The United States health care system—more costly than any on earth—will become ever more so as Wall Street increasingly extracts money from it.

Private equity funds own approximately 9% of all private hospitals and 30% of all proprietary for-profit hospitals, including 34% that serve rural populations. They’ve also bought up nursing homes and doctors’ practices and are investing more year by year. The net impact? Medical costs to the government and to patients have gone up while patients have suffered more adverse medical results, according to two current studies.

The Journal of the American Medical Association (JAMA) recently published a paper which found:

This should not come as a surprise. Private equity firms in general operate as follows: They raise funds from investors to purchase enterprises using as much borrowed money as possible. That debt does not fall on the private equity firm or its investors, however. Instead, all of it is placed on the books of the purchased entity. If a private equity firm borrows money and buys up a nursing home or hospital chain, the debt goes on the books of these healthcare facilities in what is called a leveraged buyout.

To service the debt, the enterprise’s management, directed by their private equity ownership, must reduce costs, and increase its cash flow. The first and easiest way to reduce costs is by reducing the number of staff and by decreasing services. Of course, the quality of care then suffers. Meanwhile, the private equity firm charges the company fees in order to secure its own profits.

With so much taxpayer money sloshing around in the system, hedge funds also are cashing in.

An even larger study of private equity and health was completed this summer and published in the British Medical Journal (BMJ). After reviewing 1,778 studies it concluded that after private equity firms purchased healthcare facilities, health outcomes deteriorated, costs to patients or payers increased, and overall quality declined.

One former executive at a private equity firm that owns an assisted-living facility near Boulder, Colorado, candidly described why the firm was refusing to hire and retain high-quality caregivers: “Their position was: We are trying to increase our profitability. Care is an ancillary part of the conversation.”

Congress passed the Medicare Advantage program in 2003. Its proponents claimed it would encourage competition and greater efficiency in the provision of health insurance for seniors. At the time, privatization was all the rage as the Democratic and Republican parties competed to please Wall Street donors. It was argued that Medicare, which was actually much more efficient than private insurance companies, needed the iron fist of profit-making to improve its services. These new private plans were permitted to compete with Medicare Part C (Medigap) supplemental insurance.

In 2007, 19% of Medicare recipients enrolled in Medicare Advantage plans. By 2023 enrollment had risen to 51%. These heavily marketed plans are attractive because many don’t charge additional monthly premiums, and they often include dental, vision, and hearing coverage, which Medicare does not. And in some plans, other perks get thrown in, like gym memberships and preloaded over-the-counter debit cards for use in pharmacies for health items.

How is it possible for Medical Advantage to do all this and still make a profit?

According to a report by the Physicians for a National Health Program, it’s very simple—they overcharge the government, that is we, the taxpayers, “by a minimum of $88 billion per year.” The report says it could be as much as $140 billion.

In addition to inflating their bills to the government, these HMO plans don’t pay doctors outside of their networks, deny or slow needed coverage to patients, and delay legitimate payments. As Dr. Kenneth Williams, CEO of Alliance HealthCare,........

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