The story of health insurance in the United States begins not with Wall Street sharks circling for profits, but with a modest act of community solidarity during the Great Depression.
In 1929, at Baylor University Hospital in Texas, administrators faced empty beds and unpaid bills as economic collapse kept patients away. So, they devised a prepaid plan: for a small monthly fee, teachers could secure hospital care without fear of ruinous costs. This became the blueprint for Blue Cross, a nonprofit model that spread rapidly across the country in the 1930s. Soon after, Blue Shield plans emerged to cover physician services. These were explicitly nonprofit entities, often granted tax-exempt status and special regulatory privileges in exchange for serving the public good—community rating (charging everyone the same premium regardless of health status), acting as insurers of last resort, and prioritizing access over profit.
During World War II, wage freezes pushed employers to offer health benefits as a perk, cementing employer-sponsored insurance as the dominant model. By the 1950s, enrollment exploded from millions to over 140 million. The Blues dominated, focusing on broad coverage and affordability. Commercial for-profit insurers existed but only on the fringes; they couldn’t compete with the Blues’ nonprofit advantages until they adopted “experience rating”—charging higher premiums to sicker groups—allowing them to cherry-pick healthy customers and undercut the Blues in certain markets.
This nonprofit era wasn’t perfect, but it kept costs relatively contained. Patients and providers dealt directly, with insurance stepping in as a safety net rather than a profit extractor. Medical loss ratios—the share of premiums spent on actual care—hovered around 95%, meaning nearly every dollar went to healthcare rather than overhead or dividends.
The enactment of Medicare and Medicaid in 1965, while a landmark social safety net achievement in expanding access to the elderly and poor, tragically hyper-intensified the demise of nonprofit health insurance and healthcare. By injecting massive third-party government payments into the system—reimbursing hospitals and physicians on a cost-plus or fee-for-service basis—these programs severed the direct link between patients and providers, unleashing unchecked cost inflation. Providers, shielded from price sensitivity, charged whatever they wanted, knowing the government check would arrive. This “third-party payment problem” flooded the system with money, rewarding volume over value and creating irresistible profit opportunities. Nonprofit hospitals and insurers, once focused on community service, faced mounting pressure to expand bureaucracies, raise charges, and compete in an escalating arms race of costs. For-profit entrants exploited the gusher of funds, accelerating the shift toward shareholder-driven models that prioritized extraction over care.
The devastating turning point came in the 1970s and 1980s, when greed began to infiltrate. The Health Maintenance Organization Act of 1973, signed by Richard Nixon, provided federal subsidies and loosened restrictions to promote HMOs. Early HMOs were nonprofit, emphasizing preventive care. But the law unleashed a wave of for-profit HMOs, which quickly dominated the space by prioritizing cost-cutting over quality and skimming healthy enrollees.
The real betrayal occurred in 1994, when the Blue Cross Blue Shield Association—under pressure from competitive threats—abandoned its nonprofit mandate, allowing member plans to convert to for-profit status. What followed was a feeding frenzy. Blue Cross of California aggressively acquired plans in other states, rebranding as WellPoint (now part of Anthem, the second-largest insurer). Conversions swept through states: Georgia to Cerulean, Missouri to RightChoice, Virginia, and more. By the 2000s, many iconic Blues had morphed into shareholder-driven behemoths, with assets often transferred to foundations as a deceptive fig leaf for public benefit.
This shift to profiteering transformed health insurance from a public service into a rapacious industry. For-profit insurers face relentless pressure to deliver shareholder returns, leading to skyrocketing administrative costs—marketing blitzes, executive bonanzas, lobbying armies, and denial machines designed to avoid payouts. Studies show that for-profit plans have higher administrative overhead (often 6 percentage points more than nonprofits) and lower medical loss ratios, meaning less money reaches patients and providers.
