Health insurance executives grilled by House GOP and Democrats

Total healthcare spending rose by 7.2% in 2024 to more than $5.3 trillion, according to the Centers for Medicare & Medicaid Services. Healthcare spending accounted for 18% of the United States’s gross domestic product in 2024.

Energy and Commerce Committee Chairman Brett Guthrie (R-KY) said during his opening statement that the health insurance executives hearing would be the first of a series of hearings with health sector leaders to discuss mechanisms to lower overall costs.

“Healthcare costs are increasing every year, and more and more Americans get frustrated by the failing of their insurances only people and some of the largest companies in our economy, and also companies that benefit the most from government subsidies,” Guthrie said.

Health insurance costs have been a central focus for Congress for several months, as both chambers have failed to reach a compromise to renew COVID-19-era enhanced subsidies for Obamacare marketplace plans.

President Donald Trump has also encouraged Congress to pass legislation to hold insurance companies accountable for improving price transparency and minimizing industry jargon through his “Great Healthcare Plan” agenda.

Two-thirds of voters in battleground states named health insurance premium costs as their No.1 health-related concern heading into the 2026 midterm elections, according to a survey published this week from the free-market group Unleash Prosperity.

Voters blamed insurance executives and the federal government for rising healthcare costs, with 39% blaming health insurance companies and 36% blaming Congress and federal officials.

Rep. Frank Pallone (D-NJ) said during his opening statement that Trump and Republicans are “sabotaging the nation’s healthcare system” and told the insurance company witnesses that they were not to blame for the rising costs of care across the industry.

“This is not your fault, it’s Republicans, it’s not your fault. It’s not your fault. Democrats are ready to continue to fight for lower health care,” Pallone said.

However, Paul Markovich, CEO of Ascendiun, which runs Blue Shield of California, acknowledged that health insurance companies play a pivotal role in skyrocketing costs.

“We are part of the problem, the unaffordable healthcare system we have today, but I’m committed to doing our part to fix it,” he said.

Lack of competition

Both Republicans and Democrats honed in on the theme of a lack of competition within the healthcare system, highlighting that the largest health insurance companies own pharmacy benefits managers, pharmacies, and other key players in the healthcare supply chain.

Rep. Diana Harshbarger (R-TN), a pharmacist, grilled the health insurance executives on the panel about how insurance companies determine which drugs are covered, the pricing of prescription drugs, and dispensing and care decisions involving those drugs.

“That’s not competition. That is control, and that isn’t just participating in the market; it’s running the rules of the market,” she said.

A report issued by committee Republicans ahead of the hearing highlighted that the Federal Trade Commission found last year that the three largest pharmacy benefits managers, which negotiate drug prices and are owned by UnitedHealth Group, the Cigna Group, and CVS Caremark, reimburse affiliated pharmacies at significantly higher rates.

Rep. John Joyce (R-PA), a physician by training, said vertical integration has created “multiple perverse incentives for insurance companies to dramatically consolidate.”

“The companies that you need today are not just involved in insurance. You own PBMs, you own special pharmacies, you own retail pharmacies, you own [Group Purchasing Organizations], you own physician groups and practices. In some cases, you own hospitals, and you own drug manufacturing companies, and at least one of you owns a bank,” he said.

Joyce said insurance companies are “putting corporate profits ahead of patients.”

Rep. Alexandria Ocasio-Cortez (D-NY) highlighted that CVS Caremark owns the insurance provider Aetna, CVS pharmacies, and certain drug manufacturers.

“The health insurance gets a cut, the pharmacy benefits manager gets a cut, drug manufacturer gets a cut, and the patient gets screwed,” she said.

Ocasio-Cortez said breaking up corporate monopolies is something that capitalists and a “card-carrying Democratic Socialist” can agree on.

Hospitals, uninsured care, and rising premiums

Rep. Raul Ruiz (D-CA), a former emergency room physician, said higher rates of uninsured patients raise premiums for others in the market. 

Ruiz argued that uninsured patients do not seek preventive care, which is usually more cost-effective, and eventually end up in emergency rooms when the condition becomes dire.

Because hospitals are required to provide stabilizing care regardless of ability to pay, they ultimately pass the costs of uncompensated care to insurance companies, which then raise premium prices for enrollees.

“They go to the hospital at a higher cost,” Ruiz said. “They’re sicker. The hospital gets uncompensated care. They’re negotiating higher prices so they can keep their doors open, and so you’re increasing premiums right now.”

According to AHIP, a trade organization representing health insurance companies, more than 40 cents of every healthcare dollar spent goes toward hospital costs. That includes nearly 18% for inpatient costs, nearly 20% for outpatient costs, and about 3% for emergency department care.

Roughly $1.6 trillion of that spending was directed toward hospitals, according to an analysis published last week in the Journal of the American Medical Association using CMS data.

Ruiz also blamed Republicans for raising the uninsured rate by failing to pass enhanced premium subsidies and through reductions in Medicaid and healthcare spending in the One Big Beautiful Bill Act, which was passed in July.

“The big issue here is the healthcare crisis that Republicans have created with cuts in Medicaid in order to give billions in tax cuts to billionaires, and it’s raising premiums across the board,” Ruiz said.

Obamacare subsidies loom large 

Democrats and Republicans clashed over how much extending the enhanced premium subsidies for Obamacare plans has affected rising premiums across the broader insurance market.

In 2021 and 2022, Democrats passed temporary additional premium tax credits for Obamacare enrollees to lower premiums regardless of income. With those credits expired, only Obamacare enrollees with incomes below 400% of the federal poverty line will continue to receive subsidies, as implemented by the original Affordable Care Act.

During his questioning, Guthrie used technical data points to argue that insurance companies have much greater control over high premiums, regardless of Obamacare subsidies.

Guthrie said during questioning that total premium costs have increased by an average of 8% due to expired Obamacare premium subsidies, but insurance companies last year projected premium increases of upward of 30%. 

In recent months, the GOP has argued that the Obamacare subsidies are effectively a bailout for insurance companies, but Democrats have maintained that premium support is designed to lower enrollee costs rather than benefit insurance companies.

Rep. Diana DeGette (D-CO), the leading Democrat on the Energy and Commerce health subcommittee, stressed that insurance companies operating on the Obamacare marketplace exchanges often operate at a loss and use large corporate plans to make up the difference.

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“I would say if that premium support is a handout, it’s certainly not a very good one,” she said.

Degette also said that although the Obamacare system has been successful in lowering the national uninsured rate and covering people with preexisting conditions, “systemwide work is needed to bring down costs for everyone.”