Dr. Oz Discusses Medicare and Medicaid
“Special interests push the misleading story points to stop the most ambitious healthcare reforms of all time,” remarked Dr. Mehmet Oz, the Administrator for the Center for Medicare and Medicaid Services.
In recent news, UnitedHealthcare announced it will be dropping some of its Medicare Advantage Plans that collectively serve about 600,000 individuals. Owned by UnitedHealth Group, the company stands as the largest Medicare Advantage provider in the U.S., covering more than 8 million people. They’ve been feeling pressure lately due to higher healthcare utilization and shifts in interest rates affecting businesses.
Which Medicare Advantage Plans is UnitedHealthcare Dropping?
During a revenue call last week, Tim Noel, CEO of the health insurance division, confirmed that UnitedHealthcare is phasing out plans that cover 600,000 members. The plans mostly affected are those that older adults typically have more access to regarding healthcare providers.
Noel commented that Medicare Advantage enrollees are increasingly utilizing doctor visits, tests, and emergency services, which he noted “contributes to rising outpatient spending.” He also mentioned, “We’ve made a significant adjustment to profits in light of the ongoing cost trends and the need to support margin recovery.”
Understanding the Medicare Advantage Plan
In terms of big picture, Medicare is primarily aimed at individuals over 65, providing a government health insurance program. Standard Medicare includes hospital care and medical insurance for expenses incurred after a deductible. For prescription drug coverage, beneficiaries can enroll in another Medicare drug plan.
There’s also the option of Medicare Advantage, which is a private health insurance plan authorized by Medicare. This plan encompasses hospital care, medical services, and usually standard prescription drugs, plus additional benefits that standard Medicare doesn’t cover.
As of 2024, 54% of eligible Medicare beneficiaries (about 32.8 million out of 61.2 million) are enrolled in Medicare Advantage, a significant increase from 19% back in 2007. Notably, the Congressional Budget Office anticipates that by 2034, 64% of Medicare participants will likely choose a Medicare Advantage plan.
Federal Investigations Impacting UnitedHealth
The decision to eliminate certain plans comes amid a federal civil fraud investigation into UnitedHealth’s practices regarding the diagnosis recording that could lead to increased Medicare Advantage payments. The Wall Street Journal reports that scrutiny is focused on the utilization of physicians and nurses in a way that could enhance federal reimbursements.
In a recent filing, UnitedHealth stated that it’s “fully confident in its practices” and is committed to cooperating with the ongoing investigation.
UnitedHealth’s Stature in the Industry
UnitedHealth Group Inc. is one of the largest health insurance and pharmacy benefit management firms in the country, additionally managing the growing Optum business which supports care and technology services.
The company reported revenues exceeding $400 billion last year, placing it as the third-largest organization on the Fortune 500 list. However, shares have seen a decline since December. The tragic shooting of Brian Thompson, CEO of UnitedHealthcare, earlier this year has added tumult to the company’s situation. Thompson was shot while on his way to an Investors Conference; the suspect has been indicted.
In April, UnitedHealth faced additional stock drops after cutting forecasts due to increased healthcare usage. Following a month later, former CEO Andrew Witty’s resignation came alongside a complete retraction of forecasts.
As of August 6th, shares had dropped over 5% to $245.78.
