The ugly product of capitalism: for-profit healthcare
Every month, working Americans prioritize paying their health insurance company over almost anything else. In 2025, healthcare premiums — the monthly charge for coverage whether or not you actually get sick — averaged more than $9,000 a year for a single person and nearly $27,000 for a family. Every year, that same industry also collects billions directly from the federal government through programs like Medicare Advantage. Insurance companies get paid twice over: once by the people who need care and once by the government that is failing to protect these people. Yet, neither payment is tied to how much care anyone actually receives.
The entire system is flawed, and it works exactly as designed. For-profit health insurance cannot be reformed into something good because a for-profit insurer only has two ways to grow its profit: charge people more, or pay less for their care. The health insurance industry has spent decades suppressing the one real alternative which would benefit the people — a public insurance option that would let anyone buy into a Medicare-style government plan instead of a privatized one.
Federal regulation was supposed to combat this. The Affordable Care Act requires insurers to spend 80% to 85% of every premium dollar on actual medical care, capping the rest for overhead and profit. It sounds like a real limit; it backfired. Profit under this rule is a percentage of a number, and that number is total healthcare spending. So insurers make more money every time care costs rise, whether because treatments get pricier or because insurers raise what they charge for coverage. And premiums have kept climbing: the average family plan through an employer cost $15,073 in 2011, the year the rule took effect, and nearly $27,000 in 2025. Under this exact rule, UnitedHealth’s profit grew 231% from $4.5 billion in 2011 to nearly $15 billion in 2025. A regulation meant to control costs gave the industry a reason to raise them instead.
Even the 80%-85% cap gets gamed. In a 2022 lawsuit, the Louisiana state attorney general alleged UnitedHealth paid inflated rates to its own pharmacy subsidiary — Optum Rx — then counted the overpayment as a medical expense, so money that never actually left the company was counted as money spent on patients. Meanwhile, on the other side of the ledger, insurers selling plans on HealthCare.gov denied 19% of in-network claims in 2023, and patients appealed only about 1% of those denials. That gap is not an accident. It quietly saves the company money from everyone who gives up first.
This is the standard playbook of for-profit healthcare, and hospitals ran it first. In 2019, the American Hospital Association sued to block a new federal rule forcing hospitals to publicly post their real prices for items and services. The AHA lost, and the rule took effect with the fine for violating transparency law set at just $300 a day, cheap enough for a large hospital to treat as a cost of doing business.
When the Centers for Medicare and Medicaid Services — the federal agency that administers Medicare — later proposed a tougher, up-scaled penalty reaching up to $5,500 a day, the AHA argued in its official comments that there was no evidence the original fine had affected compliance, so it should stay as is. CMS raised it anyway, to as much as $2 million a year for the largest hospitals. Even so, a 2026 report found that approximately 51% of hospitals remained noncompliant, which means a fine many times larger than the original is still not costly enough to make transparency worth more than opacity.
Health insurers play the same game, but instead of fighting a fine, they fight the competition. America’s Health Insurance Plans , the industry’s main lobbying group, has spent almost $65 million lobbying Congress and the White House since 2020, and the seven largest for-profit insurers and their allied groups spent about $476 million from 2020 through March 2025. That money buys a seat at every healthcare fight in Washington, including the fight over whether a public option, a government-run plan patients could choose instead of a private one, ever gets a vote in Congress.
The industry’s opposition to alternate healthcare options is more about competition than it is about patient care. AHIP has argued there is no fair way to compare a taxpayer-backed government plan against private insurers, since a public option could set premiums that do not have to cover its own costs the way a private insurer’s must. But when the government actually compares the two for the same patients, the private plans are the expensive ones.
MedPAC, a nonpartisan agency that advises Congress on Medicare, found that the federal government will pay private Medicare Advantage insurers $76 billion more in 2026 than it would cost to cover those same seniors through traditional Medicare. That is roughly $2,660 extra for every enrollee, money that goes to the insurer rather than the patient. In April 2025, CMS approved another $25 billion increase in those payments after insurers lobbied for it. This is not a hypothetical claim about what a public option could do. It is a direct, apples-to-apples comparison for the exact same patients in which the government-run option would be the cheaper one.
Most Americans already agree a public option is a good idea. A 2021 poll commissioned by the U.S. Senate’s Committee on Health, Education, Labor and Pensions found seven in 10 Americans support creating a public option, with that support crossing party lines to include most Republicans.
Meanwhile, the senators and representatives who dropped a public option from the Affordable Care Act in 2009 and have not passed one since, already enjoy a deal most Americans do not. Members of Congress buy their coverage through Washington, D.C.’s insurance exchange, and the government pays roughly three quarters of the premium in many plans. They have decided that their own government-subsidized coverage is good enough to keep — and that the public does not deserve the same deal.
Even Medicare, the one government program that already proves a public option can work, has let this framework in. Traditional Medicare, which Medicare’s own website calls Original Medicare, covers its share of the cost each time you get care. Medicare Advantage is a Medicare-approved plan you join from a private company instead. Traditional Medicare is the same program the MedPAC comparison measured against, and it came out cheaper.
Private plans have been part of Medicare since the 1970s , and today about half of beneficiaries are enrolled in Medicare Advantage, a privatized version of Medicare that costs taxpayers billions more per year, even though a review of 62 separate studies found no strong, consistent evidence that the coverage is any better. The one system meant to escape for-profit healthcare has tenets of this kind of coverage built in.
For-profit health insurance cannot be legislated into a system that puts patients first, because the incentive to charge more and cover less is not a flaw in the model. It is the model, and every quarterly earnings’ call rewards executives for feeding it rather than fixing it.
The fix is not more regulation of a system built to avoid regulation. It is giving people a way out of it entirely. Congress should pass a public option open to anyone, built on the same program it already runs for seniors and already runs for cheaper. Let the people choose it, with the same kind of government support members of Congress already get for their own coverage. Alongside it, Congress and CMS should stop letting Medicare Advantage plans draw about $2,660 more per enrollee than traditional Medicare costs; this would ensure the one system that already works stops quietly subsidizing the same industry it was built to replace. Neither of these requires inventing something new. Both already exist, inside the government, for the people who already have them.
Until that happens, for-profit health insurance will remain what it has always been: an ugly product of capitalism.
Seth Gabrielson is an Opinion Columnist who writes about the intersection of politics, science and philosophy in his biweekly column “Public Reason.” He can be reached at semiel@umich.edu .
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