JumpCrisscross is saying ignore the 80/20 rule for the insurance side. If you look at UHC's overall parent company profits - the profits after they've calculated in the profit from the supplier side like pharmacy benefit company, pharmacy, doctors, et al - it is 22% gross, 4% net.
In other words the double-dealing only got them 4% net profit.
For my part I think a lot of the extra money is disappearing into administration. Every doctor's office of any size employs extra staff just to deal with insurance company nonsense. Insurance companies employ extra staff to deny claims and fight providers. That extra staff justifies more layers of middle management. This repeats across all specialists and disciplines. Your radiology company? Extra staff to deal with insurance. Lots of people employed to shuffle papers and manage workers.
Also, other comments praise Kaiser for being more consolidated. Is your argument care at Kaiser is much worse?
You have a solid hypothesis. The cross ownership exists. But the hypothesised effect—margin expansion—isn’t observed. The best we can say is they tried to juice margins but failed to, which is neither here nor there, and pins administrative incompetence—not greed—as the culprit.
Kaiser works well for people willing to fight their doctors to get the care they want.
United works well for people willing to fight their insurance billing department. It also works for people planning to hit their maximum annual out of pocket limit.
Yes, and that's the subsidiary that has the 80/20 expenses rule.
UHC ensures as much of the 80% paid for "patient care" winds up in their other subsidiaries that don't have a profit cap.
> But it seems like the problem is at the level of PBMs and providers more than insurers.
UHC is both the insurer and the PBM, and they're buying up all the providers they can get their hands on.