UnitedHealth’s Profit

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How does an insurance company make money?  As the title of this article says, they “boost their profits by lowering medical costs”. So here are the facts.  UnitedHealth Group Inc. reported better-than-expected third-quarter earnings and raised its profit forecast for the year and did it by driving down medical costs. How?

  • Medical utilization remained restrained
  • UnitedHealth added that its medical-care ratio, a key industry metric that reflects the portion of insurance premiums used for patient care, fell to 79.7% in the third quarter from 80.6% a year earlier
  • UnitedHealth pointed to the increasing prevalence of high-deductible health plans and to its growing use of health-care provider contracts that link reimbursement to performance.
  •  UnitedHealth said its profit for the quarter ended Sept. 30 was $1.6 billion, or $1.63 a share, up from $1.57 billion, or $1.53 a share.
  • Revenue rose 7% to $32.76 billion.

So, let’s summarize.  The insurance companies, supposedly smacked down by the Obama administration, are making more than ever.  The limit on profits mean nothing.  We are all starting to understand that the ACA was more catered to them then to the people. And they are doing this by getting people onto high-deductible plans that are still expensive and hoping those patients never go over that deductible.  Lastly, to put a fail safe mechanism on the scam, they link reimbursement to performance (unproven P4P) which means finding ways to pay doctors less.

Why are more doctors NOT walking from this crap?

Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  6 comments for “UnitedHealth’s Profit

  1. Doctorsh
    October 29, 2014 at 8:16 am

    The answer to your question of why doctors don’t walk away from this crap:

    Because most docs are short sighted puss-ies afraid to do anything outside of the norm. Problem is the norm is defined by the govt, trial lawyers, hospitals, big Pharma, insurers, and every other stakeholder leeching money from the healthcare system.

    Docs should lead on this issue, walk away and go direct, DPC. DPC docs get very vocal and supportive patients who agree that we need to get the leeches out of the system.

  2. Linda
    October 24, 2014 at 1:12 pm

    Actually, the insurance companies hated the ACA and many of the larger insurance companies, like UHC only offered plans in a few states during 2014. In UHCs case, they were on exchange in only 4 States. So, the ACA may turn out to be good for insurance companies’ bottom line but the government did not work with them before hand nor did the insurance companies want it implemented.

    • Bridget Reidy MD
      October 24, 2014 at 11:39 pm

      I disagree. Before the 2008 election insurance was becoming less often granted with employment, and companies were in a race to the bottom. They could make money by denying payment or disenrolling the sick, only to the limit of where people would realize the product was nearly worthless and stop buying it. The best alternative was to eliminate the insurance company completely, so no doubt regulation was a betteroption for them all around.

      • Linda
        October 26, 2014 at 10:36 am

        i concur that implementing a government run healthcare system for those under 65 would have been a better option. However, the electorate hated this idea and so the ACA was what was able to be passed. If a government run option had been implemented, the insurance companies would still have been involved as contracted suppliers of care as they are today with Medicare. There was never any option that would have eliminated insurance companies. Of note, more companies are dropping employee health coverage now (after ACA vs. before) and forcing their employees to obtain healthcare insurance through an exchange.

  3. John Parkin
    October 24, 2014 at 8:25 am

    I have wondered about the lack of outrage for several years re United Health. Four or five years ago they were fined 2 billion dollars for ripping off patients and providers on reimbursements plus their own stockholders on executive stock options. The CEO has a nice compensation package of 100 million $$. Their profits are generally in the 5 or 6 billion $$ annually. United’s concept of “reducing health care costs” is reducing payments for services placing the onus on consumers and providers.

  4. Rwatkins
    October 24, 2014 at 8:06 am

    “We are all starting to understand that the ACA was more catered to them then to the people”

    So true, and something that needs to be acknowledged by those who claim that the ACA is a “government take-over” of healthcare. It’s actually a take-over of a large part of our government by the insurance industry.

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