Appendix G: What the insurance industry has become, and what the law allows us to do about it

This appendix supports the section "The insurance industry: what happens to the companies, and to the people" in the plan.

The industry is not what it was in 2019

When Medicare for All was last debated seriously in Congress, in 2019, the health insurers were, mostly, insurers. They collected premiums, built networks, paid claims, and their profit was the difference. Winding down an insurer meant winding down a financial business.

That is no longer the industry. Over the last decade the large insurers have bought the companies that deliver care and the companies that manage drugs, and in several of them insurance is now the smaller half of the business.

Company	Insurance arm	What else it owns
UnitedHealth Group	UnitedHealthcare	Optum: roughly 90,000 affiliated or employed physicians, on the order of one in 10 American doctors. Plus OptumRx (a top-three PBM), surgery centers, urgent care, home health, the Change Healthcare claims switch, and Optum Insight, which sells billing and analytics to the hospitals it competes with. Optum is the majority of UnitedHealth's revenue.
CVS Health	Aetna	Caremark (top-three PBM), roughly 9,000 retail pharmacies, MinuteClinic, Oak Street Health (senior primary care), Signify Health (in-home assessment).
Cigna	Cigna Healthcare	Evernorth / Express Scripts (top-three PBM), specialty pharmacy, telehealth.
Humana	Humana (heavily Medicare Advantage)	CenterWell: senior primary care clinics, home health, pharmacy.
Elevance	Anthem plans	Carelon: services, specialty pharmacy, care delivery.

The mergers that built this were mostly waved through. CVS bought Aetna in 2018 and Cigna bought Express Scripts the same year; the Justice Department cleared both. UnitedHealth's purchase of Change Healthcare in 2022 was challenged by the Justice Department and cleared by a court. CVS bought Oak Street Health and Signify Health in 2023. Optum has bought physician practices by the hundred, mostly too small individually to trigger any review.

Two consequences follow. An insurer with 90,000 physicians can threaten disruption in a way a pure insurer never could, and every one of these companies has an incentive to buy more practices between now and the vote, to raise the cost of reform. But the same physicians, clinics, surgery centers, and home-health agencies are care delivery capacity that already exists, and the plan is a 10-year program to build exactly that. Without intending to, UnitedHealth has built a physician network, clinic infrastructure, and home-health operation large enough to be the starting base for a public delivery system. The plan's approach to the conglomerates follows from that: wind down the insurance, abolish the PBM, and keep the care.

How an insurer is wound down

Underwriting is the business of deciding which risks to insure and at what price. An underwriter looks at what could go wrong, works out how likely it is and what it would cost, and writes a policy at a premium that covers that expected cost with something left over, or declines.

Winding down an underwriting business is an ordinary process with a name, run-off, and an industry built around it. The company stops writing new policies. It keeps enough in reserve to pay the claims it has already taken on, since those obligations do not disappear, and a supervisor, in the American system the state insurance commissioner, oversees the run-off until the last claim is settled and the entity closes. Health insurers are not leveraged like banks. They hold large reserves and investment portfolios against claims already incurred, and health claims are short-tailed, meaning nearly all of them are known and paid within a year or two of the service. When new business stops, an insurer pays out what it owes and closes. Shareholders receive whatever capital remains.

Why nobody is compensated for the lost business

The question that will be asked is whether the government owes the insurers for eliminating their market. The answer is no, and it has been no for a long time.

There is no property right in a market continuing to exist after Congress has changed it. A company that operates in a field Congress regulates does so knowing the rules may change, and that risk is part of the deal. The Supreme Court has upheld laws that landed large costs on companies after the fact: retroactive liability for coal operators to compensate miners with black lung disease, in 1976; withdrawal liability imposed on employers leaving multi-employer pension plans, in 1986; and a long line of regulatory changes that reduced the value of businesses without any compensation. The test the Court applies to economic legislation is whether Congress had a rational basis for acting, not whether the change proved expensive for the people affected. The one modern case that went the other way, a 1998 decision striking down retroactive health-benefit liability on a company that had left the coal industry decades earlier, turned on the liability being unrelated to anything the company had done, and even that case produced no majority rationale.

Contracts are different from markets, and the plan treats them differently. Where the government has signed a contract, with a Medicare Advantage plan, for instance, and a statute breaks it, the government can owe contract damages. That exposure is real and it is addressed in Appendix J. But a license to sell insurance is not a contract with the government to keep that market open, and the elimination of a line of business by an act of Congress is not a taking.

Shareholders get their capital back through the run-off. What they do not get is compensation for the profits the law has eliminated.

What happens to each part

The plan separates the conglomerates into four pieces and treats each on its own terms.

