Big Insurance Bet on the Wrong Horse

The Trump administration and many Congressional Republicans are seemingly more interested in holding big insurance conglomerates more accountable than Democrats these days. That’s leading to a lot of head scratching in Washington. Aren’t Republicans way more likely to be helpful to private insurers than Democrats?

Well, the reality is that insurers have fared exceedingly well when Democrats have been in charge of things in D.C. over the past decade and a half, and, as you’ll see below, executives and employees of the biggest insurance companies spent heavily during the past election cycle to try to keep them in charge. You may be surprised to see just how much Big Insurance favored Democrats, especially in the presidential race. It wasn’t even close. 

The seven biggest for-profit health insurers have seen their profits skyrocket since the Affordable Care Act was passed in 2010, and a good argument could be made that, despite the consumer protections and coverage gains under the law, some of its provisions actually enabled and incentivized big insurers to get even bigger by buying physician practices, clinics and pharmacy benefit managers. If you read this newsletter regularly, you know we’ve written quite a bit about how those seven companies have largely taken over both the Medicare Advantage and Medicaid programs and how just three of them control 80% of the pharmacy supply chain, determining which drugs your health plan covers, where you can get them and how much you’ll have to pay out of your own pocket before your coverage kicks in. 

Democrats have, for the most part, refused to acknowledge any shortcomings of the ACA and didn’t even begin questioning the business tactics of private Medicare Advantage plans and PBMs until a few advocates began raising a stink a few years ago. But by then, more than half of Medicare beneficiaries had already enrolled in Medicare Advantage, which has become a huge cash cow for private insurers. And Democrats paid scant attention to the growth of insurers’ takeover of the PBM business until late in the Biden presidency. Fortunately, the Biden Justice Department and Federal Trade Commission began scrutinizing insurers’ vertical integration strategy and their stranglehold on the pharmacy supply chain, and Biden’s Centers for Medicare and Medicaid Services last year refused for the first time to give Medicare Advantage plans the big raise they were seeking. But by then, taxpayers had been fleeced by hundreds of billions of dollars by Big Insurance, which thrived and got bigger and bigger during the Obama and Biden administrations and when Democrats controlled Congress.

Still, the conventional wisdom has been that when Donald Trump returned to the White House and Republicans regained control of Congress, insurers would enjoy an even more favorable political climate. After all, prominent Democrats like Sens. Bernie Sanders and Elizabeth Warren and Reps. Pramila Jayapal and Alexandria Ocasio-Cortez have for years been calling for Medicare for All, which would sideline private insurers, but House and Senate Democratic leaders have, like the Republicans, always made sure their bills never reached the floor of either chamber for a vote. But so far, Trump and Congressional Republicans have shown no willingness to go easy on big insurers. 

Here are just a few examples: The Trump Justice Department reportedly is investigating UnitedHealth Group for possible criminal Medicare fraud, the chair of a powerful Congressional subcommittee has repeatedly called for the breakup of that company, influential Senate Republicans have raised antitrust issues as a result of the massive consolidation in the health insurance business in recent years, Republicans have led efforts to reform the PBM business, and influential members of the party have called for major reforms to the Medicare Advantage program. Even CMS Administrator Mehmet Oz, who once was a leading proponent of Medicare Advantage plans, said during his confirmation hearings that the MA program will get more scrutiny under his watch. He began to make good on that promise last month when CMS announced it would ramp up its audits of MA plans. 

To be sure, many of those efforts are now bipartisan, but none of them would have a chance of moving forward without Republican support and leadership.

To see who the executives and employees of big insurance companies tried to put in power in Washington last November, I spent several hours on the Open Secrets website, which provides a treasure trove of information on political giving and lobbying. (See the company contribution pages here: Blue Cross Blue Shield Association; Centene; Cigna; CVS / Aetna; Humana; Molina; and UnitedHealth Group) If you want to know who calls the shots in Washington and our state capitals, go to Open Secrets. 

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Having been the guy who was in charge of doling out campaign contributions from Cigna’s political action committee for several years, I knew those dollars had to be reported, so I looked to see where the PACs and executives and other employees of big insurance companies sent their campaign donations during the last election cycle. When I did the math, the numbers were so one-sided that I checked my math a few times to be sure they were accurate. 

Bottom line: Big Insurance bet heavily – very heavily – on Kamala Harris and Democratic candidates for Congress.

Collectively, the executives and employees of the Blue Cross Blue Shield Association, Centene, Cigna, CVS/Aetna, Humana, Molina and UnitedHealth Group donated nearly $3 million to Harris and Trump, but an astounding 83% ($2.5 million) went to Harris, while just a little more than $500,000 went to Trump. They also favored Democratic congressional candidates by a wide margin. Of the nearly $10 million they donated to House and Senate races, 57% ($5.5 million) went to Democrats, while $4.2 million went to Republicans. 

Executives and employees of UnitedHealth and Blue Cross companies were especially generous to Democrats running for Congress. At UnitedHealth, 59% of contributions to congressional candidates went to Democrats. Of the $900,000 they donated to Harris and Trump, 82% went to Harris. 

At the Blues, 60% of contributions to congressional candidates went to Democrats. And of the $934,000 Blues employees donated to Harris and Trump, 86% went to Harris. 

If any of you all have good connections with the White House and Congressional leaders, you might want to send this story to them. The conventional wisdom that Big Insurance would prefer to have Republicans calling the shots in Washington is no longer true – and hasn’t been for years.

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