By NextBestFitPhase 3: Waves 2 & 3: working-age adults · Step 3.3
Wind down the private health insurers
Years 1–5 · State insurance commissioners; NAIC; UHADiscuss this step
Pros & cons of this step
Pros
- +Orderly run-off protects patients' pending claims.
- +Nonprofit assets go to public-benefit health foundations.
Cons
- −Shareholders lose: a rough estimate of insurance-segment equity value at risk is $420.0B–$714.0B, though diversified firms (UnitedHealth's Optum, CVS) keep other businesses.
- −Some workers lose pensions if insurers fail rather than wind down.
- No compensation for lost future profits (legally sound, and consistent with the ground rules) vs. political and market backlash.
medium confidence
Efficiency: what private insurance does well, and what is lost
Private insurers do provide services: utilization management, network negotiation, care management, fraud control, customer service, and product innovation. Single payer removes them and must either replace them or accept losing them. The evidence on whether they save more than they cost is mixed to negative.
Today
Private insurers' net cost (administration + profit) is $176.5B of $1.64T in premiums (10.7%). Medicare's administration is about 1.4% of spending (Trustees), though it does far less care management and fraud prevention.Under the plan
Insurer and plan overhead falls from $306.0B to $26.4B; UHP administration costs $96.5B. Net administrative saving $238.2B a year, before provider-side billing savings.Who gains
- Providers (one set of rules, no prior authorizations)
- Patients (no denials, appeals, or network surprises)
Who loses
- Insurer employees and shareholders
- Patients who valued plan-level care management (some MA enrollees)
Magnitude: About $238.2B a year in insurer-side savings.
- Private insurance: prior authorizationInsurers argue prior authorization reduces low-value care. Physicians report it delays necessary care; Medicare Advantage plans denied about 6% of prior-authorization requests in 2023; few denials were appealed, but about 80% of those that were got overturned (KFF).
- Medicare AdvantageCoordinated care and extra benefits are popular, but MA costs about 20% more than traditional Medicare for similar enrollees, largely from coding intensity and favorable selection.
- Price negotiationPrivate insurers' 'negotiation' yields hospital prices at about 254% of Medicare on average. Fragmented buyers have little leverage against consolidated health systems.Sources: RAND Corporation (2024)
- Customer serviceCompetition gives insurers some incentive for service quality; a monopoly public payer has none except politics. Medicare's 1-800 line and appeals are slower than the best private plans but faster than Medicaid.
- Canada vs U.S. administrationResearchers estimate total administrative costs (payers + providers) at about 34% of U.S. spending vs 17% in Canada. These are advocacy-aligned authors, so treat this as an upper bound.
Mitigations
- Program integrity funded at 2.5% of benefits, above Medicare's 1.4%.
- Integrated care organizations keep care management inside provider systems.
- Health Technology Assessment Institute replaces prior authorization with evidence-based coverage rules.
Risk that remains: A public monopoly can become complacent; customer-service failures have no competitor to absorb dissatisfied patients.
Jobs affected by this step
- Health & medical insurance carriers (incl. Medicare Advantage & Medicaid plans): 384k of 452k jobs displaced. Underwriting, sales, network contracting, utilization management, and claims adjudication for UHP-covered services end. About 15% of roles (claims processing, nurse care managers, data analysts) map onto UHP and integrated-care-organization jobs.
- Third-party administrators & claims adjusting (health share): 102k of 127k jobs displaced. TPAs administer self-insured employer plans, and those plans end.
- Health insurance brokers, agents & benefits consultants: 72k of 80k jobs displaced. There is nothing left to sell except supplementary coverage.
- Pharmacy benefit manager corporate staff: 34k of 40k jobs displaced. Rebate negotiation, formulary design, and claims adjudication move to the national formulary. Pharmacists in PBM-owned retail and mail pharmacies are not counted here; dispensing continues.
Trade-off behind each cost item
- The largest administrative saving, paid for by insurer shutdowns, about 365,000 insurer jobs, and lost services some people value (care management, plan choice).
- Accepted under the plan's ground rules; cushioned by the worker transition program and hiring preference at UHA.
- Accepted under the plan's ground rules; cushioned by the worker transition program and hiring preference at UHA.
- Accepted under the plan's ground rules; cushioned by the worker transition program and hiring preference at UHA.
- Accepted under the plan's ground rules; cushioned by the worker transition program and hiring preference at UHA.
- No compensation is paid. Losing a market to regulation is not a taking, but shareholders (including pension funds) bear the loss.
- PBM gross profit lost−$28.0BIntermediaries' revenue is the system's administrative cost; ending it saves money and ends their jobs and business.
- Intermediaries' revenue is the system's administrative cost; ending it saves money and ends their jobs and business.
Trade-off behind each system change
- Pharmacy benefit managersTransparent prices; loses PBMs' (contested) role in squeezing manufacturer prices.
- Private health insurers (commercial, MA, Medicaid MCO)Largest administrative saving; ~384,047 jobs and $420.0B–$714.0B of shareholder value at risk.
- Brokers, agents, benefits consultants~72k jobs displaced.
- Insurer statutory reserves and guaranty associationsProtects pending claims; delays shareholders' access to released capital.