America’s largest health insurance companies have accumulated more than $371 billion in profits since the Affordable Care Act’s passage in 2010, while simultaneously deploying artificial intelligence systems to deny medical claims at unprecedented rates, sparking renewed debate over whether the nation’s private medical insurance system serves shareholder profits over the public good. UnitedHealthcare, the largest U.S. insurer covering more than 50 million people, made $23 billion in profits last year, according to UnitedHealth Group’s financial statements, even as the company faces multiple lawsuits alleging its AI systems wrongfully deny coverage to patients.
The mounting tensions between corporate profits and patient care have intensified following recent revelations about how major insurers use automated systems to process claims. Investigative journalists at the nonprofit ProPublica found that the health insurance company Cigna uses an automated system that allows it to instantly reject claims on medical grounds without even opening the customer’s file. The system, which processed over 300,000 claim denials in just two months, represents what critics describe as a negative externality of profit-maximizing behavior that prioritizes shareholder returns over patient welfare.
Multiple class-action lawsuits filed in 2023 and 2024 allege that major insurers knowingly deployed flawed AI algorithms to deny legitimate claims. UnitedHealth continues “to systemically deny claims using their flawed AI model because they know that only a tiny minority of policyholders (roughly 0.2%) will appeal denied claims, and the vast majority will either pay out-of-pocket costs or forgo the remainder of their prescribed post-acute care”, according to court documents filed in federal court in Minnesota.
The financial pressure on American families has reached critical levels, with medical insurance costs rising faster than inflation. This year, the average health insurance premium that individuals pay for employer-sponsored health insurance — the largest source of health care coverage for non-elderly Americans — increased 6 percent to almost $9,000 per year, and premiums for families increased 7 percent to just under $26,000 per year. These increases come as insurance companies report record profitability, creating what economists term a market failure where private interests diverge from the public good.
Healthcare providers report experiencing systematic increases in claim denials that coincide with insurers’ adoption of AI-powered decision-making tools. “Emerging evidence shows that insurers use automated decision-making systems to create systematic batch denials with little or no human review, placing barriers between patients and necessary medical care,” said AMA President Bruce A. Scott, M.D. The American Medical Association’s recent survey found that 61% of physicians are concerned that health plans’ use of AI is increasing prior authorization denials.
The scope of AI-driven denials extends beyond individual cases to systemic patterns affecting entire categories of care. Between 2019 and 2022, each company denied prior authorization requests for post-acute care facilities significantly more than other requests, according to the report. UnitedHealthcare and CVS denied these requests at triple their overall denial rate in 2022, while Humana’s post-acute denial rate was more than 16 times higher than its baseline, according to a Senate investigation.
The financial burden of medical debt has created what critics describe as a form of economic enslavement for millions of Americans. In 2022, 41 percent of American adults, about 100 million people, were in medical debt. Over 50 percent of American adults reported going into debt because of medical (or dental) bills. 25 percent of those with medical debt owe more than $5,000 and about 20 percent don’t believe they will ever be able to pay off the debt.
Meanwhile, public support for alternative approaches to healthcare financing has grown substantially. A December 29, 2024, Gallup poll found that 62 percent of Americans believed that it is the U.S. government’s responsibility to “ensure all Americans have healthcare coverage,” compared to 36 percent who do not believe health care coverage is the federal government’s responsibility. This represents a decade-high level of support for government involvement in healthcare coverage.
The insurance industry’s profit margins have remained robust despite rising costs elsewhere in the healthcare system. Per enrollee spending by private insurers grew by 80.4% from to 2023 — much faster than both Medicare and Medicaid spending growth per enrollee (50.3% and 30.3%, respectively), suggesting that private insurers are extracting higher profits while government programs demonstrate greater cost control.
Single-payer healthcare proposals, once considered politically impossible, are gaining traction at both state and federal levels. Establishing a single-payer health care system in the United States would be a major undertaking, which would involve substantially changing the sources and extent of health insurance coverage, payment rates for providers, and financing methods for health care, according to the Congressional Budget Office’s analysis of various reform proposals.
The mounting evidence of systematic prioritization of shareholder profits over patient care, combined with growing public support for alternative approaches, suggests that America’s private medical insurance system faces a critical juncture. The question is no longer whether the current system adequately serves the public good, but whether policymakers will act to replace a structure that increasingly appears designed to extract maximum profit from healthcare needs rather than efficiently deliver care to those who need it most.
