Multiple congressional committees are preparing to grill insurance executives on practices that inflate spending. And the president plans to directly pressure those CEOs to reduce premiums.
The problems with the health insurance system won’t be solved by hearings or negotiations alone. But they’re a good starting point. President Trump and Congress clearly recognize that the insurance system is upstream of nearly all the problems Americans face in health care — and they’re laying the groundwork for much-needed reforms.
Insurers control which services patients can receive from their doctors, where they can be treated, which medicines they can be prescribed, and how much their care costs. Yet while most Americans recognize the harm insurers cause, the insurance system has for too long evaded reform.
On the contrary, the industry is propped up by massive taxpayer subsidies, often championed by Democrats with close industry ties. And over time, it has grown from a resource designed to protect against rare, catastrophic events into an all-encompassing bureaucracy that controls nearly every medical transaction.
Insurance bloat, coupled with layers of administrative complexity that conceal waste and abuse from public view, is behind much of patients’ rising costs. This year, the average family plan for two adults and two children on the Obamacare exchanges costs nearly $27,000 in premiums alone.
As healthcare cost increases continue to outpace wage growth, that problem is only going to worsen. By 2032, the average American family is expected to spend 40% of its income on health premiums.
And high costs are only part of the problem. As a former clinician, I’ve seen how the insurance system’s expanding reach has forced many important medical decisions out of doctors’ and patients’ hands.
Insurers increasingly override doctors’ clinical judgment and dictate which medicines and procedures patients can access. Insurers and their affiliated intermediaries known as pharmacy benefit managers, or PBMs, often steer patients toward higher-priced medications that come with higher hidden rebates for PBMs and insurers — though it means patients pay higher out-of-pocket fees, even when cheaper, equally effective alternatives exist. They frequently lock needed medicines behind prior authorization requirements and “fail-first” policies that force patients to try less effective treatments before receiving the care their doctors originally recommended.
More recently, insurers and PBMs are exploiting a new loophole to further pad their profits: creating offshore entities known as Group Purchasing Organizations, or GPOs. By routing drug transactions through these GPOs, insurers and PBMs can potentially avoid U.S. tax liability and sidestep requirements to pass negotiated rebates on to patients — keeping savings for themselves while patients pay more at the pharmacy counter.
Real reform will require a series of deliberate, structural changes.
First, Congress must rein in insurers and PBMs by eliminating their incentive to inflate drug prices and by requiring transparency in how coverage decisions are made.
Second, policymakers must stop pouring taxpayer dollars into a system riddled with fraud, waste, and abuse. Last year alone, the federal government spent nearly $140 billion subsidizing Obamacare coverage. Since 2014, taxpayer subsidies per enrollee have risen by more than 50% without delivering commensurate improvements in care or affordability.
Medicare Advantage plans, meanwhile, routinely offer non-medical perks, from ski passes to pet food. Taxpayers should not be footing the bill for gimmicks that have nothing to do with health.
Beyond waste, there is outright abuse. The Paragon Institute estimates that last year, more than 6 million people received fully subsidized Obamacare coverage despite being ineligible. The Centers for Medicare & Medicaid Services admitted that nearly 3 million Americans were improperly enrolled in multiple plans in 2024, forcing taxpayers to pay twice for the same care.
And many insurers routinely and fraudulently exaggerate patients’ diagnoses — a practice known as “upcoding” — to secure higher government reimbursements.
Émile Zola’s famous “J’accuse” condemned a government system that enabled fraud and concealment in the name of institutional self-protection. That history comes to mind today as government officials, policymakers, and insurers remain entangled in reimbursement schemes that drive higher payments for patient care.
The United States and Europe rely on the same innovative pharmaceutical manufacturers to develop life-saving medicines. Yet American patients often pay far more for identical drugs — not because the medicines are different, but because insurers and intermediaries layer on fees, rebates, and opaque pricing mechanisms.
Rather than rely so heavily on taxpayer-funded insurance coverage for every aspect of health care, we must give control back to patients. Expanding the use of health savings accounts, for instance, would allow patients to spend their money directly, without running every decision through an insurer.
Patients are counting on President Trump and Republicans in Congress to reshape the health insurance system so it puts their needs first.
Dr. Wolfgang Klietmann is a former clinical pathologist and medical microbiologist at Harvard Medical School
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