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Illustration: Aïda Amer/Axios

Private health insurance is a conduit for exploding health care spending, and there's no end in sight.

The big picture: Most politicians defend this status quo, even though prices are soaring. And as the industry's top executives and lobbyists gathered this week in San Francisco, some nodded to concerns over affordability — but then went on to tell investors how they plan to keep the money flowing.

Where it stands: More than 160 million Americans get private insurance through an employer or on their own, and per-person spending in that market rose by almost 7% in 2018, the highest annual growth rate in 14 years.

  • "Prices are definitely going up," Owen Tripp, CEO of health tech startup Grand Rounds, told me this week during the annual J.P. Morgan Healthcare Conference.
  • His company's vast amount of commercial health data shows big increases in what companies are spending on hospitals, doctors, specialty drugs, devices and out-of-network services.

What they're saying: Many in the industry admit price inflation has been hammering the commercial markets for years.

  • "Cost per unit is the primary driver," Cigna CEO David Cordani said. He did not mention the exploding costs of administering health insurance.
  • One hospital system at the conference acknowledged that "the number one cause of personal bankruptcy is our industry" — before going on to tell investors about the hospital's strong margins.

Multiple hospital executives claimed they charge commercial plans higher prices to make up for the lower rates they get from Medicare and Medicaid.

  • "Every health system I know of loses money on every Medicaid and every Medicare patient," Amy Compton-Phillips, a top clinical executive at Providence St. Joseph Health, told me.
  • But the evidence overwhelmingly shows that hospitals' explanation doesn't hold water.

Drug spending has risen at a slower rate than hospital and physician spending.

  • But in the commercial market, drug companies also have tripled their spending on programs that cover all or part of patients' out-of-pocket costs, then bill insurers for the full freight.
  • "It's an intriguing theory," said Stephen Ubl, CEO of PhRMA, the pharmaceutical industry's main lobbying group. "But I would be shocked if we were a significant contributor" to the increased private spending.

The bottom line: The private market is the main pot of money that everyone is chasing at the J.P. Morgan conference, and most in the industry don't see the ballooning spending within that market as a problem.

Go deeper

Mike Allen, author of AM
Updated 14 mins ago - Politics & Policy

First look: WaPo Trump book's secret title revealed

Cover: Penguin Press

The Washington Post's Carol Leonnig and Philip Rucker will be out July 20 with "I Alone Can Fix It: Donald J. Trump’s Catastrophic Final Year," Penguin Press announced.

Breaking: Axios has learned that The Wall Street Journal's Michael Bender is moving "Frankly, We Did Win the Election" up to July 20, matching Leonnig-Rucker, from his earlier pub date of Aug. 10.

Shell and GM unveil partnership on Texas power and car-charging

Illustration: Annelise Capossela/Axios

General Motors and a Shell-owned power company will unveil a partnership on Wednesday aimed at providing renewable electricity to Texas customers and free overnight charging to state residents who own GM electric cars.

Why it matters: It’s a new way for two corporate giants to expand their operations in a way that lowers emissions at the customer and supplier level.

The Democrats' wake-up call

Eric Adams, a former cop who leads the New York mayoral race, speaks last night at the Schimanski nightclub in Williamsburg, Brooklyn. Photo: Robert Nickelsberg/Getty Images

Democrats, in private and public, are warning that rising crime — and the old and new progressive calls to defund the police — represent the single biggest threat to their electoral chances in 2022.

Why it matters: There has been a big spike in big-city crime, a dynamic increasingly captured in local coverage and nationally on CNN and Fox News.

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