IT'S JUST SPIN: UnitedHealth Group touts out-of-pocket savings that patients will never see.

Only 1.3% of UnitedHealth policy holders *might* benefit from the company's decision.

I wrote Friday about UnitedHealth Group’s record-breaking $7 billion in profits during the second quarter while 14-year-old Ava Hope is pleading on GoFundMe for a few thousand dollars to cover the out-of-pockets United insists she must pay before getting the care that could save her life.

When I wrote that, I hadn’t yet seen United’s other announcement on Friday, that starting next year it will waive out-of-pockets for certain insulins and other medications for people enrolled in United’s health plans. 

Judging by the stories it generated in major publications, the company got a huge return on its negligible investment in that press release. 

It led to headlines like this one in Modern Healthcare:

 UnitedHealthcare to set $0 copay for insulin, other medications 

And this one in Axios:

UnitedHealthcare to cut co-pays for insulin

And this one in the Wall Street Journal:

UnitedHealth to drop copays on some widely used drugs

But you had to read–and understand–the details of United’s announcement to figure out that only a tiny fraction of the people enrolled in United’s health plans will likely benefit. 

The first hint that you should take the company’s announcement with more than a grain of salt was the company’s own headline: UnitedHealthcare To Eliminate Out-of-Pocket Costs on Several Prescription Drugs, Including Insulin, for Eligible Members.

The term “eligible members” is key here. The new policy applies only to people enrolled in United’s” fully insured group plans.” So let’s do the math to see how many “eligible members” there really are. 

United reported that 51.2 million people were enrolled in its health plans globally as of June 30. Of that total, only 8 million are in “risk-based” health plans in the United States. That means that just 8.6% of United’s health plan members could potentially benefit from the company’s change of heart. 

But wait: United said the new policy applies only to people in its fully insured group plans. That would eliminate people who bought their coverage on their own, including those who have coverage through the Affordable Care Act’s (Obamacare’s) marketplace plans. And it excludes the 18.5 million people enrolled in fee-based (self-insured group) plans (although the company said it would “encourage” its self-insured customers to follow suit). 

Not Nearly As Big A Deal As United Would Like Us To Believe

In its press release, United didn’t say how many people would be eligible, so Modern Healthcare inquired.

United had to acknowledge that just 688,000 people might benefit. In other words, a maximum of 1.3% of United’s total membership. 

It actually could be even less than that. 

The company said that starting in 2023, “there will be no copay, $0 out-of-pocket for several critical medicines on our preferred drug list for UnitedHealthcare’s fully insured members.” In that sentence, the word “preferred” is especially important.

If a member needs a type of insulin that is not on United’s proprietary “preferred” list (a.k.a. formulary), that member presumably would still have a copay or other out-of-pocket expense. And which drugs are included on insurers’ preferred list depends to a large extent on the kickbacks (a.k.a. “considerations” or rebates) drug companies pay insurers to get their drugs on that list.

United’s Execs Know Unaffordable OOPs Are Not Cost-Effective

It is clear that some United executives understand that out-of-pocket requirements are counterproductive in many if not most cases. That’s because many people don’t take their medications because they can’t afford their out-of-pockets. And that puts them at risk of getting sicker and needing more expensive care down the road. 

This is what Heather Cianfrocco, CEO of Optum Rx, United’s PBM, told investors Friday: 

If they don’t get the meds when they need them, they’re going to end up in the emergency room or worse. And that brings with enormous personal human consequences and, of course, cost. And so we believe this is a really important place for us to lean in and to address that. 

Shareholders are King

It’s great to hear that United plans to lean in and address that. They certainly can afford to. Because of the small scope of United’s planned “lean in,” the new policy will cost the company just a few million dollars at most. It appears that company executives are more interested in providing short-term financial gains to shareholders than affordable life-saving medications to its health plan members. 

Here’s a clue. In its earnings press release, United said that:

The company returned $4 billion to shareholders in the second quarter through dividends and share repurchases and increased the dividend by 14% in June 2022. (Translation: Over just three months, United used $4 billion of what its customers paid in premiums and fees to buy back its own shares on the New York Stock Exchange, which benefits no one other than the company's executives and shareholders.)

And as Cianfrocco made a point of stressing to those shareholders Friday, Optum Rx is a fast-growing and very profitable part of the company. She noted that:

In scripts volume [357 million in 2Q 2022, compared to 342 million in 2Q 2021], we see strong utilization and also we’re seeing that in the earnings [profit] growth.

Indeed, Optum is contributing far more to United’s earnings now than 10 years ago. Optum’s revenues for 2Q 2022 totaled $45.1 billion, more than six times the $7.3 billion in 2Q 2012. 

The division is also converting much more of what it collects in revenues into profits. Optum’s $3.3 billion in earnings in 2Q 2022 was more than 10 times the $320 million it made in the same quarter a decade ago. 

Both Optum and United’s health plan division reported year-over-year double-digit growth in revenue and profits. But Optum is growing much faster than the health plan division and has a significantly higher operating profit margin, 7.3%, compared to the health plan division’s 6.2%.

Regarding membership, United reported Friday that 325,000 more people were enrolled in its U.S. health plans in 2Q 2022 than in the same quarter last year. Almost all of that growth, however, was in its Medicare Advantage plans and the Medicaid programs it manages for several states. In fact, over the past 10 years, more than 95% of United’s enrollment growth has been in those government programs. 

Between 2012 and 2022, the company added almost 10 million people in its Medicare Advantage and Medicaid plans but just 70,000 in its commercial plans, which includes those “fully insured group plans” mentioned earlier. 

Speaking of pharmacy, United executives said its Optum division now employs more than 7,000 of its own pharmacists at its many “fast-growing” pharmacies. That means that UnitedHealth is capturing more and more of what Americans spend on prescription drugs through its huge PBM (Optum Rx) and the pharmacies and other facilities it now owns.

Bottom line: The money 1.3% of United’s health plan members might save in out-of-pockets on insulin and a few other medications likely won’t amount to a rounding error for this enormous company. But that carefully written (and I would argue misleading) press release undoubtedly bought the company a heap of goodwill, especially on Capitol Hill.

 I bet the company’s lobbyists wasted no time emailing if not hand-delivering that press release to every member of Congress. You can be sure United and other insurers want lawmakers to believe the industry will do the right thing without legislation to lower out-of-pockets. Don’t be fooled. They won’t. 

P.S.: Speaking of influencing lawmakers on out-of-pockets, Optum Rx is sponsoring the Washington Post’s The Health 202 today. With $7 billion in profits in just three months, they can afford it.