If there was ever any dispute that the U.S. government has become the biggest and most reliable cash cow for America’s for-profit health insurers, UnitedHealth Group’s first-quarter 2022 earnings report put that dispute to rest.
Over the past 10 years, United, America’s biggest health insurer, has seen its profits more than triple as the number of its private-paying customers actually shrank.
United last week reported making $7 billion in profits during the first three months of this year. That’s three times more than the $2.3 billion it made during the same period a decade ago. But during those 10 years, the company saw its commercial health plan enrollment decline by 35,000–from 26,445,000 to 26,410,000.
Here’s another way of looking at this: More than 100% of United’s U.S. health plan membership growth since 2012 has come from the taxpayer-financed Medicare and Medicaid programs.
To be sure, United’s commercial health insurance business continues to be quite profitable, thanks to constant increases in premiums and out-of-pocket requirements. People enrolled in United’s commercial plans not only are paying far more for their coverage today than they did ten years ago, but they are also having to spend far more out of their own pockets before United will pay any of their medical bills.
As a result of those relentless premium hikes, United reported taking in $37 billion more in commercial health plan revenues in the first quarter of this year than the same quarter in 2012 ($62.6 billion vs. $25.5 billion) while paying the claims of 35,000 fewer customers.
American health insurers’ revenues and profits have increasingly come from the government since the passage of the Medicare Modernization Act during the George W. Bush administration, a bill that opened the floodgates of taxpayer dollars into insurers’ bank accounts.
As a consequence, by 2012–just nine years after that bill became law–54% of United’s health plan revenues were already coming from taxpayers. By the end of the first quarter of this year, however, 71.2% of the company’s health plan revenues came from Uncle Sam.
On March 31, 2012, 2.5 million Americans were enrolled in United’s Medicare Advantage plans, which it co-brands with AARP. That number had grown to 6.9 million at the end of this year’s first quarter.
United is not only the biggest player by far in the Medicare Advantage business, but it also manages several states’ Medicaid programs. Enrollment in United’s Medicaid managed care plans increased from 3.8 million in the first quarter of 2012 to 7.8 million last quarter.
Had it not been for that spectacular growth in government programs, United would actually be a smaller company today in terms of health plan enrollment than it was in 2012.
Perhaps the most spectacular growth, however, is occurring in United’s Optum division, which has become one of the country’s largest health care providers. Optum’s many acquisitions over the years have made it the nation’s biggest employer of physicians in the U.S.–over 50,000 at last count–and the operator of the third-largest pharmacy benefit management company.
While United’s health insurance division’s first-quarter revenues more than doubled between 2012 and 2022 –from $25.5 billion to $62.6 billion–Optum’s revenues increased more than sixfold, from $7.3 billion to $43.3 billion. Optum’s profit margins are also now consistently higher than the health plan division’s margins.
United’s executives were so pleased with the company’s first-quarter numbers that they told shareholders and Wall Street financial analysts they expect to make more profits this year than they had originally expected.
