In a move generally ignored by most media outlets, the Biden administration this week made the shareholders of a small number of for-profit health insurers much richer.

As I’ve noted many times in recent years, insurers’ new cash cow is the federal government’s Medicare program, which has become increasingly privatized since former president George W. Bush signed the Medicare Modernization Act into law in 2003. That law is best known for establishing the Medicare Part D prescription drug benefit, which, as I wrote in Nation on the Take, was largely written by lobbyists for pharmaceutical and health insurance companies to ensure an ongoing stream of billions of dollars in profits.

Of even greater significance to the insurance industry, though, was a provision of that law that took a languishing private alternative to Medicare–known until 2003 as Medicare+Choice–and began throwing enormous sums of money at private insurers to entice them into participating in what became known as Medicare Advantage plans. 

In various ways, the federal government since 2003 has overpaid private insurers hundreds of billions of dollars as an incentive to continue offering those plans. And every year, the federal Center for Medicare and Medicaid Services (CMS) has given those insurers raises, to the point that Medicare Advantage plans–which were touted by many politicians as a way to save taxpayers money–actually cost the government considerably more per enrollee than Traditional Medicare.


This week, CMS announced that private insurers would get one of the biggest raises in the history of the Medicare Advantage program–8.5%. That was even more than the 7.9% increase CMS had previously signaled it would approve and that had triggered outrage among many health care reform advocates and some members of Congress. 

As I suspected, the news of that generous pay hike sent the stock price of the biggest Medicare Advantage players soaring yesterday. 

Investors were so pleased that yesterday morning they rushed to buy shares of Anthem, Centene, Cigna, Humana, and UnitedHealth Group, all of which are traded on the New York Stock Exchange and all of which are big players in the Medicare Advantage marketplace.  

The biggest winner was the biggest Medicare Advantage player of all – and the biggest for-profit insurer – UnitedHealth. United’s stock price hit an all time high of $526.97 yesterday before settling down to close at $517.76 a share. That’s around $500 a share more than what a share of the company’s stock was worth when Congress passed the Medicare Modernization Act in June 2003.

UnitedHealth’s stock has hit an all time high – a number around $500 a share more than what a share of the company’s stock was worth when Congress passed the Medicare Modernization Act in June 2003.

This helps explain why you see so many Joe Namath commercials on TV every fall during the Medicare Advantage open-enrollment period. Insurers spend billions of taxpayer dollars on misleading ads designed to lure as many seniors as possible into their plans. 

It also explains why, as I have written, the big health insurers are now getting far more of their revenues from government programs (which means from taxpayers) than from private paying customers

Last year, the six biggest health insurers made more than $60 billion in profits, fueled in large part by the money they now take in from Uncle Sam. When I reviewed 12 years of those companies’ financial disclosures–going back to 2010 when the Affordable Care Act was signed into law – I found that almost 90% of their collective gains in health plan enrollment came from government programs, primarily Medicare and Medicaid, but mostly Medicare. 

Keep in mind that most of the additional money CMS plans to give Medicare Advantage plans will go to just a few for-profit insurers, all of which have reported record profits over the past few years. And as Kaiser Family Foundation researchers have found, almost half of Americans enrolled in Medicare Advantage plans are in plans operated by United and Humana

Those researchers also have charted the rapid growth of Medicare Advantage plan enrollment since 2003. It has been nothing short of remarkable, doubling over the past decade. This year, more than 28 million people–45% of the total Medicare population–were enrolled in a Medicare Advantage plan. At that rate of growth, more than half of people eligible for Medicare will be enrolled in a Medicare Advantage by 2025, if not sooner.

It is long past time for members of Congress to start paying attention to how a handful of health insurers are depleting the Medicare Trust Fund in their ongoing quest to make their shareholders happier by making them richer.