Insurers aren't the main villain of the U.S. health care system
Noah Smith
· Noahpinion
· June 10, 2026 at 07:10
· ⏱ 17 min read
| Read on Substack ↗
Summary
Noah Smith argues that U.S. health insurers are not the primary drivers of high healthcare costs; instead, providers (hospitals, pharma, etc.) account for most of the excess spending. The article uses profit margin data and international comparisons to show insurers have slim margins and limited ability to reduce costs, shifting blame from insurers to providers. For markets, this suggests that regulatory or competitive pressure on providers—not insurers—would be needed to meaningfully lower U.S. healthcare spending.
•UnitedHealth Group's net profit margin is 6.11%, about half the S&P 500 average, while other large insurers have margins of 1-4%.
•UnitedHealth's 2023 net income ($23.1B) is dwarfed by its medical costs ($241.9B) and operating costs ($54.6B).
•If UnitedHealth donated all profits to healthcare, it could only pay for 9.3% more care than it already covers.
•Americans pay a smaller percentage of health costs out-of-pocket than residents of Sweden, Denmark, and the UK.
•Kaiser Family Foundation analysis shows most excess U.S. healthcare spending comes from providers (hospitals, pharma, doctors, tech), not insurers.
•Eliminating all administrative waste in the U.S. system would save at most ~$680 per person per year, a small fraction of the $5,683 excess cost vs. other rich countries.
•Insurers' return on equity is low relative to the S&P 500, while providers like HCA Healthcare (272% ROE) and AbbVie (84%) show much higher returns.
•The article cites a Bloomberg story on predatory hospital pricing, where hospitals bilk insurers, forcing them to pass costs to patients.