How UnitedHealthcare became the face of America’s health insurance frustrations

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Sue Cover reports that she finally settled a more than $1,000 billing dispute with UnitedHealthcare in 2023 after six months, numerous hours on hold, and state regulator intervention.

Cover, 46, claimed she was overcharged for a routine ultrasound as well as ER visits for both herself and her son. Cover stated that it would have been a financial burden on her family, even though they would eventually have been able to pay the amount.

According to Cover, a benefits advocate from San Diego, her discussions with UnitedHealthcare “felt like a circular dance.”. Cover claimed that she answered a lot of calls from creditors and combed through complicated policy language. According to her, the purpose of the experience seemed to be to wear patients down to submission.

“There were times when I spent the entire day sitting on the phone, waiting for the hospital or the insurance company to call,” Cover remarked.

Many Americans have experienced something similar to Cover’s. Additionally, it reflects growing public ire toward insurers, particularly UnitedHealthcare, the biggest private health insurer in the United States. S. . which has turned into the face of the United States’ troubles. S. . the country’s extensive health care system and the insurance sector.

Patients who claim they were refused essential care, providers who claim they are bogged down in bureaucratic red tape, and lawmakers who express concern about its extensive influence have all criticized the company and other insurers.

In a statement, UnitedHealthcare stated that it is collaborating with the provider of Cover to “understand the facts of these claims.”. It is “unfortunate that CNBC rushed to publish this story without giving us and the provider adequate time to review,” the company said. Before publishing, CNBC gave the company a few days to assess Cover’s circumstances.

Earlier this month, Andrew Witty, the CEO of UnitedHealthcare’s subsidiary, UnitedHealth Group, resigned for “personal reasons,” according to the company. “Witty had guided the business through the midst of investor and public backlash.”. Due in part to growing medical expenses, the insurer also withdrew its 2025 earnings guidance this month.

UnitedHealth Group, with a market value of almost $275 billion, is by far the largest company in the insurance sector. 15% of the U.S. is thought to be under its control. S. As per the American Medical Association’s 2024 report, the health insurance market serves over 29 million Americans. In the meantime, rivals Elevance Health and CVS Health are thought to hold a 12 percent market share each.

It should come as no surprise that a business with this much reach would encounter negative public opinion. However, some analysts told CNBC that the venom directed at UnitedHealth is unique because of the delicate nature of health care, both financially and personally.

Despite a brief lull brought on in part by insider purchases of shares, UnitedHealth Group’s stock is down roughly 40% this year after a series of setbacks for the business. A reported criminal investigation into potential Medicare fraud, Witty’s departure, and the company’s poor first-quarter earnings have caused UnitedHealth Group to lose almost $300 billion of its $600 billion market capitalization in the past month alone.

Regarding the inquiry, UnitedHealth Group issued a statement: “We maintain the integrity of our Medicare Advantage program. “,”.

Numerous lawsuits from patients and shareholders, as well as various government investigations, have been brought against UnitedHealthcare and other insurers over the years.

Additionally, UnitedHealth Group is dealing with the aftermath of a ransomware attack on Change Healthcare in February 2024, a subsidiary that handles a sizable amount of the nation’s medical claims.

Following the December shooting death of its CEO, Brian Thompson, UnitedHealthcare has more recently come to represent outrage against insurers. Calls to reform what many lawmakers and advocates claim is an opaque industry that prioritizes profits over patients were rekindled after Thompson’s death.

UnitedHealth Group is not the only issue; insurers are only one part of what some experts refer to as a “broken U.”. A. health care system, where a number of parties are attempting to strike a balance between patient care and financial gain, including pharmaceutical companies and pharmacy benefit managers. However, experts stressed that insurers’ cost-cutting strategies, which range from rejecting claims to raising premiums, can prevent or postpone necessary medical care, leave patients with unforeseen expenses, or in certain situations, even mean the difference between life and death.

UnitedHealthcare said in a statement that it is “disappointing that CNBC seems to be making generalizations based on a limited number of examples.”. “.

What is wrong with the medical field?

McDermid, Brendan | Reuters.

An intricate health care system that costs the United States money is the root cause of frustration with insurers. A. over $4 trillion a year.

U. S. . According to the independent research group Commonwealth Fund, patients in large, wealthy nations have the lowest life expectancy despite spending significantly more on healthcare than people anywhere else in the world. The previous five years have seen U. S. . Government data also indicates that spending on hospital services, prescription drugs, out-of-pocket co-payments, and insurance premiums has gone up.

Many developed nations have substantial cost control because they offer universal coverage, but the U.S. A. depends on a patchwork of private and public insurance, frequently employing profit-driven intermediaries to oversee care, according to Howard Lapin, an adjunct professor at the University of Illinois Chicago School of Law.

