Health Care Chaos: UnitedHealthcare Faces Rising Fury

After an arduous six-month struggle, Sue Cover finally settled a billing discrepancy exceeding $1,000 with UnitedHealthcare, catalyzed by the involvement of state regulators in 2023.

Cover, a 46-year-old benefits advocate based in San Diego, claimed she found herself overcharged for emergency room visits for both herself and her son, as well as for a routine ultrasound. Although she indicated that her family could eventually pay the disputed amount, it would have imposed a significant financial burden on them.

Describing her interactions with UnitedHealthcare as a “circular dance,” Cover noted the challenges of wading through complicated policy jargon and the incessant phone calls from creditors. She expressed that the entire process seemed engineered to wear patients down until they concede.

“Sometimes it felt like my entire day was consumed by being on hold with either the hospital or the insurance provider,” Cover recounted.

Her ordeal is far from unique and reflects a growing discontent among Americans toward insurance companies, especially directed at UnitedHealthcare. This company, the largest private health insurer in the United States, has increasingly become emblematic of the widespread issues plaguing the U.S. health insurance landscape.

Patients have voiced frustrations over denied care, healthcare providers are inundated with bureaucratic hurdles, and legislators have raised alarms regarding UnitedHealthcare’s considerable market influence.

In response, UnitedHealthcare stated that it is collaborating with Cover’s medical provider to glean a clearer understanding of the claims involved. The insurance giant lamented that Finance Newso hastily published the story without allowing adequate time for review, despite having been given several days prior to release.

Adding to the turmoil, Andrew Witty, the CEO of UnitedHealthcare’s parent organization, UnitedHealth Group, stepped down earlier this month citing “personal reasons.” Witty was at the helm during a period marked by intense scrutiny from both the public and investors. Following a grim earnings report and rising medical costs, the insurer also withdrew its earnings forecast for 2025.

With a market valuation of nearly $275 billion, UnitedHealth Group maintains a dominant position within the insurance industry, representing approximately 15% of the U.S. health insurance market and serving over 29 million individuals, according to a recent report by the American Medical Association. In contrast, its competitors Elevance Health and CVS Health each manage about 12% of the market.

This extensive influence has made it a prime target for public outrage. Experts assert that especially in the highly sensitive context of healthcare, the backlash against UnitedHealth is particularly pronounced.

UnitedHealth Group’s stock has plummeted by around 40% this year, reflecting a series of misfortunes, despite a temporary uptick fueled by insider stock purchases. In just one month, the company witnessed a staggering market cap reduction of nearly $300 billion, coinciding with Witty’s resignation, troubling first-quarter results, and an investigation into potential Medicare fraud.

Commenting on the investigation, UnitedHealth Group reaffirmed its commitment to the integrity of its Medicare Advantage program.

Throughout the years, UnitedHealthcare, along with various other insurers, has faced multiple lawsuits from both patients and shareholders, in addition to undergoing several government investigations.

The company is also confronting repercussions from a ransomware attack in February 2024 that targeted Change Healthcare, a subsidiary responsible for processing a significant volume of medical claims.

Moreover, the fatal shooting of CEO Brian Thompson in December has transformed UnitedHealthcare into a focal point of outrage, reigniting calls for reform in an industry many perceive as obscured and prioritizing profits over patient care.

Experts note that the challenges run deeper, as the failings of insurers represent just one segment of a complicated U.S. healthcare system. This complex ecosystem, comprising various stakeholders, including drug manufacturers and pharmacy benefit managers, continuously grapples with the delicate balance between patient care and profit generation. Insurers’ strategies, such as claim denials and increased premiums, can have dire implications for patient treatment, resulting in acute delays or unexpected financial burdens.

UnitedHealthcare maintains that it is “unfortunate” that Finance Newso appears to be making broad assertions based on limited anecdotes.

The dissatisfaction aimed at insurance companies underscores a larger issue: a convoluted healthcare system that incurs over $4 trillion annually in the United States.

Americans spend significantly more on healthcare compared to their counterparts in other affluent countries, yet they experience the lowest life expectancy among these nations, as reported by the Commonwealth Fund. Data from the federal government reveals that over the past five years, U.S. spending on insurance premiums, out-of-pocket expenses, medications, and hospital services has consistently increased.

