We previously wondered whether the tawdry leadership exemplified by this backdated stock option scandal had lead to UnitedHealth's reputation for patient-, employer-, or physician-unfriendliness. For example,
- as reported by the Hartford Courant, "UnitedHealth Group Inc., the largest U.S. health insurer, will refund $50 million to small businesses that New York state officials said were overcharged in 2006."
- UnitedHalth promised its investors it would continue to raise premiums, even if that priced increasing numbers of people out of its policies (see post here);
- UnitedHealth's acquisition of Pacificare in California allegedly lead to a "meltdown" of its claims paying mechanisms (see post here);
- UnitedHealth's acquisition of Sierra Health Services allegedly gave it a monopoly in Utah, while the company allegedly was transferring much of its revenue out of the state of Rhode Island, rather than using it to pay claims (see post here)
- UnitedHealth frequently violated Nebraska insurance laws (see post here);
- UnitedHealth settled charges that its Ingenix subsidiaries manipulation of data lead to underpaying patients who received out-of-network care (see post here).
One would think that such a reputation would decrease the company's influence on health policy. However, last week, Business Week reported that UnitedHealth has developed a powerful voice on health care reform in the US.
As the health reform fight shifts this month from a vacationing Washington to congressional districts and local airwaves around the country, much more of the battle than most people realize is already over. The likely victors are insurance giants such as UnitedHealth Group (UNH), Aetna (AET), and WellPoint (WLP). The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable.
The industry has already accomplished its main goal of at least curbing, and maybe blocking altogether, any new publicly administered insurance program that could grab market share from the corporations that dominate the business. UnitedHealth has distinguished itself by more deftly and aggressively feeding sophisticated pricing and actuarial data to information-starved congressional staff members. With its rivals, the carrier has also achieved a secondary aim of constraining the new benefits that will become available to tens of millions of people who are currently uninsured. That will make the new customers more lucrative to the industry.
UnitedHealth has managed to cozy up to many pivotal congresspeople, like Representative Jim Matheson.
Impressing fiscally conservative Democrats like [Jim] Matheson, a leader of the House of Representatives' Blue Dog Coalition, is at the heart of UnitedHealth's strategy. It boils down to ensuring that whatever overhaul Congress passes this year will help rather than hurt huge insurance companies.Also, Representative Mike Ross,
Matheson, whose Blue Dogs command 52 votes in the House, can't offer enough praise for UnitedHealth, the largest company of its kind. 'The tried and true message of their advocacy,' he says, 'is making sure the information they provide is accurate and considered.'
an Arkansas Democrat who leads the Blue Dogs' negotiations on health reform, also welcomes input from UnitedHealth. 'If United has something to offer on cutting costs, we should consider it,' says Ross, a former small-town pharmacy owner. 'We need more examples that work, and everything should be on the table.'Not to mention Senator Mark R Warner (D- Virginia),
UnitedHealth's relationship with Democratic Senator Mark R. Warner of Virginia illustrates the industry's subtle role. Elected last fall, Warner, a former governor of his state and a wealthy ex-businessman, received a choice assignment as the Senate Democrats' liaison to business. The rookie senator landed in the center of a high-visibility political drama—and in a position to earn the gratitude of a health insurance industry that has donated more than $19 million to federal candidates since 2007, 56% of which has gone to Democrats.
UnitedHealth has periodically served as a valuable extension of Warner's office, providing research and analysis to support his initiatives. Corporations and trade groups play this role in all kinds of contexts, but few do it with the effectiveness of the insurers. In June, Warner introduced legislation expanding government-backed Medicare and Medicaid coverage for hospice stays for the terminally ill and other treatment in life's final stages. The issue isn't a top UnitedHealth priority. But the corporation wanted to help Warner with his argument that in the long run, better hospice coverage would save money. UnitedHealth prepared a report for lawmakers finding that 27% of Medicare's budget is now spent during the last year of older patients' lives, often on questionable hospital tests and procedures. Expanded hospice coverage and other services could save $18 billion over 10 years, UnitedHealth asserted.
When Warner went to the Senate floor on June 15 to offer his bill, he cited those exact figures. He thanked the company for its support and put a letter from UnitedHealth applauding him in the Congressional Record.
Warner acknowledges in an interview that he worked on the hospice-care legislation with UnitedHealth executives. But he stresses that he has long experience with health issues and has formed his own views. The senator echoes UnitedHealth's contention that a so-called public option could be a 'Trojan horse for a single-payer system,' meaning government-run medical care. Warner has heard from some of UnitedHealth's largest employer clients, such as Delta Air Lines (SWY). Delta CEO Richard H. Anderson, a former UnitedHealth executive, has told Warner and other lawmakers that big companies don't want government to limit their flexibility in crafting employee health benefits.
Despite the fact that UnitedHealth subsidiary Ingenix just settled lawsuits alleging it had manipulated data, legislative leaders have come to rely on data it produced,
Warner and other opponents of a public plan have relied on an estimate by John Sheils, an actuary who says that 88 million people, or 56% of those with employer-provided coverage, would desert private insurance for a government-run program. That would destabilize the marketplace and potentially kill the private insurance industry, according to Sheils, who works for the Lewin Group, a corporate consulting firm in Falls Church, Va.
UnitedHealth lobbyists routinely cite Lewin's work, as do Senator Orrin G. Hatch (R-Utah), the second-ranking Republican on the Senate Finance Committee, and Eric Cantor (R-Va.), the House Republican Whip. Left out of these testimonials or buried in the fine print is that a UnitedHealth unit owns the Lewin Group and thus is ultimately responsible for Sheils' paycheck. In an interview, Sheils says UnitedHealth gives him and the Lewin firm complete independence: "We call it like we see it," he adds.
Why UnitedHealth wields such influence despite the numerous questions raised above about its leadership and ethics remains a mystery.
However, the clout of UnitedHealth and other large health care organizations with questionable leadership and ethics over US health care policy certainly explains why almost nobody talks about restraining concentration and abuse of power, or improving health care organizations' leadership and governance as parts of health care reform.
However, on Health Care Renewal, we have shown numerous examples of unrepresentative, unaccountable, opaque and ethically unconstrained governance of health care organizations. Such governance enables ill-informed, incompetent, conflicted, or even corrupt leadership. Such leadership may use tactics including deception, dishonesty and disinformation; intimidation and coercion; creation of perverse incentives; development of conflicts of interest; and outright fraud and corruption. We believe these are major causes of increasing costs, worsening access, declining quality, and demoralized health care professionals. (See our archives for numerous examples.)
As long as the foxes advise and influence the hen house guards, the likelihood of health care reform that will actually improve health and health care remains low.