But the main force behind U. S. . Richard Hirth, a professor of health management and policy at the University of Michigan, stated that health spending is about prices rather than how much patients use care.

“Unbelievable inflation of the prices that are being charged primarily by hospitals, but also drug companies and other providers in the system,” expressed Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms.

According to Lapin, administrative overhead, fraud, overtreatment, and health care consolidation all increase costs for providers and payers, who subsequently raise prices. U. A. Because of the pharmaceutical industry’s practices, including patent extensions, and the lack of price regulation, prescription drug prices are also two to three times higher than those in other developed nations.

Insurers are only partially to blame, despite the fact that patients frequently point the finger at them. According to some experts, removing their profits wouldn’t significantly reduce U. S. . healthcare expenses.

According to industry experts, UnitedHealthcare and other insurers have become easy targets for patient ire, and for good reason.

Their for-profit business strategy focuses on handling claims to restrict payouts while adhering to legal requirements and maintaining customer satisfaction. According to experts, this frequently entails refusing services that are thought to be medically unnecessary. However, they added that sometimes insurance companies deny patients the care they require, leaving them without necessary medical care or with large bills.

To keep costs down, insurers employ strategies like co-pays, deductibles, and prior authorization, which involves getting approval before certain procedures. Businesses are using artificial intelligence more and more to evaluate claims, which industry experts say can occasionally result in false denials.

An affiliate at the UCLA Center for Health Policy Research named Dylan Roby stated, “It’s all part of the same business model — to avoid paying as many claims as possible in a timely fashion.”.

How the UnitedHealth Group became so strong.

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In contrast, other private U. S. . Although many of the same strategies are used by insurers, UnitedHealth Group seems to have been the target of the greatest public criticism because of its prominence and size.

Compared to competitors like CVS, Cigna, and Elevance, whose market caps are less than $100 billion, UnitedHealth Group’s market value is enormous. Revenue for UnitedHealth Group increased from about $100 billion in 2012 to over $400 billion in 2024 alone.

Its expansion into numerous areas of the healthcare system has led to increased criticism of other business divisions and the company’s capacity to use one division to advantage another.

UnitedHealth Group expanded by acquiring smaller businesses and integrating them into its expanding healthcare enterprise. Today, it provides services to almost 150 million people and manages sensitive health data as well as insurance and medical services.

Even more market power comes from UnitedHealth Group’s ownership of Optum Rx, a potent pharmacy benefit manager, or PBM.

PBMs take on the role of intermediaries, managing lists of medications that health plans cover, negotiating drug rebates on behalf of insurers, and paying pharmacies for prescription drugs. They are accused by lawmakers and pharmaceutical companies, however, of overcharging plans, underpaying pharmacies, and not passing savings on to patients.

“UnitedHealth Group has control over supply and demand by owning a PBM,” Corlette said. While Optum Rx chooses which medications are available and at what cost, its insurance division has an impact on what services are covered. According to her, UnitedHealth Group can increase profits by directing patients toward more affordable or lucrative treatments and keeping rebates.

According to Corlette, the company’s reach is even greater: Optum Health currently employs or affiliates with roughly 90,000 doctors, or nearly 10% of the U.S. S. doctors — so that UnitedHealth Group can refer patients to its own providers and effectively cover the cost of care.

Last year, a STAT investigation discovered that UnitedHealth exploits its doctors to extract money from patients. In response, the company stated that its “providers and partners make independent clinical decisions, and we expect them to diagnose and document patient information completely and accurately in compliance with [federal] guidelines.”. “.”.

Large PBMs are also owned by other insurers, including Cigna and CVS, who also provide care services. However, UnitedHealth Group has increased its scale and improved its financial results.

Roby remarked, “I believe the company is definitely best in class when it comes to insurers, in terms of providing profits for shareholders.”. However, based on their personal experiences, consumers are likely to say otherwise. “..”.

criticism of UnitedHealth.

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Since private insurers are typically exempt from reporting this information, no one is certain of the precise frequency of claim denials. However, according to some analyses, UnitedHealthcare has rejected care for some plan types more frequently than its competitors.

UnitedHealthcare had one of the highest denial rates among major insurers in 2023, rejecting 33 percent of in-network claims across 20 states’ Affordable Care Act plans, according to a January report by nonprofit organization KFF. Cigna rejected 21% of claims in eight states, while CVS rejected 22% of claims in eleven states.

A request for comment regarding that report was not answered by UnitedHealth. However, the business also responded to public criticism of its denial rates in December, stating that it accepts and pays roughly 90% of claims as soon as they are submitted. According to UnitedHealthcare’s website, the remaining 10% undergo an extra review procedure. Following that review, the company reports that its claims approval rate is 98 percent.

