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Comment by ceejayoz | Hacker News Reader

> Their profit margin is 5.5%.

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.

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I don't see how those facts meaningfully changes the conclusion when the margin for the entire group, which includes the subsidiaries you mentioned was 3.6% last year and 6.1% the year before.

https://www.unitedhealthgroup.com/content/dam/UHG/PDF/invest...

> Those are "expenses" for that margin calculation

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.

> They would be expenses for the insurance sub...

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.

But we can see the group profits. They’re right at 20 gross and much lower net. You’re arguing they’re double booking profits; that should show more profits. There aren’t more profits.

Also, other comments praise Kaiser for being more consolidated. Is your argument care at Kaiser is much worse?

Let's say I'm legally required to use 80% of my salary on cupcakes. My wife makes a cupcake, and I purchase it for $100k. Do we think this was the likely intended result of the legislation?

You’re using hypotheticals when we have actual numbers. (And more-consolidated competitors with higher customer satisfaction rates.)

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.

https://fortune.com/2025/01/15/ftc-pbms-unitedhealth-brian-t...

I think comparison to Kaiser is very telling on the pros and cons. I have options for united and Kaiser at work. Kaiser is slightly cheaper but comes with major pros and cons. Cons are major internal gatekeeping for drugs and procedures. Pros are no getting stuck between provider insurer billing disputes, and most of your data under one roof.

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 two are arguing across each other.

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.

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