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THE THREAT OF BIG INSURANCE  
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David Dayen
June 11, 2026
The American Prospect
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_ The industry is hugely lucrative, with endless sums of cash to
influence lawmakers. A new report tracks 25 years of health insurance
industry donations. _

, ersinkisacik/iStock

 

Earlier this month, the California-based organization Consumer
Watchdog uncovered an incredible scandal
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involving rideshare company Uber, which we covered on the most recent
episode
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of my podcast Organized Money. The company pleaded to the California
legislature last year that its insurance costs had spiked so much that
the state needed to decrease required payouts on its mandated
uninsured motorist coverage. “They literally said 45 cents out of
every dollar is going to insurance,” Jamie Court, president of
Consumer Watchdog, told me.

It turned out that these excessive insurance payments were going to a
Hawaii-based company called Aleka that is _run by Uber executives_.
Aleka was raising rates on Uber higher than other insurers, but that
money just got transferred into a reserve bank account under Uber’s
control. These excess reserves can be put toward Uber expansion plans
while remaining untaxed, unlike company profits. Then this alleged
cost center was used to convince the legislature to ease off on its
insurance payout requirements.

Making the situation even crazier, Uber executives were given
financial bonuses for getting that specific piece of legislation, SB
371, passed into law. Executives earning the bonuses included Tony
West, Uber’s chief legal officer and Kamala Harris’s
brother-in-law, as well as Ramona Prieto, head of public policy for
the western region and the actual executive who claimed
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that Uber was paying 45 cents out of every dollar for insurance, while
eliding the fact that Uber was paying this money to itself.

Prieto’s fiancé, Juan Rodriguez, is a partner with Bearstar
Strategies, the mega-consultant in Sacramento that flipped from Eric
Swalwell to Xavier Becerra’s campaign for governor when Swalwell’s
campaign imploded. Uber spent millions of dollars on Becerra’s
behalf in his successful primary run.

Uber also has a ballot measure that has qualified for the November
ballot intended to fend off lawsuits brought by rideshare passengers
hurt in accidents. It’s polling poorly relative to a competing
measure that would increase passenger protections. But Uber is
funneling tens of millions of dollars
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into the campaign, which is being run by … Bearstar Strategies and
Rodriguez, Prieto’s fiancé. Rodriguez and Bearstar have already
made $9.2 million off the ballot measure, according to the report.

It’s a wild story, but it’s also kind of an old-school one. This
isn’t about leveraging Uber’s technology or its ability to surveil
riders and drivers. It’s just an insurance scheme, one of the oldest
plays in the books.

STORIES OF INSURANCE COMPANIES with off-books operations or oversized
reserves go back to the Massachusetts life insurance scandal of the
early 20th century, exposed by a young lawyer named Louis Brandeis. He
found that insurance companies were selling junk insurance to
working-class laborers and taking 40 cents out of every dollar for
executive salaries and shareholder dividends. Meanwhile, just 1 out of
every 12 policies actually paid out. Eventually, Brandeis’s efforts
dismantled this insurance slush fund, and it sparked his interest in
broader political reform against big business.

Insurance generates massive amounts of money in the time period
between receiving premiums and paying out claims. This is known as
float, and it can be invested, manipulated, and concealed in ways that
benefit insurers (and in this case, a self-insured transportation
company). Delaying those claim payouts or reducing government mandates
for claims increases the float, and therefore the profits.

Insurance is massively profitable. The empire of Warren Buffett would
not exist if he didn’t learn early in his career about the power of
insurance float. That excess cash was used to create Berkshire
Hathaway and build it into the ultimate conglomerate.

Because of the regulated nature of the business, insurance companies
have considerable interest in government. Any legislative burdens they
can break apart directly impacts their bottom line, to the extent that
with Uber, executive performance pay was literally tied to successful
lobbying. This is why the National Association of Insurance
Commissioners, a coalition of state regulators, is so heavily lobbied,
and not surprisingly, so weak
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When it comes to health insurance in particular, the importance of
establishing influence over government is magnified, simply because of
the prodigious size of that business and how much of the money comes
from government programs. Who is in the decision-making positions
inside government really matters to insurance companies, and they
don’t like to leave that to chance.

