“Life comes at you fast” is the familiar Nationwide Insurance ad tag circa 2004 that features unexpected misfortunes that illustrate the need for insurance. The phrase seems appropriate to current events:
On the national stage, last week’s headline news was…
- The on-again, off-again US-Iran War produced a porous 14-paragraph MOU and 60-day partial cease fire to which Israel and Hezbullah paid no attention. Mixed messages. Confusion.
- USA Soccer secured a spot in the knockout phase of the World Cup after a 2-0 victory over Australia. Unexpected!
- UK Prime Minister Keir Starmer stepped down as leader of the governing Labour Party which means Britain will have its seventh prime minister in the last decade. Not unexpected.
- And U.S. government reports showed the labor market in May more stable than anticipated but increased costs of living for groceries, gas, housing and healthcare surpassing wage growth. Complicated.
In healthcare, last week…
- Florida District Judge Middlebrooks denied The Leapfrog Group’s motion to reconsider a March ruling in a lawsuit won by Tenet stating “Upon review, none of [the] defendant’s arguments are convincing,” Methodology’s matter.
- “Healthcare billionaire” Rick Jackson won the Georgia Gubernatorial primary joining former FL Governor-now-Senator Rick Scott’s entourage of former healthcare exec’s pursuing public office. Healthcare corporatization in Campaign 2026??
- A pair of HHS reportsfound considerable inaccuracies in the maternal health data that Medicaid managed care plans provide to patients and states. Note: 72% of Medicaid enrollees are covered by MCOs. Troubling.
And at home…
- My son Jason and wife Katie welcomed twins Maggie and Drew to the family joining Owen, Caroline and Tatum in Buddy’s club. So cool.
- And an Amazon delivery driver broadsided my new wheels the same day they were born and only hours after I replaced its temporary tags. So frustrating.
That’s life! It’s not simple. It’s not predictable. It can be frustrating. And it changes fast. That’s never been more true in U.S. healthcare. On three fronts, changes are being made to address urgent needs and bring a measure of order to chaos:
- States are advancing legislation to control health costs, constrain private equity ownership, limit hospital CEO compensation, impose drug price controls, eliminate tax exemptions for “not for profit” health providers, challenging consolidation and engaging the public’s help in identifying fraud, waste and abuse. They’re not waiting on DC for solutions: states are now ground zero for health system reform.
- Large, self-insured employers are limiting access to obesity drugs, carving out clinical programs for direct contracting, pushing total-cost-of-care payment models, cutting employee benefits and creating exclusive provider networks outside insurer coverage design. They’re tired of subsidizing the entire system. They’re tired of excuses from hospitals, drug companies and insurers.
- Physicians are successfully challenging Medicare’s MIPS-based calculus for their reimbursement, integrating behavioral health and dentistry in ‘total primary care,’ challenging Stark limitations on physician ownership of hospital, modernizing medical education to produce AI-savvy, technology-enabled medical professionals and forcing hospitals to share decision-making across a broader range of responsibility. They’re tired on being taken for granted. They’re tired of being called providers and managed by inefficient MSOs.
This trio shares two views about how the system is performing:
- The status quo—especially hospitals, drug companies and insurers—is not serious about reform. Rather, it is consumed by its blame and shame game and un-serious about reducing cost, increasing price transparency and affordability for individuals and households, and balancing prevention and sick care. They believe this incumbency ignores nursing homes, home care and post-acute services as distractions, treats mental health demand with marginally-effective programs and professions and tolerates Medicaid as a well-intended money pit.
- The federal government’s leadership on healthcare is haphazard, irrational and incoherent. Issues that could be solved lack decisive action because the DC-based health establishment is paid to protect the status quo, not fix healthcare. Thus, inoperability, ultra-processed foods, workforce modernization, cost containment, competition et al are subjected to Beltway rope-a-dope: conferences, white papers, lobbyists and paid pundits that talk solutions but deliver incrementalist protections.
Until and unless states, employers and physicians coalesce around transformational changes that solve healthcare’s glaring problems, not much will change (until the system collapses).
I am not a fatalist. I am a realist. And the reality is healthcare’s future is uncertain because life is coming at it fast. And it’s unprepared.
Paul
PS: Speaking of insurance, dealing with my collision has been instructive: accident at 5:42 pm Monday, police arrive at 9:20 pm, tow truck at 9:55 pm and home at 10:45. Four days later, insurance agrees it’s OK to tow car from temporary storage to collision center with promised estimate “in a few days.”. Meanwhile, I’ll have a rental which, though covered, will cost me $75/day on top of the coverage allowance. And my agent and Amazon are hashing out other details. Maybe I’ll get an explanation of benefit followed by what I owe for my protection?
