DAILY TRIFECTA: UnitedHealth Has The Profit Motive, The Means And Plenty Of Opportunity

CSI Rx

THE SET-UP: UnitedHealth Group is the nation’s largest healthcare corporation by market share with a market capitalization of $515 billion. That makes it the “8th largest company worldwide by revenue.” UnitedHealth Group’s CEO Andrew Witty scored $23.5 million in compensation in 2023, making him the highest paid among his peers. Taken together, the CEOs of the “six major national insurers” took home a combined $122,970,614 in 2023.”

That year Brian Thompson earned a healthy $10.2 million as CEO of UnitedHealth Group’s insurance division. But it wasn’t all smooth sailing. He was entangled in UnitedHealth Group’s legal messes, including a Department of Justice probe of monopolistic behavior. He was named in lawsuit related to suspiciously-timed stock trades. The American Hospital Association also named him in a harsh open letter objecting to a denials for “non-critical visits to hospital emergency rooms.” But he was not in denial about his company’s image problem. Unnamed colleagues told the Washington Post that he worried “average Americans didn’t understand the massive insurance company’s role in the nation’s health system.”

Maybe he was right. Maybe Americans are confused by the power corporate bureaucrats have to make life and death decisions.

It’s also confusing when the cost does up, but the drug or surgery you need gets a “thumb’s down.”

And it’s confusing when middlemen get rich while you pay more for less.

Maybe that’s why they were not confused by his murder.

Most Americans knew why he was killed within minutes of seeing the surveillance video. “Health insurance executive” was the only clue they needed to link his murderer’s motivation with their own simmering anger at an industry that’s making a killing at their expense. They are victims of a perfectly legal crime with an easily identifiable motive … the profit motive. Premiums, co-pays, deductibles and denials are the “means.” And every claim is a potential “opportunity.” - jp

TITLE: UnitedHealth, employer of slain exec Brian Thompson, found to have overcharged some cancer patients for drugs by over 1,000%
https://fortune.com/2025/01/15/ftc-pbms-unitedhealth-brian-thompson-cvs-caremark-cigna-pharmacy-benefit-managers/

EXCERPTS: OptumRx, the group’s pharmacy benefit manager, along with its two main peers, Express Scripts and CVS Caremark Rx, have pocketed an extra $7.3 billion over cost thanks to price gouging, according to the findings of a report by the Federal Trade Commission. CVS Caremark Rx blasted the findings for cherry picking certain drugs in an effort to push what it called an ‘anti-PBM’ narrative.

UnitedHealth Group is charging patients a markup for key life-saving drugs that could easily exceed their cost by a factor of ten or more, according to findings from the Federal Trade Commission.

According to the FTC report, UnitedHealth’s OptumRx, along with Cigna’s Express Scripts and CVS Caremark Rx, were able to collectively pocket $7.3 billion in added revenue above cost during the five year period of the study through 2022.

“The Big 3 PBMs marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent,” it concluded.

A thousand percent increase in the price of a drug that costs $10 wholesale would result in a retail price of $110.

This markup rate applied to 22% of the specialty therapies examined, including Imatinib, a generic used to treat leukemia, or non-oncological Tadalafil for pulmonary hypertension. Others such as Lamivudine needed by HIV-positive patients were nearly quadruple the price of their acquisition cost.

UnitedHealth’s OptumRx told Fortune it is still reviewing the specifics of the report, but the PBM said it helped eligible patients save $1.3 billion in costs, estimating the median out-of-pocket payment to be $5.

“Optum is lowering the cost of specialty medications, which comprises half of all drug expenditures, and providing clinical expertise, programs and support for patients with complex and rare conditions,” it said.

CVS Caremark, by comparison, argued the FTC was guilty of “cherry picking” its analysis by focusing on generics, which represent a tiny fraction of client spending over branded specialty drugs in an attempt to mislead. It, too, said it was saving clients money: out-of-pocket costs have dropped seven straight years for a total reduction of 29% since 2016.

Cigna, parent of Express Scripts, did not respond to a request for comment.

