On Thursday, January 22, the House Energy and Commerce Committee and the House Ways and Means Committee will each hold a hearing with some of the nation’s top health insurance CEOs. The committees will likely explore how to address a health system plagued by soaring costs, extensive fraud, rampant waste, and shrinking options for consumers. Health insurance executives have been summoned to Capitol Hill before. But these hearings present a unique opportunity to investigate how health insurers exploit and profit from structural flaws in government programs, driving up prices for all Americans.
Government now accounts for more than half of all health care spending. The Affordable Care Act, also known as Obamacare, was passed in 2010 and has increased the federal government’s control over health care every year. Insurers have exploited the perverse incentives of the ACA to drive their profits up without evidence of American health improvements. By exploring some of these ACA design flaws that inflate premiums, the two committees can help identify policies that will curb escalating health care costs, including payment reforms, efforts to combat fraud and abuse, and ways to expand options for families and businesses. The ultimate goal is a more affordable and patient-driven health system.
Supporters of the ACA promised it would lower premiums by $2,500 for a family of four. Instead, individual market premiums have risen 129 percent since 2014. Both committees should probe why the ACA-mandated regulations incentivize insurers to push premiums higher. One core structural flaw of the ACA is the Medical Loss Ratio (MLR) – the rule that governs how much of premium revenues must be spent on medical claims rather than administrative costs and profits. The MLR requires that insurers spend 80 percent of individual market premiums on claims, which sounds consumer-friendly. However, the rule creates perverse incentives.
Under the MLR, insurers face incentives to increase premiums to maintain profitability, as these mandates limit flexibility in managing overhead while forcing a rigid spending floor on benefits. Due to the MLR, per-member-per-month profits fall when premiums fall but rise when premiums increase. Paradoxically, insurers can lose profit margin as people get healthier. Lower utilization from healthier populations can lead to reduced insurer earnings under the MLR caps.
Another major problem contributing to rising hospital prices is the acceleration of hospital and physician mergers since the ACA became law. Federal policies, such as those favoring larger systems through reimbursement incentives, exacerbate this negative trend. Such consolidation reduces competition, inflating negotiated rates that insurers pass on to families and taxpayers via higher premiums—a worthy topic for future congressional hearings.
The hearings should elicit insights on statutory changes to address perverse incentives that drive up costs or at least eliminate incentives for further consolidation that emanate from government programs.
A prime example is the lack of site-neutral payments in Medicare and Medicaid. Government programs often pay significantly higher rates for the same service when provided in hospital outpatient departments rather than physician offices or independent clinics—and this unnecessarily balloons expenses and incentivizes consolidation. The hearings provide an opportunity to examine the effects on health system spending if these payments were equalized across settings.
This ties into a broader conversation on cost drivers like hospital pricing trends and determining the share of premium growth attributable to rising facility fees versus increased utilization. While health care spending routinely outstrips inflation, hospital costs have risen three times faster than inflation over the past two decades. Poor regulatory design of the exchanges has unquestionably increased premiums. But it will be impossible to address premium affordability without addressing the high and growing prices in the largest segment of health care spending: hospitals, with evidence suggesting that price increases are at least as much of a problem in non-profit hospitals as in for-profit hospitals.
Another major issue that Paragon has spent a great deal of time over the past two years uncovering is fraud and abuse, which represents a glaring and growing vulnerability in the system, siphoning tens of billions into insurers’ top-line revenue annually. With the introduction of the COVID-era ACA subsidy bonuses in 2021 and the dramatic expansion of zero-dollar plans for individuals claiming income between 100 and 150 percent of the federal poverty level (FPL), enrollment for people in that income category increased from 3 million to over 10 million from 2021 to 2025, just in states using the federal exchange. This growth was three times faster than all other categories combined. At the same time enrollment was increasing the most for this group, the percentage of individuals in zero-dollar premium plans that did not use a single health care service during the year increased to 40 percent in 2025. Insurer CEOs should explain the rapid growth in enrollment of individuals who never use a medical service and the amount of commissions that they pay to brokers on behalf of enrollees who never use a single service. Relatedly, it is important to probe non-effectuation, where enrollees fail to pay premiums post-enrollment, and determine how long insurers continued receiving federal funds for them.
Finally, the hearings should examine why insurers have been able to offer substantially lower premiums in markets outside the ACA exchanges, including through short-term health plans and association health plans. Some insurers have demonstrated that these options—while not appropriate for everyone—can provide families and small businesses with far more affordable and robust coverage than exchange plans subject to ACA mandates. Understanding what works in these markets would help Congress distinguish between regulatory designs that promote affordability and those that have contributed to rising premiums, narrowing networks, and shrinking choices.
The deep structural flaws of the ACA—which have increased complexity, consolidation, fraud, prices, and premiums, while shrinking patient choices—must be addressed if we are going to make health care more affordable and accessible. Ultimately, our shared goal should be a health care system where premiums reflect true value and patient needs, not bureaucratic bloat. These hearings provide an opportunity to get our health care system back on track by putting the patient at the center of every decision.
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