The Sad Saga of Medicare Advantage and Medicaid Programs: They Won't Earn The Profits They Expected. Woe is them. (Part I)
Financial projections are shredded by increased demand for medical services. They didn't see it coming. Their stock prices are tanking. Maybe the chickens are finally coming home to roost...
—Courtesy ChatGPT
I feel so sad for the poor health insurers, as several of the larger ones announce they are having financial difficulties paying health care costs for the folks they insure.
And today along comes the Wall Street Journal with another exclusive report in a series detailing interviews the Justice Department is having with current and former employees as it looks into UnitedGroup’s Medicare Advantage billing programs.
It reminds me of the opening song “Don’t Forsake Me, Oh My Darling” sung by Tex Ritter in the western movie classic “High Noon” (1952):
—”High Noon” starring Gary Cooper, 1952. Courtesy of YouTube.
Poor babies. Tsk, tsk, tsk. Bless their heart…
For those not schooled in the language of the South, “Bless their heart” is not always a term of endearment. It is frequently tinged with sarcasm, and according to my resident expert in all things Southern, “It is not always a good thing to have your heart blessed by a Southern woman.”
For the insurers, blessing their heart is not a good thing. They certainly haven’t blessed ours.
UnitedHealth Group, Inc.—better known to the public as UnitedHealthcare--is the current poster child for this mess:
· United has grown into one of the largest companies in the nation. In 2024, according to Wikipedia, it was the world’s seventh largest company by revenue and #8 on the Fortune Global 500.
· In November 2024, at the time of its highest value, the company was worth about $616 billion. By December 2024-- after the tragic murder of one of its most senior executives—its value had fallen to $460.3 billion. Today, after some legal and profit problems, it is worth $272.55 billion
· They have a huge controlling interest in how health care is consumed and delivered in the United States.
· They have a massive operation that includes multiple businesses that go way beyond insuring your health care.
· United owns or has a significant controlling stake in almost 10% of the physician workforce in this country. That number of employed physicians is estimated to be about 90,000 docs—and does not include other health practitioners like advanced practice professionals, RNs and others. UnitedHealth Group, Inc. currently employs around 390,000 people worldwide.
· UnitedHealthcare has a substantial pre-authorization program that reviews a lot of the medical care provided in the United States. According to KFF, a highly respected service, United denied 9.1% of all Medicare Advantage medical services submitted for pre-authorization. Only 15.5%--or a little less than one out of 6 of those denials—were appealed for reconsideration.
· United has its own pharmacy benefits manager called Optum Rx which controls the cost of the medicines you buy. In 2024, Optum reviewed 23%--or about 1 in 4—prescriptions written in the United States. It’s revenue was reportedly $133.2 Billion in 2024.
That list goes on and on and on and on.
The typical layperson—and almost all health professionals—have no idea how far United’s reach extends into the everyday practice of medicine. They are the king of the hill, the Big Kahuna, the whatever-you-want-call-it when it comes to paying and sometimes delivering your health care if you have an insurance plan provided by United Healthcare.
They also have a mess on their hands:
· In February 2024, United had a massive computer data breach which brought the delivery of healthcare in this country to its knees, delayed payments to health-related professionals and organizations for months, and leaked tons of personal identifiable information to the successful hackers.
· In December 2024, one of their most senior executives was shot down in cold blood in front of a New York hotel. “Deny”, “Defend” and “Depose” were written on bullets found at the scene.
· In April 2025, the feds announced that United along with other Medicare Advantage insurers got a 5.06% pay boost for 2026 for providing insurance to Medicare Advantage patients. Meanwhile, for 2025 doctors who provide that care got their payments dinged to a lower amount than they were reimbursed in 2024 for providing similar services. Their stock increased significantly after the announcement.
· Andrew Witty, UnitedHealth Group’s CEO quit in May 2025 for “personal reasons”. More likely, as reported by others, he was probably deposed because of problems with the company’s financial performance as well as the various other problems that had emerged.
· United has been the subject of several articles in the Wall Street Journal and other media outlets describing how they worked diligently to create more diagnoses for patients covered under their Medical Advantage plans.
· So-called “sickness scores” for UnitedHealthcare Medicare Advantage patients typically increased 55% the first year after they enrolled in a United Medicare Advantage plan. That meant United could get paid more by Medicare to insure each patient because they suddenly had required more complex care as determined by those diagnoses.
· For one diagnosis in particular—hyperaldosteronism, which can be related to hypertension and usually makes no difference in patient care--that amounted to an extra $2000 per patient per year to account for “illness complexity.”
· United claimed their diagnostic efforts—which included sending nurses to the homes of the patients with computers and test equipment in hand—improved the quality of the patients’ care. Others don’t agree—including the physicians caring for those patients who said those diagnoses made no difference in their patients’ care.
· Today the Wall Street Journal has another exclusive report discussing interviews with current and former United Healthcare employees delving into the diagnostic dilemma United has created. It appears the Department of Justice is focused on the true medical need for these diagnostic efforts.
Meanwhile, everyone is frustrated:
Patients get denied care because they don’t meet United’s pre-authorization criteria. United says they are protecting the patients. The doctors say they are interfering with legitimate medical decisions and patient care. The patients wonder whether having the procedure earlier rather than when it became more acute would have made a difference.
Delay and deny sadly led to the murder of a senior United Healthcare executive. Sadder was the reaction of many in the public who were actually sympathetic to the killer, who remains in jail facing trial.
The list goes on and on and on. It is a tragedy of the commons, good intentions gone awry, business principles to maximize the bottom-line taking precedence over high quality, necessary medical care.
Now the pigeons have come home to roost, and insurers like UnitedHealthcare are having some bad days, to put it mildly.
What is happening now is that several of the large insurers like United and others who also enroll patients in Medicare Advantage plans as well as state-run Medicaid programs nationwide are having problems paying for increased costs of medical care care for untold millions of folks insured by their companies.
The result has been accumulating announcements by those companies that they are facing financial hardship.
The reason?
The health insurance companies claim the demand for medical care is unexpectedly exceeding the amount the insurers had planned on spending. All their complicated programs aren’t able to keep the reins on the horses, which are running out of the barn. Their financial projections now fall like shredded paper to the floors of the accounting departments who had been responsible to make projections for the companies’ upcoming financial performances.
Why the increased demand? We don’t know. The health insurance companies with all their data probably do know. Don’t hold your breath waiting for them to tell you the truth.
There are a variety of possibilities:
· Is it the aging population, which naturally demands more money spent on medical care because of more medical problems.
· Is it because the insurers have spent so much effort to deny care over the years that the need for more complicated care is not bubbling to the service?
· Are people finally able to figure out how to get an appointment with a clinician to get help for their medical problems, like hip and knee replacements for advanced arthritis? (LOL on that one: hips and knees make money; chronic illness does not. Try to find a new primary care clinician these days if you are not willing to pay a supplemental annual “concierge care” fee for your care.)
· Is our failure to control basic problems like overweight and obesity, hypertension, diabetes and heart disease not working?
· Is the end of the pandemic—how many years ago? —just now releasing pent-up demand for medical services? (Uh, how long ago was the pandemic over?????)
· Have the “step-therapy” prescription and care programs put in place by the insurers and pharmacy benefit managers failed to provide effective control or treatment of diseases resulting in more expensive and complex care later in their course?
Could it be the high cost of newer, more targeted treatments for diseases like cancer?
All of that and more may be the explanations. But ultimately, it’s all about the Benjamins, baby!
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This saga will continue tomorrow when I dissect the stock chart of UnitedHealth Group. It tells quite a story about why profits count more than service to its insured patients and their families. Stay tuned!!!!