“Snacks Mix”: healthcare fallout, Musk’s company town, and Waymo’s win

What we’re talking about this week: the world is dealing with the aftermath of a health-insurance executive shooting, Sherwood’s Rani Molla talks about her deep dive into Elon Musk’s company town in Texas, how Waymo pulled ahead in the self-driving race, and more.

The following is an excerpt from this week’s “Snacks Mix” podcast, where Nia and Jack discuss the biggest stories of the week. To listen to the full episode, click play in the soundbar above.

Nia Warfield: Let’s kick things off with the story everyone is talking about: the fatal shooting of United Healthcare CEO Brian Thompson. Now shooting aside, because we are obviously not condoning violence, the general public’s reaction to the incident has put a huge spotlight on the healthcare industry. At the same time, S&P 500 companies appear to be ramping up security for their execs.

Jack, are we seeing markets react to the incident?

Jack Raines: Yeah, so UnitedHealth’s stock has fallen significantly since Brian Thompson was shot on December 4, and in addition to that, other healthcare companies and health-insurance companies, like Cigna, CVS, Humana, and Centene have seen their stock prices decline as well.

Nia Warfield: I saw an interesting analyst comment in a CNBC article saying that this might be a short-term stock-price reaction, which sometimes happens when a news event drives a market move, but I don’t know that I agree with the idea that this is going to be a quick recovery.

People seem pretty upset about healthcare. It’s been an issue for most Americans for a long time, and medical costs are the top cause of bankruptcy in the US.

Jack Raines: If you’re looking at the market reaction, it makes sense that United Healthcare’s stock is down. Their CEO was killed. That, obviously, has a material impact on the business. For competitors, however, I think the market overreacted a little bit.

I don’t think we’re going to see the same thing play out with other healthcare companies or health-insurance companies. I think there was a market-wide, high-correlation reaction that I don’t necessarily think was justified.

Nia Warfield: Yeah. Another thing that I found interesting is data showing that health-insurance premiums have outpaced inflation for the last decade, and healthcare costs have jumped nearly 7% from 2023 to 2024, with the average out-of-pocket healthcare costs for employees costing more than $1,100 a year. It felt like one of those situations where you just accept the system as it is, and then an incident like this happens, and you look at the data and think, “You know, something really isn’t right.”

Jack Raines: One of the biggest problems with healthcare in the US is that it’s pretty much the only payment you’ll make where you don’t know the cost until after the service is done. If you are shopping and you want to buy a jacket, you can look at a $1,000 jacket, a $200 jacket, and an $80 jacket and determine how much you want to pay based on brand, budget, etc.

But with the way the American healthcare system works, no one ever really knows how much they’re going to have to pay for any one thing because it’s complex. Have you hit your deductible? What’s covered? What isn’t? What if you didn’t realize that a doctor was out of network until after a treatment, and then you have to pay for everything out of pocket? The complexities are a huge issue.

Nia Warfield: Right. Another interesting point about health insurance versus car insurance, or other types of insurance, is that you are not only paying your premiums, but you also have deductibles, right? And then you have a copay, as well. So you get this triple-whammy hit before you even know what the issue is, the cost of treatment, and the treatment timeline. A lot of Americans forego treatments because they assume they can’t afford them, which sucks as they’re already paying for the premiums.

Jack Raines: 100%. That being said, insurance companies aren’t the only ones to blame. There is this idea that these insurance companies are this guy in a top hat with a monocle, smoking a cigar while ripping off poor people and rejecting their claims. But that picture isn’t supported by reality. United is the most profitable health-insurance company in America, and its profit margins are 6%.

That isn’t that high! These aren’t like tech companies, where profit margins are well in the double digits. Insurers don’t make that much money. Cigna’s margins are even lower, 2% to 3%. You could say, “Well, that’s because of bloated cost structures and executive compensation,” but that’s not really the case either.

Brian Thompson was paid $10 million last year, which represents 0.018% of the company’s operating cost. The majority of healthcare spend, 87.3%, goes directly to treatment through inpatient, outpatient care, long-term care, and preventative-care prescriptions. Less than 10% of total cost is administrative.

There’s this idea that either people like padding their pockets, or the system is full of bureaucratic bloat. While there could be some truth to these claims, the real issue is that healthcare itself is expensive. It’s probably too expensive. And the insurance companies are effectively pass-through entities paying for a lot of these costs. But sometimes they don’t pay any of it, and the patient gets hit with a tsunami of expenses.

Nia Warfield: And it has been for a while. Another aspect I want to discuss is pharmacy costs. Treatment usually involves medicine, and pharmacy costs increased by 13% between 2023 and 2024, making up nearly half of the total increase in healthcare expenses.

This week — and ironically, this came out right after the United Healthcare incident — a group of bipartisan lawmakers introduced new legislation that would prohibit UnitedHealth Group, CVS, and Cigna from selling their pharmacy branches. Just FYI, these three companies control 80% of all prescriptions in the US.

Jack Raines: The consolidation thing has been an issue across all industries, but especially in healthcare, where you have a few players buying up everything. It’s hard for a doctor to say “no” to a $10 million check from a hospital chain or private-equity firm, but over time, you have a system where everything consolidates. With more private practices, doctors have relationships with patients and probably have more flexibility in their treatment options. Consolidation limits this flexibility.

One more thing to watch, before we switch topics, is how security spending for company executives might change after the United incident. The Wall Street Journal put out an interesting piece breaking down how much S&P 500 companies were spending on security for their executive officers. This study doesn’t include normal office security or normal business-travel security, but personal protection outside of work trips, such as around executives’ homes.

27.6% of S&P 500 companies spent additional money on executive protection, up from 23% two years earlier. And the median spend doubled to about $100,000. Within those companies, there were some big outliers. Meta spent over $24 million on Mark Zuckerberg, his family, and a few other key executives. Google spent about $6.8 million.

In the wake of Brian Thompson’s death, security chiefs from a lot of top companies met last week to discuss different security protocols. I think we’re going to see security spend go up a lot after this. Frankly, a lot of people are angry about the healthcare system, right?

It’s pretty crazy that the CEO of the biggest health-insurance company in the country didn’t have anyone around him as he was headed to an investor meeting in Midtown New York, right? That seems like a high-risk scenario, and it just takes one person to do one thing to cause a tragedy. There are a lot of people mad about a lot of different industries, and I think security spend’s about to jump significantly.

Nia Warfield: I think that it makes sense that security spending will go up, but certainly, you hope from a human level that there will also be a spotlight addressing these issues so that there isn’t support for such extreme actions for a very long time. This was a once-in-a-lifetime, or at least once in my lifetime, event. We’ll be keeping our eye on what comes out of this tragic incident.

This was a preview of this week’s “Snacks Mix” podcast. To listen to the rest of the episode, where we discuss Elon Musk’s company town and Waymo pulling ahead in the self-driving race, check out Snacks Mix on Apple Podcasts, Spotify, or iHeartRadio.

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