UnitedHealth Group is also being sued for denials. Families of two Medicare Advantage patients who passed away filed a lawsuit against the business and its subsidiary in November, claiming that it rejected their claims using an AI model with a “90 percent error rate.”. UnitedHealth Group has claimed that because the families did not finish the Medicare appeals process, it ought to be removed from the case.

NaviHealth, the company’s subsidiary, has previously told news outlets that the lawsuit “has no merit” and that the AI tool is used to help providers understand what care a patient might need. According to the spokesperson, it has no bearing on coverage decisions, which are ultimately determined by the Centers for Medicare and Medicaid Services’ criteria as well as the terms of a member’s plan.

The Wall Street Journal reports that the Justice Department is conducting a criminal investigation into the company’s Medicare Advantage business practices. The business claimed in its statement that the Justice Department had not informed it of the alleged investigation and referred to the newspaper’s coverage as “deeply irresponsible.”. “.”.

Employees at the company claim that obstacles affect both customers and employees.

According to one employee, who asked not to be named for fear of reprisal, UnitedHealthcare’s provider website frequently lists physicians as accepting new patients or in-network when they are not, which frequently results in complaints. According to the individual, management frequently responds that maintaining provider statuses is too challenging.

UnitedHealthcare told CNBC that it “proactively verifies provider data on a regular basis” and that it thinks “maintaining accurate provider directories is a shared responsibility among health plans and providers.”. The company added that the great majority of all inaccuracies are caused by mistakes or outdated information that providers have submitted.

The amount of time it can take for a provider to get through to a real support worker who can assist with evaluating claims or prior authorization requests over the phone has been criticized by Emily Baack, a clinical administrative coordinator at UMR, a division of UnitedHealthcare. People may be left waiting for a support agent for more than an hour or have their calls misrouted by the company’s automated phone system, she said.

Baack, however, stressed that comparable problems arise with all insurance providers.

According to her, providers are forced to make pointless prior authorization requests because they are afraid that their claims won’t be paid on time. That causes her to have a huge backlog of paperwork and postpones patient care, according to Baack.

“An important checkpoint” that helps guarantee members are getting coverage for safe and effective care is prior authorization, according to UnitedHealthcare.

The business stated that it is “constantly taking action to modernize and streamline the prior authorization procedure.”. As part of this, qualified provider groups are exempt from submitting prior authorization requests for specific services, and fewer services and procedures are subject to prior authorization requirements.

An emerging ecosystem for startups.

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Even though patients are criticizing other insurers, Thompson’s murder in December strengthened UnitedHealthcare’s distinct public image. Thousands of people shared examples of their personal hardships on social media in an effort to voice their outrage at the company.

Many insiders in the industry were not surprised by the negative response the public had to Thompson’s death.

Thompson’s murder was “a horrible crime,” according to Alicia Graham, co-founder and chief operating officer of the startup Claimable. Additionally, she admitted that resentment has been building in online health communities for years. “..”.

A number of startups, including Claimable, are attempting to solve issues in the insurance industry. Entering this market is difficult, and many of these businesses—like Claimable—have been taking advantage of the AI boom.

Founded in 2024, Claimable claims to assist patients in contesting denials by submitting personalized, artificial intelligence-generated appeal letters on their behalf. Although Graham stated that it is rapidly growing those offerings, the company is able to file appeals for ailments like migraines and specific pediatric and autoimmune diseases.

According to Graham, many patients are unaware that they have the right to appeal, and those who do may have to spend hours going through their medical records in order to form one. She stated that patients can frequently submit an appeal letter through Claimable in a matter of minutes if they are qualified to do so. The company’s website states that each appeal costs customers $39 to $95 plus shipping.

Graham told CNBC, “We’ve tried to make it as easy as possible because a lot of patients are scared, frustrated, and confused about the process.”.

There may be “bot wars” in the healthcare industry, in which all sides use AI to try to obtain an advantage, according to some experts.

Although he is worried about the possibility of an AI arms race in the industry, Mike Desjadon, CEO of the startup Anomaly, said he is still hopeful. According to him, Anomaly, which was established in 2020, uses artificial intelligence (AI) to assist providers in figuring out what insurance companies will and won’t pay for before treatment begins.

Desjadon told CNBC, “I run a technology company and I want to win, and I want our customers to win, and that’s all very true, but at the same time, I’m a citizen, a patient, a husband, a father, and a taxpayer, and all I want is for health care to be reasonable and be paying for itself.”.

Dr. Patients typically only contact insurers after something goes wrong, which adds to their frustrations, according to Jeremy Friese, founder and CEO of the startup Humata Health. According to him, before-authorization requirements can be a “huge black box” for patients, but they are also difficult for physicians to follow.