Health insurance began as a mechanism for patients to be able to pay for physicians and hospital services. It was created by providers in collaboration with employers to enable accessible care and facilitate payments for services needed. Unlike auto insurance that’s an individual purchase mandated in most states, healthcare insurance is purchased by employers, local, states and federal governments, and for growing number, individuals themselves. And it’s expensive. Like auto insurance, health insurance is on trial in the court of public opinion: is its cost commensurate with the value it promises? In the process of system transformation, might it be time to rethink the role insurance plays and seriously assess other options that rationalize risk cost effectively?
Sections in today’s report:
- Quotables
- Employers
- Hospitals
- Insurers
- Physicians
- Polling
Quotables
Health Affairs on State health cost control efforts: “What is driving the high commercial market trend? Analysis of commercial claims data points to two categories of services above all others: hospital services and retail prescription drugs. Together, they account for the majority of per person commercial spending and have seen the greatest increases in growth —making them the logical focal point for cost containment policy.
Hospital services—inpatient and outpatient combined—accounted for 45.3% of total per person spending among people with employer-sponsored insurance in 2022, and spending in this category grew 18% between 2018 and 2022. Retail prescription drugs accounted for an additional 23.3% of spending in 2022 and grew 35.0% over the same period—the fastest growth of any service category.
The eight states (California, Connecticut, Delaware, Massachusetts, New Jersey, Oregon, Rhode Island, and Washington) with cost growth targets have made a meaningful contribution to the national effort to make health care affordable. They have built the data infrastructure, analytical capacity, and public accountability mechanisms needed to understand where spending is growing and why. That foundation is valuable and necessary. While anticipated by these states, the evidence is now clear that transparency and accountability alone are insufficient to bend the cost curve in the commercial market, where spending growth has consistently and significantly outpaced targets.”
States Are Exceeding Their Health Care Cost Growth Targets. What Does It Mean? | Health Affairs
AJPH on parallel between tobacco and ultra-processed food public health impact: “The US public deserves the same level of protection from UPF corporations as from US tobacco companies. The links between the tobacco and UPF corporations, the empirical evidence on the tactics they have used to delay regulation, and the addictive nature of their products and the harm they cause are irrefutable. We are in the midst of the “New Tobacco War,” and litigation could play a defining role in addressing these commercial determinants of health and thus protect all Americans, especially our children, who do not have the ability to protect themselves from these harms.”
Institute for Accountable Care on ACOs, alternative payment models: “During 2025, the Center for Medicare and Medicaid Innovation within the Centers for Medicare and Medicaid Services (CMS) announced seven new value-based payment models. Among these new models is the Ambulatory Specialty Model (ASM), which is specifically focused on improving efficiency in care for two chronic conditions—lower back pain and heart failure. Another new model, the Long-term Enhanced ACO Design (LEAD) Model, which will launch in January 2027, also includes episode-based payments. Specifically, LEAD accountable care organizations (ACOs) will be able to set condition-specific spending targets within an ACO’s total cost of care benchmarks called CMS-Administered Risk Arrangements (CARAs). This approach is an exciting step toward “nesting” bundles within total cost-of-care models. “
Thompson on healthiness, alcohol consumption: “Clearly, I am not the only American who is reconsidering his relationship with alcohol. The share of people who drink hit an all-time low last year, according to Gallup, whose data go back to 1939. Total beer consumption recently reached a 21st-century low, and wine vineyards are reportedly “in crisis.” While many social changes happen slowly, the attitude shift against alcohol has been quite sudden. The share of Americans who say moderate drinking (defined as one or two drinks a day) is “bad for health” doubled in just the last 10 years. Two-thirds of Americans under 35 now tell Gallup that alcohol is harmful in any quantity…
The Enhanced Self is the evolution of medicine, technology, and consumer culture from an emphasis on curing illness to an obsession with optimizing normal, healthy life. We see this with the rise of GLP-1s, the explosion in biohacking with peptides (injectables that affect inflammation and gut health and are also the “P” in GLP), and the continued growth of supplements. More Americans are using therapies not only to cure what is wrong with them but also to improve what is not wrong with them. At the layer of leisure, the tendrils of the Enhanced Self touch the white-hot rise of fitness in American life. A record 77 million Americans belonged to a gym or studio in 2024, up 20 percent since before the pandemic. Running clubs on the fitness app Strava nearly quadrupled in 2025 alone. If you don’t believe the industry data, perhaps you’ll believe the federal government: according to the American Time Use Survey, Americans today exercise and play sports more than at any period on record.”