TITLE: UnitedHealth Group shares fall amid worry over medical costs
https://www.startribune.com/unitedhealth-beats-profit-expectations-in-first-earnings-report-since-health-insurance-ceos-killing/601206649

EXCERPTS: UnitedHealth Group beat estimates for fourth quarter profit as the Eden Prairie-based health care giant released its first earnings report since the fatal ambush last month of top executive Brian Thompson in New York City.

During the fourth quarter, UnitedHealth Group posted a profit of $5.54 billion on $100.8 billion in revenue.

Excluding one-time items, adjusted earnings per share of $6.81 was 7 cents better than expected among analysts surveyed by LSEG Data and Analytics.

That beat happened even as revenue trailed expectations for the quarter. Analysts were expecting revenue of $101.7 billion.

The fourth quarter results released Thursday were better than year-ago quarterly earnings of $5.46 billion on $94.4 billion in revenue.

Despite the earnings result, the company’s stock price fell in early trading Thursday as its massive UnitedHealthcare insurance business reported a surprisingly high ratio of medical costs to premium revenue at the end of last year — a potentially worrying sign about medical cost trends.

Executives cited a number of factors, including rebates during the fourth quarter to group customers who hire the company to run Medicare Advantage health plans for retirees. These payments lowered net revenue and thereby impacted the “medical loss ratio” — a widely watched measure of cost trends and profitability for health insurers, called “MLR” for short.

The financial details came as UnitedHealth Group’s insurance business UnitedHealthcare and the broader industry continue to confront questions and anger over the nation’s health care system that surged in the wake of Thompson’s killing, particularly on social media.

Last week, a group representing faith-based shareholders petitioned UnitedHealth Group to develop a report on the human and economic toll stemming from limits and delays to accessing health care paid for by UnitedHealthcare.

Thompson was CEO of UnitedHealth’s insurance business. The company has not yet named an interim successor.

UnitedHealth says critics have spread misinformation about its track record denying health insurance claims.

UnitedHealth Group runs the UnitedHealthcare insurance business, as well as Optum, a large division for health care services including outpatient medical care and pharmacy benefits management.

TITLE: Throw the book at UnitedHealthcare CEO murderer, voters say in exclusive poll
https://www.usatoday.com/story/news/health/2025/01/16/unitedhealthcare-ceo-shooting-exclusive-poll/77719562007/

EXCERPTS: Nearly two-thirds of Americans think the Dec. 4 murder of UnitedHealthcare CEO Brian Thompson was wrong, and the suspected killer should be prosecuted to the full extent of the law, according to a new USA TODAY/Suffolk University poll.

Most of the rest agreed it was wrong, but said they understood the anger the alleged shooter felt toward America's health care system.

The findings underscore lingering furor with a system that spends more than any other in the world but delivers the lowest life expectancy among large, wealthy nations.

The poll of 1,000 registered voters, taken by landline and cellphone from Jan. 7 to 11, has a margin of error of plus or minus 3.1 percentage points.

Amanda Millsap, 41, a restaurant owner who takes care of her family in North Carolina, has had her own disputes with health insurers and medical bills.

“I’m not co-signing on killing anyone," said Millsap, a registered independent. "However, the only people that get rich in insurance is insurance people."

"It's sad because he had a family and a wife," Millsap said. "However, as an American, I understand the rage. It's frustrating when you don't have the money, and you open up your mail. It's soul crushing. You're on maternity leave, you have a health concern, and now you're being charged double what you thought you were going to be."

Joe Gil, a 39-year-old who works in senior care and education in Tampa, Florida, sees how health care disparities can harm older people. This is especially true for those who don’t have lot of income or who didn’t save up enough for retirement.

He's witnessed denials for care, and issues such as trouble accessing transportation to get to appointments.

“I can see where a lot of people, a lot of folks, would hold the company accountable or villainize companies,” Gil said.

Mitchell James, 31, of Rutherford County, Tennessee, has robust health insurance as a high school history teacher and never had a claim denied.

But a health insurer blocked a family member's attempt to get a doctor-recommended knee-replacement surgery.

He said other nations with government-run health care such as the United Kingdom get more out of their medical spending than Americans.

"We're already paying more via premiums, deductibles and out-of-pocket costs than we ever would in taxes," said James. "Insurance middlemen basically just exist to profit off of American healthcare."