UnitedHealth Group Haunts Obamacare

October 31st, 2013 by Phil Mattera

unitedhealth_100121_mnKathleen Sebelius’s “hold me accountable” line at the latest House hearing on the botched rollout of Healthcare.gov was a deft political move. It flummoxed Republican interrogators who expected the HHS Secretary to pass the buck.

Yet the line was dismaying in that it continued the Obama Administration’s practice of deflecting most criticism away from the contractors that were responsible for building the portal, at a cost of hundreds of millions of dollars.

Not only have the contractors been shielded, but one of those at the center of the debacle was just chosen to head up the rescue of the project. In the world of government outsourcing, failure is no impediment to getting rehired with even more responsibility.

The anointed company is QSSI, previously an obscure player in the world of healthcare IT. What makes the kid-glove treatment of this firm all the more galling is that QSSI is owned by UnitedHealth Group, also the parent of UnitedHealthcare, one of the two behemoths (the other is WellPoint) of the private health insurance industry.

In other words, one of the large corporations that the Affordable Care Act is propping up (despite their abysmal record) is now profiting from cleaning up the mess that one of its unit caused in trying to create a system designed to help people enroll in plans sold by its own parent company and its competitors.

If this were not bizarre enough, it is worth recalling that this is not the first time a UnitedHealth subsidiary has been involved in a scandal involving a healthcare database. In 2008 the company’s Ingenix unit was the target of allegations that its tool for determining how much patients should be reimbursed for out-of-network medical expenses was seriously flawed. Then-New York Attorney General Andrew Cuomo brought suit against UnitedHealth, calling the widely used Ingenix database part of a scheme to “to deceive and defraud consumers.”

In 2009 UnitedHealth settled with Cuomo by agreeing to spend $50 million to build a new database and then agreed to pay $350 million to settle class action lawsuits that had brought over the issue. Ingenix subsequently changed its name to Optuminsight, which by the way is now the parent of QSSI.

Another UnitedHealth subsidiary, Lewin Group, has generated controversy of another sort: presenting itself as an impartial healthcare consulting company when it is part of a corporation with a big vested interest in the policy options Lewin evaluates. During the Congressional deliberations over healthcare reform in 2009 Lewin produced analyses concluding that the adoption of a public option would result in a mass exodus from private plans and jeopardize their future. A Lewin executive made the alarmist statement that the private insurance industry “might just fizzle out altogether” and helped to sway lawmakers to omit the option from the Affordable Care Act. Like QSSI, the Lewin Group is a unit of Optuminsight.

UnitedHealth is also tied to what is emerging as the new focus of anti-Obamacare rage: reports that insurance companies are cancelling large numbers of policies. This is being portrayed as a betrayal of Obama’s earlier promise that people with coverage would be able to keep it. Yet what is really going on is that insurers are complying with provisions of the ACA that bar them from continuing to sell substandard policies.

Those policies—with huge deductibles and big holes in coverage—were sold not only by fly-by-night companies. Aetna, for example, was pushing these bare-bones plans as early as 1999. UnitedHealth Group made a big push into this market in 2003 when it acquired Golden Rule Financial, which specialized in low-cost individual plans, for $500 million. The spread of such policies was one of the main justifications for healthcare reform.

The repeated appearances of UnitedHealth subsidiaries amid the tribulations of the ACA are reminders that the Obama Administration made a Faustian bargain with the private sector in designing healthcare reform. The question now is whether it can reclaim its soul.

Note: This piece draws from my new Corporate Rap Sheet on UnitedHealth Group, which can be found here.

Leave a Reply

You must be logged in to post a comment.