While numerous developed nations effectively regulate their healthcare costs through universal coverage, the U.S. persists in relying on a fragmented system that combines both public and private insurers, often employing profit-driven intermediaries. Howard Lapin, an adjunct professor at the University of Illinois Chicago School of Law, elucidates that the soaring prices—not the utilization of services—are the primary drivers behind America’s healthcare expenditures.

According to Richard Hirth, a health management and policy professor at the University of Michigan, an “unbelievable inflation” of prices implemented chiefly by hospitals and drug companies contributes to these rising costs. Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University, concurs that excessive treatment, fraudulent practices, consolidation within the healthcare sector, and administrative expenses all escalate costs for both payers and providers, resulting in higher charges passed on to consumers.

Moreover, U.S. prescription drug prices are reported to be two to three times higher than those in other developed nations, partially due to limited price regulations and pharmaceutical practices that delay competition through patent extensions.

While insurers face heavy criticism, experts caution that they represent only a facet of the multifaceted problem. Some analysts contend that eliminating the insurance companies’ profits would not substantially decrease overall U.S. healthcare costs.

Nevertheless, UnitedHealthcare and similar insurers have become focal points for patient dissatisfaction, with industry analysts asserting that the profit-driven model leads to claims management focused on minimizing payouts while navigating regulatory requirements and striving for customer satisfaction. This often results in legitimate medical services being denied, leaving patients in a precarious position.

The insurance industry employs various cost-control methods, including deductibles, co-pays, and prior authorization requirements. Industry insiders indicate that many companies are increasingly utilizing artificial intelligence to evaluate claims, which can sometimes result in erroneous denials.

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

While many private insurers utilize similar tactics, UnitedHealth Group has garnered significant public attention due to its substantial size and visibility.

With revenues exceeding $400 billion in 2024 alone—up from approximately $100 billion in 2012—UnitedHealth Group far surpasses its competitors such as CVS, Cigna, and Elevance, which each boast market caps below $100 billion.

Its growth has also led to criticism regarding its extensive involvement across various sectors of healthcare, raising concerns about potential conflicts of interest as the company may leverage different business units to gain competitive advantages.

UnitedHealth Group has expanded by acquiring smaller firms and integrating them into its extensive healthcare operations. It now serves close to 150 million individuals and oversees everything from insurance to healthcare services and sensitive patient data.

The group controls a significant pharmacy benefit manager, Optum Rx, enhancing its influence over the market. Pharmacy benefit managers negotiate drug discounts for insurers, oversee drug coverage for insurance plans, and arrange payments to pharmacies for medications. However, both lawmakers and drug manufacturers have accused these managers of inflating costs, undercompensating pharmacies, and failing to relay savings to patients.

Owning a PBM allows UnitedHealth Group control over both supply and demand, as its insurance division influences covered services while Optum Rx regulates drug availability and pricing. Consequently, the firm can optimize profits by guiding patients towards lower-cost options or higher-margin treatments, retaining resultant rebates, according to Corlette.

Furthermore, Optum Health employs or partners with approximately 90,000 doctors—nearly 10% of all U.S. physicians—enabling UnitedHealth Group to steer patients toward its own providers and essentially finance care from itself.

A STAT investigation found that UnitedHealth employs its physicians to maximize profits from patients. However, the company clarified that its providers make independent clinical decisions and are trained to document patient information accurately in adherence to federal guidelines.

Competitors like CVS and Cigna also operate large PBMs and healthcare services, yet UnitedHealth has achieved greater scale and financial yield.

Roby labeled the company “best in class” concerning investor returns, but he added that consumers likely have an opposing view regarding their experiences.

The frequency of claim denials by private insurers remains shrouded in uncertainty, as they are often not mandated to disclose such data. However, some studies suggest that UnitedHealthcare has denied care at higher rates than its competitors for specific plan types.

A January report from the nonprofit KFF revealed that UnitedHealthcare rejected 33% of in-network claims across Affordable Care Act plans in 20 states during 2023, one of the highest denial rates among major insurers. In comparison, CVS denied 22% of claims over 11 states, while Cigna denied 21% across eight states.

