It is widely recognized that health care is an increasing cost for many Americans. But what healthcare companies are doing in their own interests (through government programs such as Medicare) is vague.
To investigate this question, researchers at Yale School of Medicine (YSM) analyzed financial reports from 92 large US healthcare companies. The results were published in the Jama Internal Medicine Research Book on February 10th.
The research team focuses on the Standard & Poor's 500 (S&P 500) to see how much has been spent on shareholder payments over the past 20 years, following the 500 large companies trading on stock exchanges. Masu. The analysis included large medical facilities such as pharmaceutical and biotechnology companies, insurance companies, medical supplies and commercial hospitals.
Research findings show that over the past 20 years, healthcare companies have spent 95% of their net profits on shareholder payments, totaling up to $2.6 trillion. Shareholder payments have also tripled over this period. This tends to be shaped primarily by several powerful pharmaceutical companies, the researchers noted.
These findings reveal that “funds are distributed to shareholders rather than being returned to the healthcare system.” These decisions, he says, have a direct impact on the health and health care of ordinary Americans.
Track the money of taxpayers that fund healthcare
Healthcare is one of the largest sectors in the US economy. In 2023, healthcare accounted for 17% of the country's gross domestic product (GDP). This is the total monetary value of all the goods and services offered that year.
Of the $5 trillion US spends on healthcare in 2023, about 70% was funded “in some form or form” by taxpayer money, says Gross, a professor of chronic disease epidemiology at Yale School of Public Health. I say it. This includes employer-based health insurance tax cuts and direct funding from Medicare and Medicaid.
With premiums and drug prices rising in recent years, pharmaceutical companies often claim that drug prices are high due to advance costs for research and development, says lead authors Victor Roy, MD, PhD. Masu. At YSM, he is currently an assistant professor of family medicine and community health at the University of Pennsylvania. However, while researching one healthcare company, Roy realized that rather than reimbursing development costs, the majority of the profits from the new drug came from shareholder payments.
During his tenure in YSM's National Clinical Scholars Program, Roy worked with Gross to collect data on the 92 S&P 500 healthcare companies between 2001 and 2022, and to include other large healthcare companies in the US economy. We have checked whether we can find similar trends between The team focused on two types of payouts (which are sent directly to shareholders), where profits are sent directly to shareholders, and buybacks where companies buy their own shares to increase value.
Regulate benefits to support healthcare
The team found that, like high-tech and finance, most of the profits realized by healthcare companies have been redistributed to shareholders. Overall, shareholder payments increased 315% between 2001 and 2022. This is a trend driven in part by 19 healthcare companies in the S&P 500, which accounted for 80% of total payments for this period.
The decision by this small group of powerful companies to prioritize reinvestment of healthcare over shareholder payments is likely to affect healthcare costs for many Americans, Roy said.
“When shareholders expect to increase their payments year by year, that affects affordability,” he says. “One way (healthcare companies) make money is to keep prices high or raise them.”
Because much of the money in the healthcare industry comes from taxpayers, the US can regulate the industry in a different way than other sectors, says Gross. For example, lawmakers could request that some benefits be returned to the health sector to pay healthcare workers' wages or to help fund drug development. Construction worker.
“Some people say that these are for-profit companies, so their goal is to make a profit,” says Gross. But “Healthcare is a right, not a privilege. You can choose when to buy a car. You can't have a heart attack. As the cost of care continues to rise, you can't go where your health dollars are heading. It's important to ask.”