The result? Exploding prices. US healthcare now consumes nearly 20% of GDP, double what most developed nations spend, with worse outcomes like lower life expectancy and higher infant mortality. For-profit dominance incentivizes higher provider payments because insurers can simply pass costs to premiums—especially under rules like the Affordable Care Act’s medical loss ratio requirements, which paradoxically reward spending growth as long as it’s on “care.” Consolidated insurers negotiate aggressively but often acquiesce to provider price hikes, knowing they can raise premiums accordingly and pocket the difference in profits.
Big Pharma thrives in this ecosystem, jacking up drug prices knowing insurers will pay (or shift costs to patients via deductibles). The corporatized hospital industrial complex—chains like HCA—mirrors this, buying up facilities, cutting nursing staff for “efficiency,” and inflating charges. All while denying claims, imposing prior authorizations that delay care (and sometimes outrightly deny care), and narrowing networks to squeeze providers.
Critics of nonprofits claim they lack innovation or efficiency. This is propagandistic profiteer-driven nonsense. Nonprofit executives still earn substantial wages—often seven figures at large plans like Kaiser Permanente—providing ample incentive without the obscene shareholder mandates. Nonprofits historically delivered higher medical loss ratios (up to 95% pre-conversion) and broader community benefits, serving as insurers of last resort without cherry-picking.
The American people are paying the price—literally—for this profiteering orgy that is for-profit health insurance. Families face crushing premiums, deductibles that deter care, and medical debt that bankrupts millions annually. Meanwhile, for-profit giants like UnitedHealth rake in billions while CEOs are compensated like royalty.
It’s time to reclaim healthcare from these vultures. The United States would be far better served by returning to a nonprofit model for health insurance, where patient care is the focus, not stock prices. This isn’t the anti-capitalism of government-controlled or hyper-regulated health insurance and healthcare—far from it. Multiple nonprofit entities would still compete vigorously for enrollees, driving down premiums through market forces, innovating in service quality, network breadth, and preventive programs to attract customers and establish efficient pricing. Historical Blue Cross plans competed successfully as nonprofits, proving that competition thrives without shareholder extraction.
Moreover, mandating nonprofit status aligns with the US Constitution’s mandate to “provide for the...general Welfare of the United States.” Healthcare access is fundamental to the nation’s welfare, and profiteering has corrupted this common good by inflating costs and erecting barriers to care. Returning to nonprofit health insurance would expunge the bloated bureaucracy of denial appeals, prior authorizations, and profit-driven overhead—freeing resources for actual medicine—while purging the corruption that prioritizes profiteering over human lives.
Intelligent federal legislation is urgently needed: mandate nonprofit status for all insurers and hospitals, prohibit conversions and shareholder payouts, cap administrative overhead, redirect surpluses to expanded coverage and community health, and foster robust competition among nonprofits. Pair this with reforms to dismantle provider monopolies and rein in BigPharma’s gouging, and you have a winning solution to the problem at hand.
Only then can we build a system that serves people, not predators. Congress must act—before another generation is sacrificed on the altar of corporate greed.
When we come back, our segment on America’s Third Watch, broadcast nationally from our flagship station WGUL, AM860 and FM93.7 in Tampa, Florida.
In Closing…
It’s time to dismantle the corrupt grip of corporate profiteers on American healthcare. Government subsidies, favorable regulations, and laws rigged to benefit for-profit insurers and hospital chains have fueled skyrocketing costs, rampant claim denials, and obscene executive payouts—turning a public necessity into a private windfall.
We must return to proven nonprofit models that prioritize patients over shareholders.
Demand bold federal legislation: mandate nonprofit status for insurers and hospitals, eliminate shareholder extraction, cap overhead, and restore genuine competition. This isn’t anti-capitalism, and it’s not pro-government takeover of healthcare. It’s the re-institution of nonprofits as the driving cause in our American health system—it’s expunging corruption and going back to the future.
Contact your representatives now. Insist they champion this reform. Truthfully, lives depend on it.
Until next time…
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