UnitedHealth Group
UnitedHealth Group is the largest healthcare provider in the United States, holding over 15.3% of the health insurance market as of 2021. Founded in 1974 as Charter Med Incorporated, it underwent several transformations and restructuring, ultimately rebranding itself to UnitedHealth Group to encompass a diverse range of subsidiary businesses. The organization is primarily divided into two divisions: UnitedHealthcare, which manages health insurance plans for millions domestically and internationally, and Optum, which focuses on healthcare services like medical research, pharmacy care, and technological development in health facilities.
Throughout its history, UnitedHealth Group has been involved in significant acquisitions and expansions, including its notable partnership with AARP and its strategic decision to exit most Affordable Care Act state exchanges in 2016 due to financial losses. However, in 2021, the company announced its re-entry into several state markets, aiming to address the growing demand for affordable healthcare during the COVID-19 pandemic. UnitedHealth Group has faced controversies as well, particularly regarding allegations of overbilling in Medicare, which it has denied, asserting that the claims are based on outdated data. As of 2023, the company continues to expand its services, providing coverage for a substantial portion of Medicare recipients and reporting significant profits.
UnitedHealth Group
Company information
- Date founded: 1974
- Industry: Healthcare
- Corporate headquarters: Minnetonka, MN
- Type: Public
Overview
UnitedHealth Group is the largest healthcare provider in the United States by revenue. By the mid-2020s, it had captured more than 14 percent of the American health insurance market. The organization was founded as Charter Med Incorporated in 1974 and later renamed UnitedHealth Group to reflect its growing brand and several subsidiary businesses.
UnitedHealth Group’s subsidiary businesses each cater to specific parts of the healthcare industry. These subsidiaries are primarily part of two of the company’s divisions: UnitedHealthcare and Optum. UnitedHealthcare and its subsidiaries manage millions of healthcare plans across America and millions more abroad. Optum and its subsidiaries are responsible for medical research, filling prescriptions, and the development of medical facilities and technologies.
UnitedHealth Group has made national headlines on several occasions. In 2016, it announced that it would be leaving most of the state markets created by the Affordable Care Act, legislation intended to reduce the price of health insurance for individuals. UnitedHealth Group explained that it had taken significant losses in these state markets and considered them volatile. However, in 2021, UnitedHealth Group announced an expansion of its services to seven state markets in an attempt to profit from market changes caused by COVID-19.
UnitedHealth Group has had its share of controversies. In 2021, federal regulatory agencies alleged that it had collected far more in risk-averse Medicare payments than any other company. The regulatory agencies were concerned that such a discrepancy was caused by intentional manipulation of data to collect inappropriate payments and maximize profits. UnitedHealth Group denied these allegations, arguing that the findings were based on out-of-date and inaccurate data.
History
UnitedHealth Group was originally founded in 1974 by Richard Taylor Burke as Charter Med Incorporated. At the time, the organization was structured as a privately held company. In 1977, Charter Med Incorporated underwent significant restructuring, emerging as United Healthcare Corporation. Though Charter Med Incorporated continued to exist, United Healthcare Corporation became its parent company.
United Healthcare Corporation launched Diversified Pharmaceutical Services, a pharmacy benefit management subsidiary, in 1988. However, Diversified Pharmaceutical Services did not remain with United Healthcare Corporation and was instead sold to SmithKline Beecham in 1994. That same year, United Healthcare acquired the health insurance company Ramsey-HMO.
Though the company grew through aggressive acquisitions, it did not achieve its first major success until 1997, when United Healthcare Corporation was selected to provide insurance coverage for the AARP (American Association of Retired Persons). That same year, the company significantly expanded its Evercare program, a health management program specifically tailored to provide long-term care to older adult patients in assisted living facilities and nursing homes. Unlike traditional healthcare plans, Evercare offered special coverage for people suffering from chronic illnesses and individuals whose health limited them to the confines of their homes.
Because of its acquisitions, in 1998, United Healthcare Corporation underwent another significant restructuring. It became a subsidiary of the larger UnitedHealth Group, which also managed Uniprise, Ovations, and numerous other healthcare providers. UnitedHealth Group then purchased AmeriChoice and GeoAccess in 2002 and Mid Atlantic Medical Services in 2003. These acquisitions allowed UnitedHealth Group to both expand its services and enter new markets.
UnitedHealth Group continued acquiring health insurance providers across the country. Some of these acquisitions, such as John Deere Health Care Inc., were specialized healthcare services tailored for specific markets. John Deere Health Care was available to John Deere employees. Others, such as Pacificare Health Systems, were larger networks that provided a wide variety of services to patients. In 2011, UnitedHealth Group created Optum, a brand dedicated specifically to healthcare services. Other more specialized variants of Optum were later created by UnitedHealth Group, such as Optum Rx and Optum Bank.
In 2016, UnitedHealth Group announced that it planned to exit most of the Affordable Care Act state exchanges. At the time, UnitedHealth Group was the largest health insurer in the United States, so the announcement generated significant media attention. Stephen Hemsley, CEO of UnitedHealth Group, noted that the exchanges were too small and risky to be profitable. Hemsley also stated that at the time of his remarks, UnitedHealth Group had lost roughly $475 million in Affordable Care Act exchanges in the previous year and was on track to lose roughly $500 million that year. Though the company planned to pull out from the state market exchanges, Hemsley noted that UnitedHealth Group would continue to advocate for new and sustainable approaches that better served the people who rely on the national healthcare market.
