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Sure, except they own the pharmacy (https://en.wikipedia.org/wiki/Optum), the payments solution (https://en.wikipedia.org/wiki/Change_Healthcare), the outpatient surgery centers (https://en.wikipedia.org/wiki/SCA_Health), the in-home care providers (https://en.wikipedia.org/wiki/Amedisys), and a whopping 10% of the country's doctors - the nation's single largest employer of them (https://www.statnews.com/2024/07/25/united-health-group-medi...).
(Oh, and they pay their doctors higher rates. https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...)
Those are "expenses" for that margin calculation.
https://www.unitedhealthgroup.com/content/dam/UHG/PDF/invest...
Source? They would be expenses for the insurance sub but profits for the consolidated public company. The latter are 22% (gross) and 4% (net).
I don’t have a horse in this race. But it seems like the problem is at the level of PBMs and providers more than insurers.
Yes, and that's the subsidiary that has the 80/20 expenses rule.
UHC ensures as much of the 80% paid for "patient care" winds up in their other subsidiaries that don't have a profit cap.
> But it seems like the problem is at the level of PBMs and providers more than insurers.
UHC is both the insurer and the PBM, and they're buying up all the providers they can get their hands on.
JumpCrisscross is saying ignore the 80/20 rule for the insurance side. If you look at UHC's overall parent company profits - the profits after they've calculated in the profit from the supplier side like pharmacy benefit company, pharmacy, doctors, et al - it is 22% gross, 4% net.
In other words the double-dealing only got them 4% net profit.
For my part I think a lot of the extra money is disappearing into administration. Every doctor's office of any size employs extra staff just to deal with insurance company nonsense. Insurance companies employ extra staff to deny claims and fight providers. That extra staff justifies more layers of middle management. This repeats across all specialists and disciplines. Your radiology company? Extra staff to deal with insurance. Lots of people employed to shuffle papers and manage workers.
Also, other comments praise Kaiser for being more consolidated. Is your argument care at Kaiser is much worse?
Kaiser works well for people willing to fight their doctors to get the care they want.
United works well for people willing to fight their insurance billing department. It also works for people planning to hit their maximum annual out of pocket limit.
You have a solid hypothesis. The cross ownership exists. But the hypothesised effect—margin expansion—isn’t observed. The best we can say is they tried to juice margins but failed to, which is neither here nor there, and pins administrative incompetence—not greed—as the culprit.
5.5% of what, dmm?
https://www.healthcaredive.com/news/unitedhealth-unh-2024-re...
> the Minnesota healthcare behemoth reported adjusted profit of $25.7 billion — an all-time record.
Obviously murdering healthcare CEOs and shareholders isn’t legal, and I wouldn’t endorse that method.
Are there alternatives?
Unfortunately that is rolling a boulder uphill, and even if you fire all of Congress (on this issue, you'd need to get rid of all the Republicans and at least a third of the Democrats) and replace it with people who give a crap, all it takes is one executive to stop enforcing the rules.
And then most voters: “71% of U.S. adults consider the quality of healthcare they receive to be excellent or good, and 65% say the same of their own coverage. There has been little deviation in these readings since 2001” [1].
[1] https://news.gallup.com/poll/654044/view-healthcare-quality-...
I'm very satisfied with my healthcare. I am not satisfied with my insurer.
The question was specifically about “the quality of healthcare you receive/your healthcare coverage.” Coverage doesn’t cover the insurer on cost, but it does on claims denials.
Most Americans like their coverage. If you want to reform the system, you have to start with that fact and convince them they aren’t risking what they have unnecessarily.
Even more Americans (81%!) are unhappy with the cost of their coverage.
Correct. You've identified why this debate has been frozen in American politics for decades. One man's leech is another's adored Cadillac insurance policy, trusted provider or prescribed placebo. Healthcare reform keeps dying on the rocks of conspiracy theories about the Congress of whatnot. The problem is surfacing a solution the electorate trusts and endorses.
No, the plans aren’t leeches, the people using the plans aren’t leeches, the entire administrative / leadership staff at health insurance orgs are the leeches.
A majority of the electorate wants government provided healthcare.
https://news.gallup.com/poll/468401/majority-say-gov-ensure-...
No. (Come on, read your own source.)
A majority say "it is the responsibility of the federal government to make sure all Americans have healthcare coverage." There is a 10-point preference for a "system based on private insurance" versus a "government-run system."
