of dollars of costs on the consumer to pay for before insurance can actually be usable. This way, it creates more incentive for consumers to continue to be safe, and also reduces costs for insurance firms, as they can still earn money while also making consumers pay for the costs that the firm was supposed to pay.
In 100 million people in the US with healthcare debt, a majority of these people have health insurance. However, due to the high premiums being paid by these households, the difficulty in acquiring the insurance coverage in the first place, and the gradual increase in price for these premiums. Today, a family may have to pay up to $18,900 USD before their health insurance is actually usable.
Is it just the health insurance firms?
Health insurance companies definitely have their problems which greatly contribute to the root cause of the problems with healthcare insurance in the US. However, these firms are not independent actors and exist within a system which does not hold these firms accountable, or even encourage this bad behaviour these amoral practices.
The US is the only wealthy country that has a private healthcare system in the way that the US operates. Most of these other countries have government run systems, or require citizens to purchase more affordable insurance. In 2013, when surveyed about whether it was the government’s responsibility for health care coverage; only 42% voted yes as opposed to 56% for no. In 2024, the results of this survey have shifted significantly; with 62% of Americans saying yes compared to the 36% voting no. The same is observed with the satisfaction of the overall healthcare system, with 56% of the citizens being content with the system in 2013 compared to the 44% of today. Thus, the government must also act on improving their healthcare coverage, reducing financial burden, or have a firmer grip on the quality and price of healthcare.
Other than the government, healthcare firms also have the opportunity to overcharge their products and services: “Health spending per person in the U.S. was nearly two times higher than in the closest country, Germany, and four times higher than in South Korea.”.
While these clinics are the ones who have increased prices, a large contribution of this comes from middlemen. These people negotiate with insurance firms and pharmacies; setting the prices of drugs, identifying which ones will be covered by insurance, and paying back pharmacies for prescriptions. The three largest middlemen manage 79% of the industry in drugs. This lack of competition means that they can set the price for various products, inflating prices exorbitantly to make a profit (Reuters).
All parts of their individual problems which work together to destroy the healthcare coverage that consumers expect to receive from paying to be compensated in the future. Healthcare industries have come up with tactics to cut costs. The government is still very late in their correction or even changing the system. Middlement further increases drugs, making health care even less accessible. Just to earn some money. All these firms have one goal in mind to amass as much wealth as possible, leading to the demise and suffering of millions of American citizens.
Written by Vi Lam Dinh
