Why do we allow private insurance companies to decide how health care is accessible?

The U.S. healthcare system lets private insurance companies act as gatekeepers because that's the deliberate design that emerged from a century of political compromises, lobbying power, and ideological commitments.

1. It started as a wartime accident, then got locked in by tax policy
  • During World War II, wage controls prevented companies from raising salaries to attract workers.
  • Employers got around this by offering health insurance as a tax-free fringe benefit.
  • In 1943 and 1954, the IRS and Congress made employer-sponsored insurance permanently tax-exempt. This created a $300–400 billion annual tax subsidy (larger than the entire Medicare budget) that only flows through private insurers.
2. Powerful interests built a moat around the system
  • Private insurers, hospitals, and pharma spend ~$600 million/year on lobbying (2024 figures).
  • The American Medical Association fought national health insurance in the 1930s–1960s so hard they called it "socialized medicine" and compared Truman's plan to Nazism.
  • When Medicare/Medicaid passed in 1965, they were designed as carve-outs that preserved the private insurance model for everyone under 65.
3. The "private = efficient" myth got weaponized
  • Politicians (mostly Republican, but plenty of Democrats too) repeat that "government can't run anything" while ignoring that:
    • Medicare's administrative costs are 2–3%.
    • Private insurers average 12–18% (UnitedHealthGroup hit 19.8% in 2023).
    • The U.S. spends $12,914 per person on healthcare (2023 OECD)—almost double the next highest country—yet ranks dead last in outcomes among rich nations.
4. Private insurers literally decide who lives and dies for profit
  • They deny ~17% of claims initially (KFF 2024).
  • "Prior authorization" delays care: a 2023 study found 13% of denied requests were for medically necessary services.
5. Why do we still allow it? Because the people who benefit own the system:
  • Insurance companies fund campaigns (top 5 insurers gave $58 million in 2020 cycle alone).
  • All 535 members of Congress + their staff get premium government plans—they're insulated.
 
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