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The American healthcare system is complex, and the relationship between public healthcare plans and private insurers is no exception. Here’s a breakdown of the current situation and what it means for the future: 

Who Relies on Public Healthcare?

  • A significant portion of the US population depends on public healthcare: 145 million, or roughly 42%. 
  • This includes seniors, low-income individuals, and people with disabilities who rely on Medicare and Medicaid. 

The Insurer Advantage

In the past, managing public healthcare programs was good business for private insurers. They covered a lot of people in Medicaid and Medicare, and it cost them less to manage this coverage compared to private plans. 

The COVID-19 pandemic upended the balance between insurers and public healthcare programs. Costs for medical care went way up due to the pandemic, but the government reimbursements to insurers haven’t kept pace. This is causing financial problems for insurers. 

Feeling Squeezed

Major insurers are struggling financially. For example, Humana, which relies heavily on Medicare Advantage for 80% of its revenue, had to cut its outlook for 2024 after a significant loss in the first quarter. Similarly, UnitedHealth’s CEO acknowledged delays in receiving higher Medicaid reimbursements from states. 

Rising healthcare costs are hurting insurers’ profits. This is reflected in the stock prices of companies like CVS Health (CVS) and Humana. CVS’s big expansion plans for its Aetna business (adding 600,000 members) seem like a mistake now. The company is focused on making money instead of adding new customers, and they might lose up to 10% of their Medicare Advantage users. 

What This May Mean for You

In response to rising costs, insurers are likely to raise prices and cut benefits. This could mean things like:

  • Higher premiums: You might have to pay more each month for your health insurance.
  • Fewer benefits: Your plan might cover less, like vision, dental, or prescriptions.
  • Limited choices: Some insurance companies might even stop offering certain plans altogether. 

The Future of Public Healthcare

The shift in public healthcare has significant consequences for both patients and insurers. Patients may have to pay more for less coverage, while insurers will need to adjust to a new financial reality. The long-term impact on affordability and accessibility of healthcare is still uncertain. 

The evolving landscape of public healthcare presents challenges, but there are also opportunities. As the system adapts, staying informed about your insurance options is crucial. If you’re concerned about your current plan or need assistance navigating the changes, we invite you to schedule a complimentary consultation with a licensed insurance professional. We can help you understand your coverage, explore plan options, and ensure you have the right healthcare plan for your needs.


(1) Press releases CMS releases proposed payment updates for 2025 Medicare Advantage and Part D programs. Centers for Medicare & Medicaid Services. (n.d.). 

(2) Aspe homepage. ASPE. (2024, May 29). 

(3) The official U.S. government site for Medicare. Medicaid. (2024, May 31). 

This information is being provided only as a general source of information and is not intended to be the primary basis for investment decisions. It should not be construed as advice designed to meet the particular needs of an individual situation. Please seek the guidance of a financial professional regarding your particular financial concerns. Consult with your tax advisor or attorney regarding specific tax issues. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Product and feature availability may vary by state. We are not affiliated with Medicare or any other governmental agency. 

Pinnacle Financial

The Pinnacle team’s primary objective is to provide holistic financial strategies. Our ultimate vision is to educate clients about their own personal financial challenges and potential solutions regarding complex financial issues.

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