Why the Healthiest Generation Is the Loneliest
Madden on AI in healthcare: “…Which brings me to the frame I’m most attached to: healthcare AI has a self-driving car problem. A Waymo gets stuck at an intersection and its national news; the ~40,000 annual road deaths — a 737 falling out of the sky every day — are background noise. We judge the machine against perfection and the status quo against nothing. Healthcare does the exact same thing. Nearly every clinical AI study measures the model against an idealized ground truth, not against relative human performance, which is the actual bar. Over-reliance is a real failure mode and I’m not waving it away. But until we start asking “better than the tired resident at 3am?” instead of “perfect?”, we’ll keep slow-walking tools that are already safer than what they replace — and the convergence point, where it’s simply cheaper and lower-risk to deploy AI than not, is coming whether the liability and reimbursement questions are settled or not.
Blake Madden Hospitalogy June 18, 2926 Workweek Media
Employers
Cuban expands Cost Plus Contracting: “Mark Cuban disrupted pharmaceutical pricing in 2022 with Cost Plus Drugs, a public benefit corporation that charges a flat 15% markup on generics and posts its full price list publicly, bypassing pharmacy benefit managers and intermediaries entirely.
Four years later, he is running the same playbook on how providers get paid, and ASCs are at the center of the experiment.
His platform, Cost Plus Wellness, connects self-insured employers directly with providers through publicly posted contracts with no insurers in the middle, no prior authorization requirements and no hidden fees. The providers leading adoption are predominantly ASCs and physician groups…
Commercial rates average around 196% of Medicare fee-for-service, while Medicare pays ASCs only 53% to 56% of what it pays hospital outpatient departments, according to 2025 Milliman data. That reimbursement structure makes commercial payer relationships disproportionately important to ASC margins, and disproportionately damaging when those relationships are unprofitable.”
Mark Cuban built Cost Plus Drugs. Now he’s coming for how ASCs get paid – Becker’s ASC
Business Group on Health employer poll: In February-March, 2026, BHG surveyed 105 employers about their views on GLP-1 coverage.
Background: GLP-1s (Ozempic, Wegovy, Mounjaro, Zepbound) were originally developed to help regulate blood sugar in people with Type 2 diabetes. They lead to substantial weight loss for people with obesity and show promise in helping to manage other conditions, such as cardiovascular disease, obstructive sleep apnea and substance use disorder. Highlights:
- Nearly eight in 10 employers report that GLP-1s are driving an increase in their company’s health care costs, leaving many to consider some difficult choices in balancing costs and care, according to a survey released today by Business Group on Health. 67% currently cover GLP-1s for weight management.
- Of those covering GLP-1s for weight management, 72% said they were likely to continue that coverage in 2027, while 10% said they likely would not, according to the survey.
- While more than half of employers that cover GLP-1s for weight management expect the expensive medications to yield significant clinical benefits, few have yet seen evidence (such as a reduction in obesity rates and fewer employees needing bariatric surgery) within their aggregated claims.
- 87% of employers anticipate that the availability of an oral GLP-1 medication will result in higher demand for the drugs overall, and only 9% of employers anticipate a decrease in price.
- 83% use the same standard cost-share arrangement as they do for other medications. This approach far exceeds options such as using a special design or having no out-of-pocket costs.
Hospitals
Study: Hospital wage index exceptions: “The hospital wage index standardizes Medicare hospital payments for labor cost differences, paying otherwise equivalent hospitals more when they operate in areas with higher labor costs than in areas with lower labor costs. However, because of a plethora of exceptions, labor costs are commonly disconnected from the originally assigned wage index, and policy makers have expressed concerns that exceptions are not justified. Using publicly available wage index and Centers for Medicare and Medicaid Services impact files, we found that wage index exceptions increased by nearly 60% from 2016 to 2024 and were highly prevalent, with more than 70% of hospitals receiving exceptions by 2024 (compared with 46%in 2016). Growth was disproportionate across states and hospital types. Two exceptions—geographic reclassifications and rural floor adjustments—increased annual hospital revenues by an average of $650,000 and $930,000, respectively. Growth in costly exceptions distorts wage index accuracy and impedes the policy’s intended goal of calibrating payments to actual labor costs…
More consistent regulatory policy is warranted. Numerous recent regulatory changes, including the introduction (and subsequent expiration after FY 2024) of the low-wage adjustment and policies affecting reclassification eligibility and rural floor calculations, have introduced greater complexity into the policy and may have encouraged additional “gaming” by hospitals. We observed a sharp increase in rural floor adjustments after a 2024 change enabling higher rural floors”
Medicare’s Hospital Wage Index Exceptions Grew By Nearly 60% From 2016 To 2024 | Health Affairs
Beckers on hospital revenue growth: “Revenue growth continued across the hospital industry in 2025, with many of the nation’s largest health systems posting mid- to high-single-digit gains fueled by stronger patient volumes, improved payment rates and the expansion of ambulatory and pharmacy operations.
