The Brutal Truth About U.S. Healthcare: How the System is Being Gamed — and We’re All Paying the Price

Let’s be honest: U.S. healthcare is a rigged game, and it’s not designed to serve everyone equally. Behind the scenes, private equity (PE) firms, insurers, and new direct-to-consumer (D2C) healthcare players have figured out how to maximize profit by minimizing risk. They’ve built a system that rewards them for cherry-picking the healthiest, wealthiest patients — while offloading the sickest, poorest, and most complex paLet’s be honest: U.S. healthcare is a rigged game, and it’s not designed to serve everyone equally. Behind the scenes, private equity (PE) firms, insurers, and new direct-to-consumer (D2C) healthcare players have figured out how to maximize profit by minimizing risk. They’ve built a system that rewards them for cherry-picking the healthiest, wealthiest patients — while offloading the sickest, poorest, and most complex patients onto public programs and overstretched hospitals.

The result? A two-tiered healthcare system that benefits a select few, while the rest of us — patients, hospitals, taxpayers — are left holding the bag.

This isn’t just about a few bad actors or greedy corporations. It’s bigger than that. The U.S. healthcare system itself incentivizes this behavior. Private companies aren’t necessarily malicious — they’re responding to a broken system that rewards gaming risk and avoiding financial responsibility for high-cost care. But make no mistake: These games are leaving the sickest and most vulnerable behind, and the rest of us are paying the price.

Let’s take a closer look at how the system is being gamed, who’s winning and who’s losing, and why this trend will only accelerate unless we fix the underlying incentives.

Step 1: Follow the Money — Why Private Players Focus on Employer-Sponsored Insurance

The golden goose of U.S. healthcare has always been employer-sponsored insurance (ESI) — the system through which most working-age Americans get their health coverage. For-profit healthcare companies and private equity firms know this is where the money is, and they’ve built their entire business models around capturing the commercially insured population.

Here’s why employer-sponsored insurance is so lucrative:

1. It covers healthier, working-age individuals. These patients are generally healthier and less expensive to treat. They don’t require the complex, long-term care that comes with chronic conditions or aging.
2. Private insurers pay higher reimbursement rates. Commercial insurance pays significantly more than Medicare or Medicaid for the same services. For example, a procedure that Medicare reimburses at $800 could be billed at $2,000 or more to a private insurer. This makes commercially insured patients highly profitable for healthcare providers.
3. Employers are willing to pay for convenience and innovation. Companies want their employees to have easy access to healthcare, so they’re willing to pay a premium for on-demand services, concierge care, and direct contracting arrangements with providers.

As a result, private healthcare companies — especially those backed by private equity — have built entire businesses around targeting these healthier, wealthier populations. From telehealth platforms to membership-based primary care models to freestanding surgery centers, these players focus on capturing the commercially insured and leaving the public system to handle the high-risk patients.

But what happens when a patient becomes too expensive to care for? That brings us to the next step in the game.tients onto public programs and overstretched hospitals.

The result? A two-tiered healthcare system that benefits a select few, while the rest of us — patients, hospitals, taxpayers — are left holding the bag.

This isn’t just about a few bad actors or greedy corporations. It’s bigger than that. The U.S. healthcare system itself incentivizes this behavior. Private companies aren’t necessarily malicious — they’re responding to a broken system that rewards gaming risk and avoiding financial responsibility for high-cost care. But make no mistake: These games are leaving the sickest and most vulnerable behind, and the rest of us are paying the price.

Let’s take a closer look at how the system is being gamed, who’s winning and who’s losing, and why this trend will only accelerate unless we fix the underlying incentives.

Step 1: Follow the Money — Why Private Players Focus on Employer-Sponsored Insurance

The golden goose of U.S. healthcare has always been employer-sponsored insurance (ESI) — the system through which most working-age Americans get their health coverage. For-profit healthcare companies and private equity firms know this is where the money is, and they’ve built their entire business models around capturing the commercially insured population.

Here’s why employer-sponsored insurance is so lucrative:

1. It covers healthier, working-age individuals. These patients are generally healthier and less expensive to treat. They don’t require the complex, long-term care that comes with chronic conditions or aging.
2. Private insurers pay higher reimbursement rates. Commercial insurance pays significantly more than Medicare or Medicaid for the same services. For example, a procedure that Medicare reimburses at $800 could be billed at $2,000 or more to a private insurer. This makes commercially insured patients highly profitable for healthcare providers.
3. Employers are willing to pay for convenience and innovation. Companies want their employees to have easy access to healthcare, so they’re willing to pay a premium for on-demand services, concierge care, and direct contracting arrangements with providers.

