Freedom

Opinion by Emma Freer

In early April, market analysts touted UnitedHealth Group as a “tariff safe haven.” And why not? The Trump administration had just announced an increase in payments to Medicare Advantage plans in 2026. Surely profits would likewise increase for UnitedHealth — not only the nation’s largest insurer, but specifically the largest provider of Medicare Advantage plans.

But, less than two months later, the company is in a state of free fall. Its collapse reflects not simply the troubles of the broader health care market, but also the troubles with Medicare Advantage, the program set up with the idea that the private sector could provide better health care than traditional Medicare at lower prices.

Instead, Medicare Advantage has only succeeded at juicing corporate profits, charging more — and denying more care — than traditional Medicare. And as for UnitedHealth Group, it’s looking quite possible the company’s bottom line was padded by billing fraud and patient abuse.

The company faces three federal investigations, looking at allegations of civil and criminal fraud and antitrust violations. The Wall Street Journal reported in February, for instance, that the DOJ is investigating whether UnitedHealth made its clinician employees record questionable diagnoses that make Medicare Advantage patients appear sicker than they are. This practice, known as “upcoding,” triggered extra federal payments. (UnitedHealth told the Journal it stands “by the integrity of our Medicare Advantage program.”)

And last week The Guardian alleged the company secretly paid nursing homes to prevent or delay transfers of Medicare Advantage patients to hospitals, something that saved the insurance giant money — but cost patients desperately needed care.

“At least one lived with permanent brain damage following his delayed transfer,” The Guardian reported, “according to a confidential nursing home incident log, recordings and photo evidence.” Five current and former UnitedHealth employees told The Guardian that the company “pressed nurse practitioners to persuade Medicare Advantage members to change their ‘code status’ to DNR” – or “do not resuscitate” — rendering them ineligible for “certain life-saving treatments that might lead to costly hospital stays.” (UnitedHealth denied the allegations.)

Somehow, that’s not the end of UnitedHealth’s troubles. A group of investors recently sued the company, claiming it had misled them about its financial outlook following the fatal shooting of Brian Thompson, CEO of UnitedHealthcare, UnitedHealth Group’s insurance arm. (UnitedHealth denied the lawsuit’s allegations.) In mid-May, UnitedHealth Group CEO Andrew Witty suddenly resigned for “personal reasons,” and the company withdrew its earnings guidance to Wall Street for 2025 after a disastrous first quarter, claiming it had underestimated its Medicare Advantage costs.

Because UnitedHealth is vertically integrated, it simultaneously pays for care through UnitedHealthcare and provides care through its health care services arm Optum, which includes both physician practices and pharmacies. This setup gives the conglomerate enormous leverage to dictate which claims are covered, which physicians patients can see and which medications are prescribed to them.

Moreover, UnitedHealth also reimburses its own physician practices and pharmacies much more than competitors. A recent Federal Trade Commission report found the average markup could be more than 7,700%. This systematic under-reimbursement leaves independent physician practices struggling to keep their doors open, and some then sell to Optum, reinforcing UnitedHealth Group’s monopoly power. Disparate payments likewise squeeze independent pharmacies out of business, stranding patients in care deserts.

Ethics aside, UnitedHealth’s Medicare Advantage strategy has proven very lucrative — until now. Since 2003, its annual revenue has increased nearly 15 times over — to $372 billion last year — and its Fortune ranking has climbed 59 spots, to fourth. This strategy also inspired competitors — including CVS Health’s Aetna, Elevance Health’s Anthem, and Humana — to pursue a similarly vertically-integrated business model and Medicare Advantage billing practices. Early this month, the Justice Department sued all three for allegedly paying brokers hundreds of millions of dollars to steer older Americans to their Medicare Advantage plans — and to steer clear of potential enrollees with disabilities. (The companies have said they will fight the allegations.)

Older Americans are drawn to Medicare Advantage because most plans offer supplemental benefits, such as vision and dental coverage, and lower cost-sharing requirements than traditional Medicare. It’s not until they require lifesaving medical care that the program’s disadvantages — including rampant denials — reveal themselves.

For more than two decades, patients and taxpayers have paid a steep price for the Medicare Advantage grift. Only in the last few weeks, though, have shareholders felt any sort of pinch from Medicare Advantage. Finally, it seems UnitedHealth Group’s size and business model may be liabilities rather than assets.

Although the Trump administration plans to hike Medicare Advantage payments next year, plans are still reeling from a Biden administration rule that limited upcoding. UnitedHealth Group also floundered because, as mentioned earlier, Medicare Advantage costs exceeded expectations. More specifically, patients sought more care than expected during the first three months of the year, perhaps in part because of pent-up post-pandemic demand. Regardless of the reason, UnitedHealth had to provide more service, as The Wall Street Journal explained, both as an insurer paying for claims and as a provider “absorbing the higher cost of delivering that care.”

This is the fundamental flaw at the heart of Medicare Advantage. Plans are beholden to shareholders, who seek short-term profits. Profits are only achievable through the widespread denial of care. Meanwhile, plans use these profits to buy up entities along the health care supply chain, whose clinicians and other employees can do the insurance company’s bidding.

A growing number of members of Congress from both parties are sounding the alarm. Reps. Lloyd Doggett, D-Texas, and Greg Murphy, R-N.C., recently requested an investigation into private Medicare Advantage plans. Rep. Pat Ryan, D-N.Y., sent a letter to Attorney General Pam Bondi, urging her to hold UnitedHealth Group accountable. At a recent meeting of the Senate Judiciary Committee, several senators called for breaking up big insurers like UnitedHealth. Sen. Cory Booker, D-N.J., decried “a level of corporate violence that is costing American lives, a level of colossal greed at the expense of patient wellbeing.” Sen. Josh Hawley, R-Mo., echoed this sentiment. “Why shouldn’t we be breaking you guys up?” he asked. “[T]his looks like classic monopolist behavior. The patients are getting screwed. … You’re getting rich.”

Meanwhile, traditional Medicare chugs along, costing Americans 20% less than its for-profit rivals while besting them on a majority of care metrics. It turns out the federal government is a much better steward of taxpayer dollars than rapacious executives and shareholders. Yet, traditional Medicare now only covers a minority of Medicare patients.

It’s time to face the truth. Medicare Advantage — like all private health insurance — is structurally unsound. Nothing short of a complete overhaul can cure the U.S. health care system of this disease.