UnitedHealth did not provide comments on that report. However, in December, it refuted public criticisms regarding its denial rates, asserting that it approves approximately 90% of claims upon submission. The company claims that the remaining 10% undergoes further review, with an approval rate of 98% after that process.

Additionally, UnitedHealth Group faces lawsuits regarding claim denials. In November, families of two deceased Medicare Advantage patients filed a suit against the company and its subsidiary, alleging that an AI model with a “90% error rate” was used to reject their claims. UnitedHealth Group contended that it should be dismissed from the case because the families did not complete Medicare’s appeals process.

A spokesperson for its subsidiary, NaviHealth, previously indicated that the lawsuit is without merit and that the AI tool merely assists providers in understanding patients’ potential needs but does not directly influence coverage decisions, which are ultimately based on the terms of a member’s plan and CMS criteria.

Further compounding their challenges, the UnitedHealth Group is under investigation by the Justice Department concerning its Medicare Advantage business practices. The company has stated it has not been officially notified about the probe and taglined the reporting as “deeply irresponsible.”

Within the organization, employees assert that both customers and staff encounter obstacles. One anonymous worker cited frequent inaccuracies in the company’s provider directory, where doctors listed as part of the network or taking new patients are often not available, prompting numerous complaints.

UnitedHealthcare contends that maintaining accurate provider directories is a joint responsibility shared between health plans and providers and adds that it regularly verifies provider data. The company states that most inaccuracies stem from outdated information submitted by providers.

Emily Baack, a clinical administrative coordinator at UMR, a UnitedHealthcare subsidiary, lamented the considerable time it can require for a provider to connect with a live representative who can assist with claims or prior authorization queries, with wait times sometimes exceeding an hour.

Despite these issues, Baack noted that similar challenges are prevalent across the entire insurance sector.

Providers often feel pressured to submit non-essential prior authorization requests, fearing delays in claim processing. This, according to Baack, results in a significant backlog of paperwork and delays in patient care.

In response, UnitedHealthcare highlighted that prior authorization serves as a crucial safeguard to ensure members receive coverage for safe and effective care, noting ongoing efforts to simplify and modernize this process, including reducing the number of services requiring prior authorization.

While UnitedHealthcare is not the sole insurer under fire, Thompson’s assassination has significantly magnified the company’s visibility. Following the incident, numerous individuals took to social media to express their frustrations, sharing personal stories of struggles with the insurer.

This widespread anger did not catch many industry veterans off guard. Alicia Graham, co-founder and COO of the startup Claimable, remarked that Thompson’s murder was undeniably tragic but acknowledged the growing discontent expressed in various online health communities over the years.

Claimable is one of several startups attempting to tackle pain points within insurance. Although entering this market is challenging, many of these companies, like Claimable, are leveraging advancements in AI.

Founded in 2024, Claimable assists patients in contesting denials by generating tailored, AI-driven appeal letters on their behalf. While currently focused on cases involving migraines, and certain pediatric and autoimmune diseases, Graham mentioned that its offerings are quickly expanding.

Many patients are unaware of their right to appeal, and those who do often spend an extensive amount of time sifting through records. Claimable allows eligible patients to submit an appeal letter in a matter of minutes for a fee of $39.95 plus shipping.

“Patients are often fearful, frustrated, and confused by the process, so we’ve aimed to simplify it as much as possible,” Graham explained.

However, some experts caution about the potential for a competitive landscape characterized by AI-driven interactions, termed “bot wars,” within healthcare.

Mike Desjadon, the CEO of startup Anomaly, evinced concern about the implications of escalating competition through AI, yet he remains optimistic. Established in 2020, Anomaly employs AI to aid providers in determining what insurers will pay for preemptive care.

“I run a tech company and I want to win for our customers, but as a father, husband, and citizen, I want healthcare to be rational and appropriately compensated,” Desjadon articulated.

Dr. Jeremy Friese, the founder and CEO of Humata Health, noted that the patient experience often only emerges when issues arise, contributing to their dissatisfaction. He identified prior authorization as a complicated process burdening both patients and doctors.