As a result, private healthcare companies — especially those backed by private equity — have built entire businesses around targeting these healthier, wealthier populations. From telehealth platforms to membership-based primary care models to freestanding surgery centers, these players focus on capturing the commercially insured and leaving the public system to handle the high-risk patients.

But what happens when a patient becomes too expensive to care for? That brings us to the next step in the game.

Step 2: Dump the High-Cost Patients Onto Government Programs

One of the dirtiest secrets in U.S. healthcare is that private players actively avoid high-cost, complex patients by offloading them onto public programs like Medicare and Medicaid. This isn’t a glitch in the system — it’s a core strategy.

Private healthcare providers have no financial incentive to manage patients with multiple chronic conditions, disabilities, or low incomes. These patients require more resources, longer treatment times, and more specialized care, all of which erodes profit margins.

So, how do private companies offload these patients? Let’s look at two major tactics:

The Cherry-Picking Game in Medicare Advantage

Medicare Advantage (MA) plans are run by private insurers who receive fixed payments from the government to manage seniors’ healthcare. On paper, these plans are supposed to provide better care at lower costs. In reality, they’re a cherry-picking machine.

Here’s how it works:

• Healthier seniors are actively recruited into MA plans through slick marketing campaigns that promise extra perks like gym memberships and dental care.
• Meanwhile, sicker seniors — those with multiple chronic conditions, disabilities, or long-term care needs — are steered away from MA plans and back into traditional Medicare, where the government covers the costs.

Even within MA, insurers use risk adjustment coding to inflate how sick their patients look on paper, allowing them to collect higher payments from the government while still avoiding the truly costly patients.

Medicaid: The Catch-All for the Sick and Poor

Patients who are poor, disabled, or dually eligible for Medicare and Medicaid are often pushed into Medicaid programs — or left to rely on safety-net hospitals.

Why? Because Medicaid pays providers far less than commercial insurance or Medicare. There’s no profit to be made in caring for Medicaid patients, so private providers shift them to public hospitals, which are required by law to treat them.

This leaves public systems to absorb the financial burden of caring for the sickest and most vulnerable patients — a burden that is growing every year.

Step 3: Strip Hospitals of Their Profitable Service Lines

Private healthcare players aren’t just avoiding complex patients. They’re also targeting hospitals’ most profitable services — the ones that help subsidize care for uninsured and underinsured patients.

Here’s what’s happening:

• Freestanding surgery centers are taking lucrative procedures like orthopedic surgeries and colonoscopies out of hospitals.
• Urgent care centers and retail clinics are capturing low-acuity, commercially insured patients who would have previously gone to hospital-affiliated primary care practices.
• Telehealth platforms are taking over routine care for healthier patients who prefer the convenience of virtual visits.

Hospitals, meanwhile, are left with the sickest, poorest, and most complex patients — and no profitable services to subsidize their care.

This is why hospitals are closing — especially in rural areas and low-income urban communities. They’re being stripped of revenue while still being expected to care for patients that no one else wants.

Step 4: Keep the Status Quo — Protect Employer-Based Insurance at All Costs

One of the reasons this system persists is that employer-sponsored insurance remains the backbone of U.S. healthcare. Private equity firms, insurers, and providers have a vested interest in keeping it that way — because it protects their profits.

Efforts to expand public insurance options — like a public option or Medicare for All — are fiercely opposed by the healthcare industry. Why? Because public programs would force private players to take on more risk and cover less-profitable patients.

Instead, they spend millions lobbying to keep employer-based coverage dominant, ensuring that risk stays concentrated on healthier, wealthier populations.

The Human Cost: We’re All Paying for This Game

This risk-shifting isn’t just hurting hospitals and underserved communities — it’s hurting all of us.

• Taxpayers are footing the bill when complex patients are dumped onto Medicaid and public hospitals.
• Employers are absorbing rising healthcare costs for employee-sponsored insurance, even as workers face higher deductibles and out-of-pocket expenses.
• Health disparities are widening, leaving vulnerable populations with fewer options for care.

The Bottom Line: The System is Broken — But It Can Be Fixed

The truth is, this isn’t sustainable.

If we want to fix healthcare, we need to rebalance the system so that risk is shared equitably between public and private payers. Private companies can’t be allowed to skim profits while shifting costs onto taxpayers and hospitals.

We need to rethink how we incentivize care, regulate risk, and fund the safety net that millions of Americans rely on.

Because if we don’t, the games will continue — and we’ll all pay the price