As an interventional radiologist, Friese claimed that his work served as the impetus for his company. He was a co-founder of Verata Health, a prior-authorization business that was purchased by Olive, a now-defunct health-care AI startup, in 2017. In 2023, Friese repurchased his technology and established Humata, his most recent business.

According to Friese, Humata automates prior authorization for all payers and specialties using AI. The company announced a $25 million funding round in June, and it mainly works with medium-sized and large health systems.

According to Friese, “there’s just a lot of pent-up anger and angst, frankly, on all aspects of the health-care ecosystem,” she told CNBC.

the cyberattack on Change Healthcare.

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Additionally, UnitedHealth Group’s dismal record from the previous year did little to improve public opinion. About 190 million Americans were impacted by the company’s subsidiary Change Healthcare’s cyberattack, which was the biggest known health care data breach in the United States. S. The past.

Together with other solutions like electronic prescription software, Change Healthcare provides tools for revenue cycle management and payments. It combined with the Optum division of UnitedHealth Group in 2022, which serves over 100 million patients in the United States. S.

In February 2024, a portion of Change Healthcare’s IT network was compromised by the ransomware group Blackcat. As stated in a filing with the U.S., UnitedHealth Group disconnected and isolated the impacted systems “immediately upon detection” of the threat. S. Securities and Exchange Commission; however, the subsequent upheaval shook the healthcare industry.

A significant source of income for thousands of providers throughout the United States was cut off while the company’s systems were unavailable. S. . came to a screech. To keep their practices afloat, some physicians took thousands of dollars out of their personal funds.

John Riggi, the American Hospital Association’s national advisor for cybersecurity and risk, told CNBC, “It was and remains the largest and most consequential cyberattack against health care in history.”.

According to the Federal Bureau of Investigation, ransomware is a type of malicious software that prevents victims from accessing their computer files, systems, and networks. Using this software, ransomware organizations like Blackcat—which are frequently headquartered in nations like China, North Korea, and Russia—will steal confidential information and then demand payment to return it.

According to Steve Cagle, CEO of the cybersecurity and compliance company Clearwater, ransomware attacks in the healthcare industry have increased recently, partly due to the value of patient data and the ease with which cybercriminals can exploit it.

Cagle told CNBC, “It’s been a very lucrative and successful business for them.”. Regretfully, until something changes, we will continue to witness that kind of activity. “.

In May 2024, then-CEO Witty testified before the Senate that UnitedHealth Group had paid the hackers a $22 million ransom in an attempt to secure patient data.

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UnitedHealth Group started a short-term funding assistance program in March 2024 to assist providers with their short-term cash flow.

Several physicians told CNBC that the program had a rough start and that the initial deposits were insufficient to cover their growing costs.

According to UnitedHealth Group’s fourth-quarter earnings report released in January, the company ultimately distributed over $9 billion to providers in 2024.

In his testimony before Congress, Witty stated that providers would only have to pay back the loans once “they, not me, but they confirm that their cash flow is normalized.”. “.”.

However, according to documents seen by CNBC and funding providers, the company is now pursuing borrowers vigorously, requiring them to “immediately repay” their outstanding balances nearly a year later. According to documents seen by CNBC, certain organizations have been asked to return hundreds of thousands of dollars in a few short days.

In April, a Change Healthcare representative told CNBC that the organization had begun to collect the loans.

We’re still working with providers on repayment and other options, and we’re still contacting providers who haven’t returned our calls or emails asking for more details,” the spokesperson stated.

UnitedHealth Group was the target of increased social media criticism due to the repayment pressure, and some providers told CNBC that their interactions with the company were “very frustrating.”. “.”.

According to UnitedHealth’s cyberattack response website, three products are still marked as “partial service available,” even though the great majority of Change Healthcare’s services have been restored over the past year.

The path ahead.

| Getty Images | Bloomberg | Michael Nagle.

UnitedHealth may face a difficult road as a result of Witty’s departure, the company’s warning about high medical costs, the fallout from Thompson’s murder, and the Change Healthcare cyberattack.

It seems that UnitedHealth Group is making an effort to win back the public’s trust. For instance, in March, Optum Rx revealed plans to remove prior authorizations for dozens of medications, which would alleviate a burden on patients and doctors.

However, experts in the health insurance sector previously told CNBC that policy changes at UnitedHealth Group and other insurers might not significantly improve patient care.

According to them, the entire insurance sector will need to undergo structural changes, necessitating legislation that may not be a top priority for the sharply divided Congress.

In the upcoming months, UnitedHealth Group’s profile might only get more prominent. Luigi Mangione, who is charged with federal stalking and murder in relation to Thompson’s shooting, is anticipated to have his trial date set for December. For the charges, Mangione entered a not guilty plea.