Document Type

Essay

Publication Title

Emory Law Journal Online

Abstract

Health insurance companies are having a moment in the United States. Their moment involves widespread public objections to their seemingly random and increasing willingness to deny coverage and reimbursement to insureds. These denials are in large part not part of a program to improve health coverage but, rather, to reduce insurance companies’ expenses and, in turn, increase their profits.

There is broad consensus that something has to change. The public demands it. Bipartisan groups of senators and representatives have investigated it. Even the health care industry acknowledges that something needs to change. To actually make the health care system better requires more than easy or simplistic solutions. A long-term solution requires completely rethinking the way the United States provides health care. But while policymakers struggle to craft such a fundamental revision of the health care industry, denials by health insurance companies continue to hurt individuals.

Although this Article does not provide a comprehensive rethinking of the health care industry, it does propose a relatively simple interim policy that will ameliorate the problem of health insurance companies unnecessarily denying health coverage: an excess profits tax imposed on health insurance companies. While the putative purpose of insurance companies is to protect policyholders from unexpected and ruinous financial losses, internally, insurance companies function to earn a profit for their shareholders. To the extent an insurance company denies a claim—or even delays payment on that claim—it has increased its profits. The company, thus, has two competing incentives: On the one hand, its business involves paying for health care, but on the other, it is designed to provide a return to its shareholders. While it cannot ignore paying for policyholders’ health care, a health insurance company will likely face steep pressure to prioritize profits. Even though there is debate over whether shareholder primacy constitutes a legal obligation for corporations or just a generally accepted norm, shareholder primacy continues to “dominate” thoughts about corporate governance. Thus, whether or not corporations have a legal obligation to maximize shareholder profits, many corporations focus on maximizing shareholder profits.

After looking at the history of excess profits taxation in the United States, including a renewed interest in it during the COVID pandemic, this Article proposes a targeted excess profits tax imposed on the health insurance industry. Such a tax would avoid the impediments of a broad-based excise profits tax and would function as an effective tool to ensure that insurance companies do not delay and deny insurance claims to boost shareholder profits. In addition to enacting a tax on health insurance companies’ excess profits, Congress should earmark its revenues to help fund health care access for people who cannot afford it. Then, such a tax would simultaneously provide regulatory pressure for insurance companies to pay for health care and help those who cannot access insurance to receive the health care they need.

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1

Publication Date

9-29-2025

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