By Mark Merritt, Executive Director, Insurance Watchdog Coalition

As Medicare open enrollment begins, insurers are cutting Medicare Advantage plans that let seniors choose their doctors and hospitals. To no one’s surprise, they’re replacing them with far more restrictive plans that put new obstacles between seniors and care.

Now 3.2 million seniors — many in preferred provider organizations (PPOs) — will have to switch to plans with more restrictions and, in many cases, higher out-of-pocket costs.

Insurance executives call this a switch to “High Value HMOs.” That’s code for plans that profit insurers at patients’ expense.

Many of these HMOs are Special Needs Plans (SNPs) for Medicaid patients or seniors with chronic conditions. While these patients’ needs are special, their care is not.

Insurers get higher payments from taxpayers to enroll special needs patients, but there’s little evidence of better outcomes. Many of these plans increase profits through narrow networks and other limits on care.

While all Medicare Advantage plans cover far fewer doctors than traditional Medicare, “High Value HMOs” are even more draconian. Medicare Advantage plans denied 4.1 million prior authorization requests in 2024.

The big winners are insurers. This quarter, the nation’s largest Medicare Advantage insurer, UnitedHealth, posted a $4.1 billion profit while spending $3 billion LESS on care across its entire business than a year ago.

It also owns nearly 2,700 subsidiaries, including doctors’ practices, pharmacies and surgery centers, and does $151 billion a year in business with itself. Researchers found UnitedHealthcare pays its own doctors 17% more than independent doctors for the same services.

As Congress looks to reduce wasteful spending in federal health programs, it should ask a simple question: why are taxpayers paying insurers MORE for plans that offer seniors LESS?

By Mark Merritt, Executive Director, Insurance Watchdog Coalition

A new GAO report on Medicare Part D found that, for about half of the 20 highest-priced medicines, insurers paid their own pharmacies more than they paid pharmacies they don’t own.

That fits a broader concern that experts have raised for years: insurers that own pharmacy benefit managers (PBMs), specialty pharmacies and other health care companies tend to drive costs up, not down.

As insurers have become more vertically integrated, costs have gone up in both Medicare and the commercial market. A May 2026 HHS Inspector General report found that patients are also paying higher out-of-pocket costs.

PBMs are also charging a host of new fees that drive up costs in ways consumers never see, including fees charged by subsidiaries such as group purchasing organizations (GPOs) and so-called “rebate aggregators.”

The GAO report undersells the problem. It relies on 2023 data, before new Inflation Reduction Act policies shifted more of the cost of expensive drugs onto Part D plans. Premiums for stand-alone Part D plans rose 21% in 2024 alone, and insurance costs have kept rising since. Across the broader market, premiums now cost as much as mortgage payments for the typical family of four.

Plans are also restricting access to prescription drugs with more limited formularies and broader use of tools like prior authorization. This year, one PBM, Express Scripts, expanded its list of excluded drugs to more than 600 products.

In 2027, Congress can improve coverage and reduce health costs by rooting out abuses by vertically integrated insurers. 

By Mark Merritt, Executive Director, Insurance Watchdog Coalition

The MAHA Summit should tackle one of health care’s toughest challenges: reining in insurance costs so patients can afford the care they need.

Insurance costs are rising far faster than the cost of underlying medical care.¹ Yet insurers often point to hospitals, doctors, drug companies and others when explaining why Americans keep paying more.

But insurer practices are part of the affordability problem too.

SHOULD HEALTH INSURANCE COST MORE THAN YOUR MORTGAGE?

The average family health plan now costs more each month than the median mortgage payment on a newly purchased home.²

Meanwhile, America’s largest health insurers generate billions of dollars in profits.³

That’s unsustainable.

INSURERS SHOULD ANSWER FOR THEIR OWN COSTS

Today’s largest insurers increasingly own physician groups, pharmacies, PBMs and other businesses that receive health care dollars.

That raises an important question: Are insurers lowering costs — or steering more health care dollars through businesses they own?

Insurer practices deserve scrutiny too. Medicare pays more when insurers make patients look sicker than they are, while billions counted toward insurers’ medical spending requirements never pay a medical or prescription-drug claim.⁴

Those are just two examples of why insurers themselves belong at the center of the affordability debate.

AFFORDABILITY REQUIRES INSURER ACCOUNTABILITY

MAHA is right to focus on making Americans healthier. Reining in insurance costs should be job one.

Insurers often blame hospitals, doctors, drug companies and others for rising health care costs. Their own practices deserve scrutiny too.

Where is the money going? Why are insurance costs rising? And what are insurers doing to bring them down?

Those are questions worth asking as America looks for ways to make health care more affordable.

It’s tough to stay healthy when you can’t afford insurance.

¹ KFF, 2025 Employer Health Benefits Survey; BLS medical-care CPI and Altarum Health Sector Economic Indicators.

² KFF, 2025 Employer Health Benefits Survey; Mortgage Bankers Association, Purchase Applications Payment Index, August 2026.

³ Insurance Watchdog Coalition, insurer profitability analyses and research library.

⁴ Insurance Watchdog Coalition, The Medicare Advantage Spending Gap (September 2026); MedPAC and Committee for a Responsible Federal Budget analyses of Medicare Advantage coding and overpayments.

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Insurance Watchdog Coalition’s mission is to educate legislators, regulators, key opinion leaders, the media and the American people about the harmful impacts of vertically integrated insurance monopolies, especially in our healthcare system, which in turn will help create more competition in the marketplace, lower healthcare costs, and ensure that healthcare savings go to patients, not big insurers.

