In early April, UnitedHealth Group was being hailed by market analysts as a “tariff safe haven,” largely due to a favorable policy shift. The Trump administration had announced increased payments to Medicare Advantage plans starting in 2026. With UnitedHealth standing as both the country’s largest insurer and the top provider of Medicare Advantage plans, many anticipated that the firm would enjoy significant profits as a result.
However, less than two months later, the company is in a downward spiral. Its rapid decline not only underscores broader issues plaguing the health care sector but also highlights the deep-rooted problems within the Medicare Advantage system itself. Designed with the belief that private insurers could outperform traditional Medicare in both efficiency and cost, Medicare Advantage has instead become a tool for corporate profit. Critics argue that the system leads to higher charges and more frequent care denials than traditional Medicare.
What’s unfolding at UnitedHealth Group now suggests something more serious than just operational missteps. The company may have inflated its earnings through fraudulent billing and mistreatment of patients. Currently, it is facing three separate federal investigations for potential civil and criminal fraud as well as antitrust violations.
A February report in The Wall Street Journal revealed that the Department of Justice is probing whether UnitedHealth forced clinicians to input questionable diagnoses that made Medicare Advantage patients appear sicker than they actually were. This technique, known as “upcoding,” can trigger additional federal reimbursements. UnitedHealth, however, told the Journal that it stands “by the integrity of our Medicare Advantage program.”
Further allegations surfaced in The Guardian, which reported that UnitedHealth had covertly paid nursing homes to delay or prevent transfers of Medicare Advantage patients to hospitals. This tactic saved the insurer money, but in some cases, severely impacted patients. “At least one lived with permanent brain damage following his delayed transfer,” the outlet wrote, citing a confidential log, recordings, and photo documentation.
The Guardian also cited five current and former UnitedHealth employees who alleged that the company “pressed nurse practitioners to persuade Medicare Advantage members to change their ‘code status’ to DNR” — do not resuscitate — a move that made them ineligible for “certain life-saving treatments that might lead to costly hospital stays.” UnitedHealth has denied these allegations.
Adding to its woes, a group of investors filed a lawsuit accusing UnitedHealth of misleading them about its financial health following the death of Brian Thompson, CEO of UnitedHealthcare, the company’s insurance division. UnitedHealth also denied the claims in the lawsuit.
In May, CEO Andrew Witty abruptly resigned, citing “personal reasons,” and the company retracted its earnings forecast for 2025. It attributed this to unexpectedly high costs within its Medicare Advantage segment during the first quarter of the year.
UnitedHealth’s structure is vertically integrated. It not only pays for medical care through UnitedHealthcare but also provides that care via its health services arm, Optum, which owns both physician groups and pharmacies. This integration gives UnitedHealth vast control over which claims get approved, which doctors patients can see, and which medications are prescribed.
Additionally, UnitedHealth reportedly pays its own physician practices and pharmacies much higher rates than it pays independent competitors. A recent Federal Trade Commission (FTC) report highlighted that markups could reach over 7,700%. This leaves independent doctors and pharmacists at a significant disadvantage, forcing many to sell to Optum. This consolidation further cements UnitedHealth’s dominant position in the market and pushes patients into health care deserts as independent services shutter.
Despite ethical concerns, the Medicare Advantage approach has been enormously profitable. Since 2003, UnitedHealth’s annual revenue has grown nearly 15-fold, reaching $372 billion last year. The company also surged 59 places on the Fortune rankings, now sitting in fourth place. Seeing this success, competitors like CVS Health’s Aetna, Elevance Health’s Anthem, and Humana have mimicked its vertically integrated model and Medicare Advantage billing tactics.
Earlier this month, the Department of Justice sued these three rivals. The allegation: they paid brokers hundreds of millions of dollars to steer elderly Americans toward their Medicare Advantage plans while actively avoiding potential enrollees with disabilities. Each of the companies has said it plans to contest the charges.
Many seniors are initially drawn to Medicare Advantage because of its lower out-of-pocket costs and extra benefits like dental and vision coverage. Yet, it’s often only when they need intensive care that the program’s pitfalls — especially the frequency of denied treatments — come to light.
For over 20 years, patients and taxpayers have borne the financial and health-related burdens of the Medicare Advantage system. Only recently have shareholders begun to feel its impact, as UnitedHealth’s dramatic downturn reveals that its size and business model might now be liabilities instead of strengths.
Even though the Trump administration is pushing for higher payments to Medicare Advantage plans next year, the sector is still grappling with the effects of a Biden-era rule aimed at curbing upcoding. At UnitedHealth, things worsened when Medicare Advantage costs unexpectedly ballooned. One reason cited is that patients sought significantly more care in the first quarter of the year — potentially due to a backlog of health needs following the COVID-19 pandemic. Regardless of the cause, UnitedHealth had to shell out more for care both as an insurer covering claims and as a provider handling the delivery of services. As The Wall Street Journal put it, the company was “absorbing the higher cost of delivering that care.”
This brings to light the fundamental flaw of Medicare Advantage. The model prioritizes shareholder gains, often necessitating the denial of care to maintain profits. Moreover, these profits are then funneled into acquiring other entities within the health care system — including the very clinics and pharmacies patients rely on. Employees within these acquisitions may then find themselves compelled to act in ways that serve corporate rather than patient interests.
The situation has alarmed lawmakers across party lines. Democratic Representative Lloyd Doggett of Texas and Republican Representative Greg Murphy of North Carolina have both called for a formal investigation into private Medicare Advantage plans. Representative Pat Ryan of New York wrote to Attorney General Pam Bondi urging her to hold UnitedHealth accountable. In a Senate Judiciary Committee hearing, several senators echoed these concerns and advocated for breaking up large insurance conglomerates like UnitedHealth.
Senator Cory Booker, a Democrat from New Jersey, criticized what he called “a level of corporate violence that is costing American lives, a level of colossal greed at the expense of patient wellbeing.” Republican Senator Josh Hawley of Missouri also weighed in, stating, “Why shouldn’t we be breaking you guys up? This looks like classic monopolist behavior. The patients are getting screwed. … You’re getting rich.”
While all this unfolds, traditional Medicare continues to perform efficiently. It costs Americans about 20% less than private alternatives and outperforms them in most care-related metrics. Ironically, this government-run system, often portrayed as inefficient, has proven to be a more responsible steward of taxpayer dollars than profit-driven executives and shareholders. Yet, traditional Medicare now covers only a minority of Medicare beneficiaries.
It’s time to confront reality. Medicare Advantage, like much of the private insurance system in the U.S., is fundamentally broken. Nothing short of a complete overhaul can restore the health care system to one that prioritizes patients over profits.