Friese was inspired to launch his company through his previous experience as an interventional radiologist. In 2017, he co-founded a prior authorization company called Verata Health, which was later acquired by the now-defunct Olive. He reclaimed the technology to establish Humata in 2023.

Humata leverages AI to streamline prior authorization for various specialties and payers and has partnered with medium and large health systems, announcing a $25 million funding round in June.

“There is immense pent-up anger and frustration across the healthcare ecosystem,” Friese added.

In 2023, UnitedHealth Group recorded a distressing milestone that negatively impacted its reputation. A cyberattack on its subsidiary, Change Healthcare, affected around 190 million Americans, marking the largest reported healthcare data breach in U.S. history.

Change Healthcare, which provides payment and revenue cycle management solutions, merged with UnitedHealth Group’s Optum unit in 2022, impacting over 100 million patients nationwide.

In February 2024, the ransomware group Blackcat infiltrated a segment of Change Healthcare’s IT systems. Following the discovery of the breach, UnitedHealth Group acted swiftly, isolating and disconnecting affected systems; however, the interruption severely disrupted the healthcare sector.

With the systems offline, payments ceased, crippling revenue streams for thousands of providers across the nation. Some doctors reportedly had to utilize their personal savings to keep their practices operational.

“This was—and continues to be—the largest and most consequential cyberattack against healthcare in history,” stated John Riggi, a cybersecurity and risk advisor at the American Hospital Association.

Ransomware functions as malicious software that restricts victims from accessing their files or networks. Groups such as Blackcat, sometimes operating from countries like Russia and North Korea, employ these techniques, stealing sensitive information and demanding payment for its restitution.

Ransomware incidents in healthcare have surged in recent years, primarily due to the significant value and accessibility of patient data, according to Steve Cagle, CEO of Clearwater, a healthcare cybersecurity firm.

“This has turned into a lucrative venture for them, and sadly, we can expect to see more of this type of activity unless changes are made,” Cagle remarked.

During a Senate hearing in May 2024, Witty disclosed that UnitedHealth Group paid the hackers a ransom of $22 million to safeguard patients’ data.

In March 2024, the company initiated a temporary funding assistance program to support providers experiencing cash flow difficulties.

The program encountered obstacles initially, with feedback from multiple physicians indicating that the initial payments were insufficient to cover accumulating costs.

Ultimately, UnitedHealth Group allocated over $9 billion to providers in 2024, as detailed in the company’s fourth-quarter earnings report in January.

During congressional testimony, Witty mentioned that repayment would only be required once providers confirmed their cash flow had stabilized.

However, nearly a year later, some providers reported they were being pressured to repay their loans immediately, with some institutions facing demands for repayment in the hundreds of thousands of dollars within just a few days.

A Change Healthcare representative verified to Finance Newso in April that the loan recovery process has begun.

They stated, “We are continuing our efforts to work with providers on repayment arrangements and following up with those who have not responded to previous requests.”

The urgency for repayment has drawn further criticism towards UnitedHealth Group on social media, with some providers labeling interactions with the company as “extremely frustrating.”

Despite the restoration of most of Change Healthcare’s services, several products remain in a state characterized as “partial service available,” according to UnitedHealth’s response to the cyberattack.

The combined weight of Witty’s resignation, the company’s alert regarding escalating medical costs, and the fallout from Thompson’s murder alongside the Change Healthcare cyberattack may signal a challenging road ahead for UnitedHealth.

In an effort to restore public confidence, UnitedHealth Group is initiating changes, such as Optum Rx’s recent announcement to eliminate prior authorization requirements for numerous drugs, addressing common frustrations faced by both physicians and patients.

However, experts in the health insurance sector caution that such policy modifications may not fundamentally enhance care delivery for patients. They argue that substantial reforms across the entire insurance industry are necessary, a task that may not rank high on Congress’s list of priorities in its current divided state.

In the upcoming months, the scrutiny on UnitedHealth Group could intensify. The trial for Luigi Mangione, who faces federal stalking and murder charges connected to Thompson’s shooting, is anticipated to be scheduled for December; Mangione has entered a not-guilty plea.