At the time, experts noted that UnitedHealth Group’s departure from the Affordable Care Act would likely result in increased premiums for healthcare purchasers and additional scrutiny of the Affordable Care Act legislation, which was intended to reduce healthcare costs for Americans. However, when asked for a comment, representatives from UnitedHealth Group noted that the health insurance industry was growing, and such programs were clearly desired by consumers. Because of this, representatives from UnitedHealth Group recommended that observers not judge the success of the marketplaces created by the Affordable Care Act on the actions of a single business but rather on how it benefited Americans.
Following its announcement that it would soon exit state marketplaces, UnitedHealth Group announced its plans to acquire several other companies, increasing its share of the health insurance marketplace. In 2017, the company acquired Rally Health, with which it had previously been involved as an investor. It later acquired both DaVita Medical Group and Equian.
In 2020 and 2021, the COVID-19 pandemic placed significant new strains on the US healthcare system. New data showed that these pressing circumstances increased the number of Americans who were unable to afford their rising healthcare premiums. These difficulties caused more people to participate in the state markets created by the Affordable Care Act. To capitalize on these increasingly profitable markets, UnitedHealth Group announced that it would reconsider its plans to leave most state markets. In 2021, the company announced that it would expand its health insurance products into seven new states. UnitedHealth Group planned to sell insurance for both individuals and families in these markets, which included Florida, Georgia, Michigan, Texas, Illinois, Alabama, and Louisiana. The new policies went into effect in 2022, and UnitedHealth Group hoped that this venture into the state markets would be more profitable than its last. In 2023, UnitedHealth Group announced it was further expanding its services to provide coverage for 95 percent of Medicare recipients in the United States, securing its position as the nation’s leading Medicare provider. UnitedHealth Group continued its pattern of strong growth in 2023, with the company reporting $5.6 billion in profits in the first quarter of the year.
In 2024, the UnitedHealth subsidiary called Change Healthcare experienced a cyberattack that disrupted insurance payments and compromised the personal information of millions of people. On December 4, 2024, Brian Thompson, the CEO of UnitedHealth's insurance division, was shot and killed in New York City. This incident brought significant attention to the company and the broader health insurance industry. Tim Noel, a company veteran, was appointed as the new CEO of UnitedHealthcare in January 2025. Also in early 2025, the Justice Department and attorneys general from four states filed a lawsuit to block UnitedHealth's $3.3 billion acquisition of Amedisys, arguing that the merger would reduce competition in the home health and hospice care markets.
Impact
UnitedHealth Group is divided into two brands, with each providing different services to the marketplace. UnitedHealthcare directly provides health insurance plans to consumers. It is subdivided into four businesses: UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement, UnitedHealthcare Community & State, and UnitedHealthcare Global. UnitedHealthcare Employer & Individual manages health benefit plans for more than 29 million Americans. UnitedHealthcare Medicare & Retirement manages health benefits for more than 13.8 million older adults, specializing in individuals who qualify for Medicare. UnitedHealthcare Community & State manages benefit plans for nearly 7.7 million economically disadvantaged and medically underserved Americans. UnitedHealthcare Global manages benefit plans for 8 million people across 130 countries outside America. In the mid-2020s, UnitedHealthcare controlled more than 14 percent of the American health insurance market, making it the country’s largest health insurance network.
Optum, the second brand under the UnitedHealth Group banner, uses modern technology to directly address healthcare problems. Like UnitedHealthcare, Optum is divided into several smaller companies: Optum Health, Optum Insight, and Optum Rx. Optum Health includes the facilities and medical practices where patients receive medical care, including primary, specialty, urgent, and surgical care. Optum Health facilities and practices provide care for more than 100 million consumers. Optum Insight is responsible for utilizing research, data, and analytics to provide services to hospitals, governments, and medical research facilities. Optum Rx manages pharmacy care services and drugs for over 62 million consumers and fills more than 1.5 billion prescriptions annually.
UnitedHealth Group was investigated in the early and mid-2020s for its interactions with Medicare. According to federal agencies, the company collected significantly more risk-averse payments than any other Medicare health insurer in 2017. The federal government alleged that this discrepancy may be based on questionable billing practices. These practices manipulate the risk assessment system associated with Medicare Advantage health plans to boost Medicare payments to the company. In response, representatives from UnitedHealth Group stated that such reports were based on old data, alleging that the reports were both inaccurate and misleading.
The company experienced several lawsuits in the mid-2020s. Optum Rx agreed to pay $20 million to the Department of Justice after allegations of filling illicit opioid prescriptions. UnitedHealth agreed to pay $69 million to settle a class-action lawsuit alleging it mismanaged its 401(k) plan by keeping underperforming Wells Fargo target-date funds, which reportedly cost employees millions in potential earnings. In January 2025, UnitedHealthcare settled a class-action lawsuit over the Telephone Consumer Protection Act violations between 2015 and 2019 for $2.5 million.
Bibliography
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