But the gains were far from uniform. Some systems grew revenue by double digits through mergers, acquisitions and new payer arrangements, while others saw declines as they shed hospitals and restructured their portfolios.”
Here are 104 health systems ranked by their most recent annual revenue:
81 health systems ranked by annual revenue
CHS CEO on strategy: ““We believe the value is in building scale within where we have a network of both inpatient and outpatient services. What’s really core for us is those markets where we have that kind of scale.
Almost 35% of the company we’ve sold, but yet our revenue generation is almost identical and so is our earnings. What we’ve done is we’ve really reinvested back in that core group. Our core hospitals are growing and doing well. Those hospitals are much more difficult to operate because we don’t have leverage with the payers, we don’t have leverage with physician groups. We’ve actually pivoted away from considering ourselves just a hospital company, we really consider ourselves more of a healthcare company and it’s really across the whole continuum of care. We’re kind of at the end of any kind of formal program of trying to divest and really starting to pivot towards growth and looking for opportunities, we may have a divestiture, but we end up having an opportunity to roll those proceeds into an acquisition where we’re just optimizing our portfolio.”
Since 2014, when CHS (NYSE: CHY) peaked with 207 hospitals nationwide, the health system has sold off over 70% of its hospitals. As of June 15, the company had 60 hospitals in 12 states
Community Health Systems cuts debt, offloads hospitals – Nashville Business Journal
North Carolina Senate targets NFP system CEO comp: A North Carolina Senate committee endorsed a bill June 11 that would cap hospital CEO pay but removed a provision that could have affected a proposed health system combination (Wake-Atrium). The North Carolina Senate Health Care Committee… amended Senate Bill 978 to remove the merger-related provision, but it still includes provisions that would cap nonprofit hospital CEO pay at 400 times the compensation of the lowest-paid full-time employee, prohibit noncompete clauses for physicians, physician assistants, nurse practitioners and registered nurses, and add whistleblower protections for those same professionals who report violations of medical staff bylaws or raise patient safety concerns.
Compensation includes salary, bonus payments, incentive payments, severance and value of hospital-provided vehicles or housing. If passed, qualifying hospitals would be required to report minimum compensation and CEO compensation for the preceding year by March 1 annually.
Note: Other states pursuing similar activity: California, a ballot initiative eligible for the November general election would cap pay at $450,000 annually for hospital executives, managers and administrators. In Vermont, a bill introduced in the state Senate in January 2025 would limit executive and clinical leadership pay to no more than 10 times the lowest-paid direct care employee. The push comes as an August study found the pay gap between CEOs and average employees at U.S. nonprofit hospitals widened between 2009 and 2023.
North Carolina General Assembly https://www.ncleg.gov/BillLookUp/2025/S978
Insurers
MA Plan Star Rating recalculation: CMS will award $428 million in bonus payments to Clover Health and Humana based on their successful challenges to their Star Ratings. That $428 million represents 2.3% of the $18.54 billion the agency will pay out in bonuses for the 2026 plan year, the analysis found originally announced in October.
CMS Medicare Advantage star ratings redo boosts Humana, Clover – Modern Healthcare
UnitedHealth AI strategy: “At UnitedHealth Group Inc., artificial intelligence reads aloud summaries of medical charts as nurses drive to patients’ homes. It listens to millions of customer calls to find the causes of complaints. One trial even has AI agents calling doctors’ offices to schedule appointments for patients.
The largest U.S. health insurer plans to invest $3 billion in AI over 2026 and 2027. UnitedHealth executives say they’re seeing a 2-to-1 return, as AI automates cumbersome manual processes and makes workers more efficient. Executives say the technology can reduce friction for patients while lowering costs…
The company has more than a thousand AI uses, 20,000 AI engineers, and 117 large language models available for staff to draw on.
UnitedHealth Group’s AI Strategy: How the World’s Largest Health Insurer Is Modernizing Member Experience in 2026 https://getperspective.ai/blog/unitedhealth-group-ai-strategy-largest-health-insurer-member-experience-2026
S&P: Blue Cross Plan profitability: “Nonprofit Blue Cross and Blue Shield health insurers underperformed relative to national and regional competitors last year as costs mounted. Only seven nonprofit Blues plans reported positive operating margins in 2025, one fewer than the prior year, according to an S&P Global Market Intelligence analysis of health insurance company regulatory filings.