ANOTHER NEW REPORT, this one from the Center for Health & Democracy
Education Fund, looks at health insurance industry donations through
nine corporate PACs since 1999, finding $120 million in contributions
to state and federal candidates and political parties. This year, the
report’s authors expect donations to break the annual record of $17
million set back in 2022. And this doesn’t count dark money routed
through PACs that do not have to disclose their spending.

The money is being tracked in real time at a website called the Health
Insurance Influence Tracker [[link removed]]. The
authors of that tracker and the report, Rachel Madley and Zena Wolf,
connect these outlays directly to outcomes in policies affecting the
industry. “We talk in the report about Frank Pallone, ranking member
of the House Energy and Commerce Committee, who is a co-sponsor of
Medicare for All but takes a lot of money from the health insurance
lobby,” Madley said. “He was chair and controlled the calendar
from 2019 to 2023, but there was only one hearing on Medicare for All,
and he never held a markup.”

Another fight concerns Medicare Advantage, the privatization of the
single-payer system for older Americans. The Medicare Payment Advisory
Commission (MedPAC) estimates that private Medicare Advantage
companies will effectively steal $76 billion
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from the federal government this year, in the form of “upcoding,”
the process of making their patients look sicker than they are to
inflate reimbursements. Congress is well aware of these overpayments,
yet it’s done nothing about it, and the flow of corporate PAC
donations is likely a major reason. Bipartisan bills to reform the
practices can’t get a vote.

For years, Sens. Catherine Cortez Masto (D-NV) and Tim Scott (R-SC)
submitted a bipartisan letter
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extolling Medicare Advantage for giving insurance access to millions
of seniors. The report notes that Cortez Masto has taken $297,000 from
the health insurance industry throughout her career, while Scott has
taken $314,000.

Some of the biggest recipients of health insurance industry cash in
Congress are party leaders, who control the voting calendar. They can
bottle up reforms, even when they have majority support, for years.
“When they enter leadership they get a huge rise in donations,”
Madley said, citing House Speaker Mike Johnson (R-LA), who received
just two PAC contributions from the industry prior to winning his
leadership election in 2023, and $150,000 in PAC money since then. The
same dynamic is apparent for the new House Democratic leaders Hakeem
Jeffries (D-NY; $88,000 from industry PACs) and Katherine Clark (D-MA;
over $100,000).

These leaders have been able to hold off reforms of such impediments
to treatment as prior authorization, which has been used excessively
in Medicare Advantage and other insurance policies to block access to
care. Currently, a prior authorization reform bill, the Improving
Seniors’ Timely Access to Care Act, has a supermajority of
co-sponsors in both
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chambers
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yet cannot get a vote.

The report tracks a spike in spending on state politics, particularly
in states that haven’t expanded Medicaid, including Texas,
Wisconsin, and Florida. Private insurance companies manage Medicaid
programs for states, and expanded coverage would be quite lucrative.
Yet none of these states have expanded Medicaid, suggesting limits to
the power of insurance industry cash. The obstacle in this case, of
course, is that conservatives recoil at the idea of spending any
public money to cover poor people through Medicaid. But this inability
of the industry to fully dictate outcomes is true in other contexts as
well.

The health insurance industry has effectively merged with pharmacy
benefit managers, the middlemen that drive drug prices higher. Yet
Ohio and Kentucky successfully threw out PBMs from their state
Medicaid programs; Arkansas and Tennessee banned PBMs from owning
retail pharmacies (something targeted at CVS, which owns Aetna and its
own PBM Caremark); and Congress after years of work passed a PBM
reform law that bans so-called “spread pricing,” where PBMs charge
different rates to health plans and pharmacies and pocket the
difference. Several other state reforms
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have passed as well.

In other words, campaign largesse does not have to be destiny. “The
health care crises that we are in are so devastating, and crushing so
many people, that a lot of people are realizing that this system has
to change and can change,” Madley said. “It’s not going to be
easy but we’re starting to move in the right direction.”

_DAVID DAYEN is the executive editor of THE AMERICAN PROSPECT. He is
the author of Monopolized: Life in the Age of Corporate Power and
Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s
Great Foreclosure Fraud. He co-hosts the podcast __Organized Money_
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_He can be reached on Signal at ddayen.90 and [email protected]_

_Before you go._

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_DAVID DAYEN__Executive Editor_

* Big Insurance
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* health industry
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* health insurance
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* health insurance costs
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* political donations
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* Uber
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* History
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* profits
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* Medicare Advantage
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* Congress
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* pharmacy benefit managers PBMs
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