Insurers aren't the main villain of the U.S. health care system

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Insurers aren't the main villain of the U.S. health care system<br>A repost from the Noahpinion archive.

Noah Smith<br>Jun 10, 2026

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In a post last week, I wrote about the progressive anti-monopoly movement’s increasing disconnect from reality. I wrote:<br>[C]onsider the movement’s choice of targets. These include some industries with high profit margins, but also some with very low margins. These include grocery stores, airlines, and health insurers. Grocery stores and health insurers both consistently have much lower profit margins than American corporations in general, often hovering near the zero mark.

Commenter Matthew argued that the low profit margins of insurers are not a reason not to worry about their market power:<br>The idea that health insurers have “low margins” so they are OK is nuts…Private health insurers in the US do not lower costs and do not improve patient care…In the flow of money between patients and providers, private insurers just sit in that flow like a tapeworm and take money out to sustain themselves…<br>There is a lot of evidence…[W]ith the current status quo, 10 -15$ out of every 100$ of healthcare premiums a person spends is just going to the private insurer….That would be fine if the insurance companies secured lower costs for their members; it would be the useful service they provide…But there is no evidence that they do.

Matthew’s argument doesn’t really address the point of my post. Private insurers might be inefficient, or even unnecessary, but this is very different from them being extractive monopolies. It is absolutely incredibly relevant that health insurers have very low profit margins. If $10 of every $100 spent on health care premiums goes to the insurer, but the insurer isn’t profitable, this just means that the $10 is going to cover the insurer’s operating costs. It is not money being funneled into the pockets of the people who own the insurance companies.<br>In fact, the more general fact here is that private insurers are not the main reason why American health care costs so much more than health care in other developed nations. Almost all of the excess cost goes to providers rather than to insurers. Private insurers may be an unnecessary middleman, but the amount they extract from the system is not large compared to the amount that gets either appropriated or wasted by the people providing the care.<br>So why do Americans — especially American progressives — focus so obsessively on health insurers instead of health providers? In a post two years ago, I hypothesized that it’s because insurers are the part of the system we have direct contact with — the people who have to tell us “no” when we can’t afford some treatment.

Insurance companies aren't the main villain of the U.S. health system<br>Noah Smith<br>December 9, 2024

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Insurers have thus become what Jeremiah Johnson calls “sin-eaters” — the hapless fall guys who bear the brunt of all Americans’ rage, despair, and frustration at a broken system in which the insurers play only a very minor role.

Jeremiah Johnson 🌐@JeremiahDJohns

Insurance companies are sin-eaters for every other pathology in America's healthcare system.

There are a LOT of broken parts of the US healthcare system, and it's remarkable how much blame insurance gets relatively to literally anything else.

Secular Talk (KyleKulinskiShow@bsky.social) @KyleKulinski

https://t.co/M0kVWbBJA8

5:28 PM · Apr 26, 2026 · 78.1K Views

52 Replies · 95 Reposts · 1.44K Likes

The more progressives focus on venting rage and making accusations at insurance companies, the less effective they will be in actually delivering Americans cheaper health care.<br>Anyway, here’s the post I wrote back in 2024, which fleshes this all out in greater detail.

“I’d rather die than owe the hospital til I get old” — Courtney Barnett<br>When UnitedHealthcare CEO Brian Thompson was gunned down in the street in cold blood the other day, a bunch of people on the internet gloated and cheered:<br>The jokes came streaming in on every social-media platform, in the comments underneath every news article. “I’m sorry, prior authorization is required for thoughts and prayers,” someone commented on TikTok, a response that got more than fifteen thousand likes. “Does he have a history of shootings? Denied coverage,” another person wrote, under an Instagram post from CNN. On X, someone posted, with the caption “My official response to the UHC CEO’s murder,” an infographic comparing wealth distribution in late eighteenth-century France to wealth distribution in present-day America…On LinkedIn, where users post with their real names and employment histories, UnitedHealth Group had to turn off comments on its post about Thompson’s death—thousands of people were liking and hearting it, with a few even giving it the “clapping” reaction. The company also turned off comments on Facebook, where, as...