Plans reported an MLR near 90% in 2023. But an Insurance Watchdog Coalition analysis reveals, by insurers own filings, medical and prescription-drug claims were 82.5% of revenue — below the 85% federal requirement, and $36 billion below the figure they reported.

WASHINGTON, DC — The Insurance Watchdog Coalition (IWC) today released a new report finding that Medicare Advantage insurers are spending billions less on health care than what they’re reporting. Plans reported a Medical Loss Ratio (MLR) near 90% in 2023 — but by their own filings to the Centers for Medicare & Medicaid Services (CMS), only 82.5% of revenue actually paid a medical or prescription-drug claim.

“For years, policymakers thought Medical Loss Ratio (MLR) meant insurers paid 85% of every dollar on health care.   But insurers rigged the system, counting billions in overhead, marketing and of other costs as ‘medical’ expenses. We need real transparency to make sure health dollars go to patients — not just insurers’ bottom line,” said Mark Merritt, Executive Director of the Insurance Watchdog Coalition.

The $36 billion gap includes administrative costs that insurers classify as “quality improvement,” non-medical extras such as prepaid “Flex Cards,” bonus payments to providers, and premium subsidies that never touch a claim.

Flex Cards operate more like SNAP cards than health care benefits — cash for everyday living expenses, not medical costs like co-pays. MedPAC’s own research found they’re a key reason low-income, dual-eligible seniors enroll in Medicare Advantage in the first place.

The report also finds that insurers can meet the 85% MLR minimum by paying their own affiliated physician practices more than they pay independent providers:

• Up to 61% more for identical services in some markets, with every dollar of that markup still counting as medical spending
• CMS does not require insurers to disclose what they pay their own affiliates

Bipartisan, Cross-Industry Concern

The American Hospital Association, representing the nation’s community and nonprofit hospitals, and the Federation of American Hospitals, representing investor-owned hospital systems, have both told Congress they are concerned insurers are gaming MLR by directing payments to their own affiliated entities. A Democrat and a Republican on the House Ways and Means Committee have jointly asked the Government Accountability Office to investigate.

Key Findings

• CMS conducts only “selected review” of insurer-submitted MLR data, not an audit — insurers classify their own spending with no independent verification.
• Research on the ACA’s own commercial MLR requirement found that once insurers hit the required floor, claims costs rose while premiums did not fall.
• CMS does not require Medicare Advantage insurers to disclose what they pay their own affiliated providers, so the affiliate-markup problem cannot currently be measured in this program.

Recommended Reforms

The report calls on policymakers to consider three reforms:

1. Count only medical and prescription-drug claims toward the 85% test. CMS can do this by regulation; no new law is required.

2. Require insurers to report MLR by plan, not by contract, so a strong plan and a weak plan can no longer be blended into one number.

3. Require insurers to disclose what they pay their own affiliated providers, in dollars, benchmarked against independent-provider rates.

None of these reforms cost taxpayers a dime. They just make the number tell the truth.

The full report, “The Medicare Advantage Spending Gap: What Insurers Actually Spend on Health Care” is available at insurancewatchdogcoalition.com.

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Insurance Watchdog Coalition’s mission is to educate legislators, regulators, key opinion leaders, the media and the American people about the harmful impacts of vertically integrated insurance monopolies, especially in our healthcare system, which in turn will help create more competition in the marketplace, lower healthcare costs, and ensure that healthcare savings go to patients, not big insurers.

How PBM Group Purchasing Organizations Retain Rebates and Fees — and Why They’re Being Investigated

By Mark Merritt
Executive Director, Insurance Watchdog Coalition

Congress is tightening the rules for pharmacy benefit managers (PBMs), including greater transparency and requirements that negotiated drug rebates be passed through to employer health plans. But reform can miss an increasingly important part of the business: PBM-owned Group Purchasing Organizations, or GPOs.

These are not traditional hospital purchasing groups. PBM GPOs sit between PBMs and drug manufacturers and negotiate rebates and other payments — work PBMs historically performed themselves.

Why does that matter? Follow the money. The FTC quoted a former OptumRx representative saying PBM GPOs were created to establish fee structures that could be retained rather than passed through to clients.

Investigators are already raising red flags:

•  FTC: GPO fees may keep rebates from being passed through. A former OptumRx representative said GPOs were created to establish fee structures that could be retained rather than passed through.

•  FEDERAL AUDITS: Billions in rebates were retained by a GPO rather than passed through to the carrier or federal government.

•  STATE LAWSUITS: Rhode Island alleges PBMs and GPOs recategorized income and redefined rebates; Virginia, Hawaii and Vermont have made similar claims.

Congress shouldn’t allow a PBM to accomplish through an affiliated GPO what policymakers are trying to prevent the PBM from doing itself. Transparency and rebate pass-through rules should follow the money into affiliated GPOs, regardless of what manufacturer payments are called.

VOTERS WANT ACTION

88% OF VOTERS SUPPORT ACTION TO REFORM BIG INSURANCE

*Insurance Watchdog Coalition national survey of 1,000 likely voters, April 2026.

IT’S TIME TO REGULATE GPOs LIKE PBMs.

Sources: Federal Trade Commission; federal employee health-benefit audits; state litigation cited in PhRMA GPO policy materials.

insurancewatchdogcoalition.com  •  Exposing Insurance Monopolies. Protecting Patients.