79% of Democrats want a government-run system. But only 46% of independents and 13% of Republicans. Which explains the gridlock. If one side only proposes government-provided healthcare as its solution, it will waste a bunch of energy on it and then be predictably shot down.
But that's two different things.
If you put me in a giant mansion with a $100k/month mortgage, I will be quite satisified with my house. Very briefly.
From your link.
So if they were a charity which magically had 0 costs the most payouts could increase is 20%.
Healthcare demand is infinite and providers have every incentive to inflate costs and recommend as many services as possible. I don't like our healthcare system but as it is, insurance companies play a necessary role of rationing care and there is no magical fix to claim denials.
[0] https://www.healthcare.gov/health-care-law-protections/rate-...
You can either accept that these business do not have a lot of pricing power, and they compete on razor thin profit margins (except UNH, but that is because they sell software and healthcare, not just insurance). Even then, their profit margin is only 5% or so, which is objectively a low profit margins.
Or you think there is a massive fraud and a nationwide conspiracy amongst 7 publicly listed businesses (UNH/Elevance/Cigna/CVS/Humana/Centene/Molina), and numerous non profits like Kaiser Permanente and various BCBS affiliated plans (because their premiums are basically the same as the for profit insurers).
The easiest thing to do though, is ask yourself why shareholders would accept lower annual returns if their business they own earns so much money?
Put their stock tickers in here:
https://dqydj.com/stock-return-calculator/
https://dqydj.com/sp-500-return-calculator/
You would think they could do better than SP500 if they were raking it in. Although, UNH did do better, but that is because they sell more high margin stuff like software and healthcare.
I definitely do not accept that assertion. Especially for the big vertically integrated ones like UHC.
> Or you think there is a massive fraud and a nationwide conspiracy amongst 7 publicly listed businesses (UNH/Elevance/Cigna/CVS/Humana/Centene/Molina), and numerous non profits like Kaiser Permanente and various BCBS affiliated plans (because their premiums are basically the same as the for profit insurers).
Yes? It's a cartel.
"Massive fraud" isn't really even in dispute! https://www.nytimes.com/2022/10/08/upshot/medicare-advantage...
> Even then, their profit margin is only 5% or so, which is objectively a low profit margins.
Walmart's is lower than that.
> The easiest thing to do though, is ask yourself why shareholders would accept lower annual returns if their business they own earns so much money?
That's why they do stock buybacks.
> You would think they could do better than SP500 if they were raking it in.
If everyone else wasn't also enshittifying at the same time, sure.
Good article, and they definitely do skate on the line, but there aren’t any indictments and it doesn’t seem there is any evidence they are colluding. Just lack of enforcement by the feds means it pays off for everyone to break the rules, but even then, the business is not profiting much.
>Walmart's is lower than that
So? That doesn’t mean 5% is a low profit margin. And the other MCOs are at 3% or less.
> That's why they do stock buybacks.
The effects of stock buybacks are incorporated into the total return calculation, so not sure what the relevance of this is either.
I just don’t see the logical consistency of claiming a business is doing super shady things to earn ridiculous amounts of profit, and then the business not doing better than SP500.
Or why insurance premiums at all the non profits would similar to premiums at all the for profits.
The more likely and simple answer is that it’s a cutthroat business, where almost all revenue goes out as expenses, and that is why all the premiums are similar, because no one can really cut more costs than they already are.
However senior management generally wants to pump the stock price to get comp, not juice their salary. And to pump the stock price, they want money going to shareholders (or growth).
Paying out dividends hasn't been a major factor in stock picking logic for at least 20 years, and rather than real growth, they'd rather pad their numbers by firing people. Shareholders get their money by buying low and selling high, not through something as quaint as long-term investment.
The UHC CEO made 10M, even if we 10x that to 100M then if the CEO decided to give it all back, UHC could payout << 1% more claims.
I tried researching this, but couldn't come up with an answer: if an insurance company pays doctors to review and dent claims, does that doctor salary count as "quality improvement activities", or administrative?
https://www.kff.org/report-section/ehbs-2023-section-10-plan...
While everyone calls them "health insurers", the industry term is "managed care organizations" (MCOs), which sell a variety of services, which may or may not include healthcare, managed care, insurance, negotiated pricing, and even retail pharmacy services.