Collectively, nonprofit Blues Cross and Blue Shield carriers reported a -2.4% operating margin, worse than for-profit national insurers and regional nonprofit carriers, according to an analysis HealthScape Advisors performed for Modern Healthcare using data from the National Association of Insurance Commissioners.
In spite of a generally positive first quarter this year, these chronic losses suggest Blue Cross and Blue Shield insurers face the toughest road to profitability in the sector.
Struggling insurers will continue to consolidate, reevaluate provider contracts and raise premiums to recover, said Atul Pathiyal, the managing partner at HealthScape who conducted the analysis.
The average medical loss ratio, which measures the portion of premiums spent on claims, was 93.5% across the entire health insurance sector last year, the highest in more than a decade, according to S&P.”
Blue Cross Blue Shield plans ranked by 2025 profits https://www.beckerspayer.com/financial/blue-cross-blue-shield-plans-ranked-by-2025-profits/
Sherlock: BC Admin costs: Based on its analysis of data from 12 Blue Cross plans:
- Administrative expense growth in 2025, at 0.3% excluding mix differences, was the lowest since the effects of Covid adaptation in 2021 and is otherwise the lowest since 2015. Growth was 0.5% without excluding the effect of a product mix shift in favor of Medicare Advantage. The 2024 growth rates were 5.6% holding mix constant and 6.6% as reported.
- Growth in costs for the cluster of Account and Membership Administration was the slowest growth since 2016. In 2025, this cluster’s costs increased by 1.1%, 1.7% including the effect of the increased MA mix. The prior year’s growth rates were 4.2% holding mix constant and 4.7% as reported.
- Cost growth declines between 2025 and 2024 were broadly evident. With the exception of the Corporate Services Cluster, all clusters’ growth rates were lower, regardless of whether trends were as reported or excluding the effect of mix differences.
- Factors impacting the change in administrative costs were a slight decline in staffing ratios, an increase in compensation likely affected by a shift towards more expensive employees and a decline in non-labor costs.
Note: Sherlock analysis is based on twelve Blue Cross Blue Shield Plans that serve 41.2 million members with Comprehensive products, approximately 57% of all Blue members not served by public Blue companies.
Blue Cross Blue Shield Plans’ Administrative Expense in 2025 | Sherlock Company Navigator
Physicians
Private equity limitation: Vermont became the third state since the start of last year to try to keep private equity out of the examining room, as physicians and lawmakers increasingly take a skeptical view of corporate investors in medicine….Vermont is now the third state, after Oregon and California, to pass new restrictions on the corporate practice of medicine since the start of last year. In addition, states including Massachusetts and Indiana recently enacted laws to scrutinize private equity’s healthcare investments. Connecticut last month passed a law to ban a type of transaction critics say private-equity firms use to extract money from hospitals.
The action may soon shift to the federal level. The American Medical Association, the nation’s largest doctors’ group, last week voted to seek a nationwide prohibition on corporate interference with physicians’ patient care, and to oppose certain legal structures commonly used by private-equity firms to invest in healthcare practices.
Vermont Becomes Latest State to Limit Private Equity’s Influence on Healthcare – WSJ
Polling
WSJ: Economic Sentiment: The Wall Street Journal interviewed 2000 adults May 7-18, 2026: 1,500 Registered Voters and 500 Non-Registered Voters. Highlights
“More than 40% of Americans who call themselves upper class or upper-middle class say they haven’t saved enough money to retire comfortably. Only about 40% say their financial security is where they thought it would be at this point in their lives. Nearly three in five say they are strained by high gasoline prices…
While middle- and working-class Americans signaled the most economic strain, the pessimism felt by the upper classes stood out for having worsened, despite the ways the economy has favored them. Nearly two-thirds of people who consider themselves upper class or upper-middle class have $150,000 or more in annual household income, including 25% with incomes above $250,000.”
WSJ_Econ_Class_Poll_May_2026.pdf
McKinsey on workforce stability: “The effects of trauma can extend into the workplace, impacting employee performance and satisfaction. In a McKinsey Health Institute survey of 30,000 workers across 30 countries, 33% of respondents report experiencing a traumatic event that has affected their lives. These employees also report lower levels of adaptability, learning, engagement, and other performance outcomes. The difference is most pronounced in engagement, where scores are ten percentage points lower for employees who have experienced trauma than among those who have not.”