• The insurance business is wound down, as above.
• The pharmacy benefit manager is abolished, after the transaction system is brought into public hands. Appendix F explains why that has to be sequenced.
• The care delivery assets are divested and kept operating. Physician groups, clinics, surgery centers, home health, and pharmacies are separated from the insurance parent at fair market value struck at a lookback date, which prevents the parent from inflating or stripping them once the law is in prospect, and thereafter operate under the ownership rules that apply to every provider (Appendix H). A national network like Optum becomes many regionally governed entities, not one national provider. The doctor keeps the same office and the same patients.
• The ancillary businesses mostly evaporate. A large industry exists to process claims, review whether treatment was necessary, contest and deny payment, and optimize how patients are coded so that the insurer collects more from Medicare. All of it exists because there are many payers with different rules and an incentive to pay less. A single public payer generates none of that work. The few pieces worth keeping, software that moves records between doctors and coordinates care across providers, continue as ordinary vendors bidding for public contracts, barred from holding any stake in the care itself.

Medicare Advantage

Medicare Advantage is Medicare run by a private insurer. Instead of Medicare paying doctors and hospitals directly for a beneficiary's care, it pays a private plan a fixed amount per enrollee per month, and the plan manages the care, builds a network, requires prior authorization, and keeps what it does not spend. Congress created the option in 1997 and expanded it sharply in 2003, and enrollment has grown every year since. Over 33 million people, about half of all Medicare beneficiaries, are now in Medicare Advantage plans, and the largest plans belong to UnitedHealth and Humana.

The program was supposed to save money, on the theory that private plans would manage care more efficiently than traditional Medicare. It has cost more. The Medicare Payment Advisory Commission, Congress's independent adviser on Medicare, estimated in 2025 that Medicare Advantage plans are paid on the order of 20 percent more than the same beneficiaries would cost in traditional Medicare, a difference of roughly $84 billion in a single year. Most of the gap comes from two mechanisms. Plans are paid more for sicker enrollees, so they have an incentive to record every diagnosis they can find, and they do, through home visits and chart reviews that produce diagnoses traditional Medicare would never record; this is risk-score inflation, and it has been the subject of repeated audits, whistleblower suits, and a Justice Department case against UnitedHealth. And plans tend to enroll people who are healthier than the risk scores suggest, and keep them.

The overpayment funds real benefits. Medicare Advantage plans use part of their margin to offer dental, vision, hearing, gym memberships, and reduced cost-sharing that traditional Medicare does not cover, and seniors value those benefits. That is why ending the overpayment is one of the hardest political fights in this plan: the money buys things people can see, and any change will be sold to them as a loss. The plan's answer is that dental, vision, hearing, prescription drugs, and care coordination become baseline benefits for everyone, and that long-term care, which no Medicare Advantage plan covers and which is the most expensive health need most families will ever face, is included. The cost table in Appendix J counts only the part of the overpayment that comes from coding and selection as a saving, because the 33 million people involved move to a richer benefit rather than a cheaper one.

The workers, and the lesson of Trade Adjustment Assistance

A single payer eliminates hundreds of thousands of jobs across insurance, pharmacy benefit management, and provider billing. The people who hold them did nothing wrong, and the plan's Health Workers Transition Guarantee is built to be the program that trade policy promised displaced workers and never delivered.

Trade Adjustment Assistance was created in 1962 and expanded in 1974 to offer retraining and income support to workers who lost their jobs to imports. It became the standard answer to every trade agreement for 50 years: the deal would cost some jobs, and TAA would take care of the people who lost them. In practice it did not, and the reason is instructive. To qualify, a group of workers had to petition the Labor Department and prove that imports or offshoring, rather than automation, management, or the business cycle, had caused their layoffs. The causation test excluded most applicants, the process took months, the benefits were modest, and participation was low. Workers who lost their jobs in a plant that closed partly because of trade and partly because of everything else got nothing. The program lapsed entirely in 2022. It is the reason "we will retrain the workers" is heard, by anyone who has heard it before, as a lie.

The guarantee is written against every one of those failures.

• No causation test. Eligibility is stamped to the announcement date and covers anyone working in insurance, pharmacy benefit management, or provider billing and revenue cycle on that date, including contractors and outsourced staff, and, named explicitly, licensed brokers and agents. Nobody has to prove the Act cost them their job.
• Full wage replacement for three years, tapering over five, not a modest allowance.
• Wage insurance. If a worker takes a lower-paying job, the program pays a share of the difference for several years, because the barrier to a new job is rarely the training and usually the pay cut.
• Tuition-free retraining with a living stipend, at any public institution, for any health field, and a legal right of first refusal on jobs in the new public system and the new capacity.
• Pension protection and an early retirement bridge from 55.
• Named regional packages for the insurance hubs, Hartford, Louisville, Minneapolis, Indianapolis, Woonsocket, negotiated with the unions and the states before the phase-out date.
• A retention premium, because billing departments are needed for 12 to 24 months of run-out claims after the payer changes, and a guarantee that paid out from day one would empty them exactly when they are needed. The full benefit is conditioned on staying through a certified run-out completion date.
• Enforcement through the owners' money. Wind-down payments and divestiture proceeds to shareholders are conditioned on the company honoring the guarantee.