Earlier this month, the California-based organization Consumer Watchdog uncovered an incredible scandal involving rideshare company Uber, which we covered on the most recent episode 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.

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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 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 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. 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 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 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 chambers, 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 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.”

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