Health insurers tell Congress their operations aren’t the cause of high healthcare costs

The debate over the root causes of surging healthcare costs came to Capitol Hill this week as health insurance executives defended their business models to Congress.

While acknowledging bipartisan criticism after a year when the cost of employer-sponsored family coverage grew by 6%, with similar or larger projections for 2026, the executives said the crux of the issue is the high cost of healthcare and thus is largely outside their control.

Hospital prices, pharmaceutical prices and the increasing utilization and intensity of care were among the most commonly cited factors by executives of five leading insurers Jan. 22 during a hearing conducted by the House Energy and Commerce Committee’s Health Subcommittee and then a forum held by the House Ways and Means Committee.

Health insurance is essentially a pass-through mechanism, they said, with 85% to 90% of premiums typically going to pay medical claims.

“The cost of healthcare insurance fundamentally reflects the cost of healthcare itself,” said Stephen Hemsley, CEO of UnitedHealth Group. “If insurance costs are going up even as we compete aggressively against other companies, it signals rising costs of health services and drugs and rising volumes of care activity.”

The executives pointed to newly released data from CMS researchers that spending on hospital care increased by more than 10% in 2023 and nearly 9% in 2024, while prescription drug spending rose by 10.9% and 7.9% and now comprises a quarter of employers’ healthcare costs.

Contrasting views on consolidation

When discussing hospitals, the leaders of UnitedHealth, CVS Health, Elevance Health, Cigna and Blue Shield of California pointed to the market power stemming from consolidation as a cost catalyst. They also said vertical integration funnels more care toward higher-cost outpatient departments instead of physician offices or urgent care.

“Less choice means more price inflation, whether it’s through consolidation of hospitals or otherwise,” David Cordani, the president, CEO and board chair of Cigna, said in response to a question.

The issue has the attention of legislators from both parties, as indicated during the hearings, with committee members touting possible approaches such as greater scrutiny of hospital consolidation, an expansion of site-neutral payment (including in Medicaid), and enhanced price transparency.

However, much of the concern expressed about consolidation and vertical integration centered on insurers that have expanded into the provider and pharmacy benefit manager spaces.

Rep. Diana Harshbarger (R-Tenn.), vice chair of the Health Subcommittee, asked whether any guardrails prevent insurers from steering patients to pharmacies and clinics that operate under the insurer’s corporate umbrella.

“I think people would suggest today that technology doesn’t work, there’s a fragmented and disjointed experience,” replied David Joyner, chairman and CEO of CVS Health. “By putting these businesses together, we believe we’re solving for the fragmentation.”

In comments submitted to Congress ahead of the hearings, the American Hospital Association (AHA) called attention to what it says is a better model: “Smaller, community-based regional plans often work closely with providers to deliver coordinated, high-quality coverage. … As Congress examines ways to improve affordability, these plans offer a clear model for achieving high-quality coverage without the costly, problematic practices seen among larger insurers.”

Hospitals in a tough spot

One line of questioning to the insurers was about the pressures faced by hospitals at a time of rising uninsured rates and coverage disruptions that increase uncompensated care. There may be little recourse but to negotiate higher commercial payment rates, leading to higher premiums.

Rep. Raul Ruiz (D-Calif.), an emergency department physician by background, raised that scenario to the insurance executives and asked whether they agreed that it was a legitimate concern, especially in the wake of the projected coverage loss stemming from the 2025 reconciliation bill known as the One Big Beautiful Bill Act (OBBBA). The executives all answered in the affirmative, although at least one tried to interject with additional context but was cut off as Ruiz spoke.

“We’ve argued all along that [the OBBBA] is going to raise costs for everybody,” Ruiz said.

Administrative processes implemented by insurers were another aspect of the discussion.

“Every dollar wasted on inefficiency, waste, denial of claims or unnecessary billing is a dollar not spent on patient care,” said Rep. Mariannette Miller-Meeks (R-Iowa).

Rep. Cliff Bentz (R-Ore.) asked the insurers to submit written answers as to how much their companies make in interest while sitting on the money from denied claims. In its comments, the AHA said 50% of hospitals have more than $100 million in unpaid claims for care delivered more than six months earlier.

The executives touted their companies’ evolving policies such as steps to reduce the number of services subject to prior authorization and to increase cases when authorization is given in real time.

Committee members talked up drafted legislation that would ensure a greater share of prior authorization is standardized, electronic and real-time. They also see opportunities to reduce authorization requirements for services with high approval rates.

Little optimism on the ACA subsidies

A recurring dispute between committee members during the hearing was the fate of the Affordable Care Act (ACA) enhanced subsidies, which have expired in 2026. Although the Senate still has not ruled out agreeing on an extension, momentum has stalled after bipartisan talks seemed to make headway earlier in January.

At the hearing, Democrats argued that a failure to extend the subsidies would have substantially adverse effects on the affordability of healthcare. Republicans countered that the ACA has structural flaws that would be exacerbated by continued subsidization, as would the potential for enrollment fraud.

Baseline premiums rose by 26% for benchmark silver plans going into the current year, according to data compiled by KFF, which also projected that the average out-of-pocket premium would more than double.

Of note, the insurance executives indicated that the underlying premium increase likely would have happened regardless of the fate of the subsidies, meaning the uncertainty and instability in the risk pools were not the impetus for the price hike.

“The overall costs are still driven by underlying root causes,” said Gail Boudreaux, president and CEO of Elevance Health.

Fundamental areas for improvement

An apparent area of harmony between the political parties and between many insurers and providers is the understanding that incentives in the healthcare system should shift to emphasizing patient outcomes over volumes.

“We believe that the single biggest issue is the health status of the population,” said Joyner of CVS Health. “They’re aging, consuming more healthcare resources. Our focus is on wellness, prevention, keeping people out of the hospital, keeping people on low-cost therapies that we believe will ultimately manage the overall health costs and focusing on an outcomes-based model with the providers. We’re working collaboratively and introducing technology to help bring the consumer into the process.”

One line of questioning posed the idea that just as provider reimbursement depends on patient outcomes in value-based payment models, compensation for insurance executives should hinge on the experience of patients navigating the healthcare system. For example, Rep. Kat Cammack (R-Fla.) asked the group whether “an executive at your company takes a financial penalty when a patient is harmed due to an insurer-caused delay or wrongful denial.”

No hands were raised among the executives.