Why Health Insurance Is So Expensive (Official Filings Explain It)

Intro

15%. That's the median increase health insurers on the ACA marketplace proposed for 2027. The second year in a row of double-digit hikes. Every number in this video comes from official documents, and you'll see them on screen.

And at work, the average family plan already costs $26,993 a year. Workers pay about a quarter of that straight out of their paychecks. In the latest survey, premiums jumped 6% in a single year. Wages?

Four. Now, there's a federal rule that's supposed to stop insurers from keeping too much of that money. It works exactly as written. And that's the problem.

Because one of America's biggest health insurance groups now pays billions in medical bills to companies it owns. It's right there in its own SEC filing. $168 billion. And stay to the end: there's one question to ask HR that most people never think to ask.

Let's unbox it.

The 80/20 Rule

The Affordable Care Act gave health insurers a simple rule. Spend at least 80% of the premiums you collect on health care and quality improvement. The other 20% can go to administration, overhead and marketing. And profit.

Insurers selling to large employers have to hit 85%. Miss the target, and customers get a rebate on part of the premium they paid. This year, insurers expect to pay out just over $759 million in rebates. That's down from 1.6 billion in 2025.

So the rule works. Profits are capped. Or are they?

The Catch

Read the rule one more time. It caps a percentage. Not a dollar amount. Say a plan collects $100 in premiums.

Up to twenty can go to overhead and profit. Now say medical costs double, and the premium doubles to 200. The same 20% is now $40. Same rule.

Twice the money. Under a percentage cap, a bigger bill can mean a bigger slice. And premiums keep getting bigger. Over ten years, family premiums climbed 53%.

Inflation? About thirty-six. To be fair, over the last five years, wages kept pace: premiums up 26%, wages up about twenty-nine. If you like seeing the actual documents behind the numbers, subscribe.

Every episode works like this. Because next, we're going inside the filing of a company that sits on both sides of the bill.

Paying Itself

UnitedHealth Group owns UnitedHealthcare, an insurance business that brought in $345 billion in revenue last year. This past quarter, it served 48.3 million people. It also owns Optum. Optum runs doctor practices and clinics, sells data and software to the health system, and runs Optum Rx, a pharmacy benefit manager.

So when UnitedHealthcare pays for care, that money can flow to a doctor, a clinic or a pharmacy business owned by the same parent company. How much? The company's annual report to the SEC spells it out. In 2025, Optum booked $270.6 billion in revenue.

168 billion of it came from what the filing calls affiliated customers. In plain English: the group, paying itself. That's sixty-two cents of every dollar Optum brought in. The biggest piece, 97 billion, was booked by Optum Rx, the pharmacy business.

Not every part of Optum wins. Optum Health, the doctors and clinics, lost $278 million in 2025. The money was in the pharmacy business: Optum Rx earned 7.2 billion. And this line keeps growing: 136 billion in 2023, 151 billion in 2024, 168 billion in 2025.

The filing says these deals are mostly pharmacy, care and technology services that Optum sells to UnitedHealthcare. And it says they're recorded at management's estimate of fair value. In other words, the company itself estimates what those deals are worth. Now look at where the profit landed.

UnitedHealthcare, the insurer, earned $9.4 billion from operations in 2025. Optum earned 9.5 billion. And it wasn't a one-off. In 2024, Optum out-earned the insurer too, 16.7 billion to 15.6.

The eighty-twenty rule limits what the insurer keeps. Not what the companies it pays can earn. None of this proves anyone broke a rule. But it shows why the rule may not mean what it sounds like.

Washington Noticed

And Washington has noticed. It isn't just a referee here. 44% of UnitedHealth Group's revenue last year came from premiums paid by CMS, the agency that runs Medicare and Medicaid. In December 2024, that agency wrote this in the Federal Register, about Medicare Advantage plans.

Payments made to related parties may, in some cases, be inflated, to make sure the plan meets its loss ratio requirements. Translation: money paid to your own companies can make the insurer's profit look smaller than the group's real profit. Then, in March 2026, Medicare's advisers told Congress that buying provider groups may let insurers shift profits to their providers, to avoid the limits of loss ratio rules. Notice the word may.

Regulators are describing a risk, not a proven crime.

The Pharmacy Counter

The same pattern shows up at the pharmacy. Pharmacy benefit managers are the middlemen that run your plan's drug coverage. And according to the Federal Trade Commission, the largest ones are now part of the same groups as the largest insurers. In January 2025, the FTC reported that the three biggest marked up numerous specialty generic drugs at their own pharmacies by thousands of percent.

Generating more than $7.3 billion in revenue above the drugs' estimated cost, from 2017 to 2022. Same family. Both sides of the counter.

The Real Driver

But here's the part most videos skip. Even without any of this, American health care is simply priced higher. RAND studied what hospitals actually get paid. In 2022, employers and private insurers paid, on average, 254% of what Medicare would have paid.

Same services. Same hospitals. Add it all up, and America spent $5.3 trillion on health care in 2024, up 7.2% in a single year. Private insurance alone was $1.6 trillion, up 8.8%.

That's $15,474 per person, and 18% of the entire economy. And CMS projects that share will reach 20.6% by 2034. Because spending is projected to grow faster than the economy: 5.4% a year, against 4.1. By the OECD's count, the United States spends by far the most on health of any member country.

And when the whole pie grows, a fixed percentage of it grows too.

What It Means For You

So what can you actually do? First, the question for HR: how is my plan funded? 67% of workers with job-based coverage are in self-funded plans, where the employer pays the medical bills from its own funds. The eighty-twenty rule is about insurance premiums.

In a self-funded plan, your employer pays the bills, so it's worth asking what they do when prices climb. Second, mark the dates. Medicare open enrollment runs from October fifteenth to December seventh. If you're on Medicare Advantage, CMS projects the average premium will actually drop, from fourteen thirty-seven to $12 a month in 2027.

On the ACA marketplace, enrollment starts November first and ends January fifteenth. Third, compare before you renew. Remember that 15%? That's what marketplace insurers proposed for 2027.

And tell me in the comments: how much did your premium go up this year? So, why is health insurance so expensive? Because care in America is priced high, and a rule built on percentages doesn't push back on that. And because some of the biggest insurers now own the doctors and pharmacies they pay.

The law capped the slice. Nobody capped the pie.