(Credit: Go Army)

Pentagon officials circulated a memo to military leaders on Thursday blaming delays to military families’ health care referrals on UnitedHealth Group, the nation’s largest private insurance provider. The delays led the Defense Department to take the unusual step of granting temporary waivers “so the plan’s members in the western region could get specialty care without UnitedHealth’s authorization and not incur penalties.”

In April, UnitedHealth took over a contract that serves beneficiaries enrolled in the Tricare Prime program in the western United States. Tricare ensures that nearly 10 million active duty personnel, retirees, reservists and their families have access to health benefits; the Tricare Prime program itself is a subset of that entitlement, pairing beneficiaries with “a primary-care manager responsible for referring patients to specialists for necessary services.”

However, those specialist referrals are contingent on the insurance provider’s — in this case, UnitedHealth’s — approval. The trouble is, the insurer has been falling behind in approving those referrals, leaving many military families in limbo while waiting for their care. And while UnitedHealth spokespeople claim they were simply overwhelmed by an unexpected number of referral requests, others argue that they were aware that this exact problem would arise, and should have been prepared to deal with it:

The delays are occurring because UnitedHealth has received requests for referrals and care authorizations that “far exceeded the norms” since it took over the contract, said Bruce Jasurda, a spokesman for the company.

“The increased volume was driven largely by people asking whether previously authorized referrals and authorizations were still valid, resulting in large numbers of duplicate referrals in the system,” Jasurda said in a phone interview. The company “understands the issues we need to improve on, and we are taking aggressive action.” [...]

U.S. Representative Doug Lamborn, a Colorado Republican, said in a letter to Defense Secretary Chuck Hagel yesterday that health-care providers in his state are facing “unexpected and dramatic reductions in their workload” because of the backlog in referrals. He also blamed UnitedHealth.

“They claimed to be aware of the problem and doing what was necessary to get on top of the problem,” Lamborn said in a phone interview. “There seemed to be a disconnect from the reality on the ground.”

Specialty care encompasses a broad swath of medical services, ranging from urgent care surgical procedures to treating autoimmune disorders — so UnitedHealth’s delays were, in essence, preventing military families from getting anything other than primary and preventative care until Thursday’s Pentagon waiver was issued. That’s especially problematic considering that many military families’ health needs fall outside the realm of primary care.

And when it comes to Tricare, specifically, beneficiaries certainly don’t need additional hassles from insurance companies. The program’s outsized spending on retiree — as opposed to active — enrollees’ benefits has led Pentagon officials to call for raising veterans’ out-of-pocket health costs. So far, Congress has found such a proposal too politically unpalatable to adopt — but given the reality of the numbers, their resistance may not last much longer.

California Insurance Commissioner Dave Jones on Wednesday slammed UnitedHealth Group — the nation’s largest private insurance company — over its decision to cut benefits and raise premiums for health plans used by close to 5,000 California small businesses. The combination of cuts and hikes would amount to a nearly eight percent rate hike for small business owners and their employees.

“At a time when small businesses are struggling to survive, UnitedHealthcare’s rate increase is just one more unwarranted economic burden on California’s small business owners and their employees,” said Jones. He estimated that close to 45,000 small business employees could be affected by the hikes.

Jones’ comments were quickly dismissed by UnitedHealth, as a spokesman argued that the annual increase would merely be two percent for customers. But that two percent figure likely only take into account the requested premium rate hike, not the cuts to benefits provided on relevant health plans. Previous, seemingly-arbitrary rate hikes by UnitedHealth and other insurers have led Jones to become a vocal advocate for greater insurance commission authority on the issue, and he has been pushing for the passage of a 2014 popular referendum that would “grant state officials the power to reject unreasonable rate increases for health coverage.”

This certainly isn’t the first time that UnitedHealth has engaged in profit-seeking behavior at the expense of government and employer health expenditures and workers’ benefits. The company recently complained that it wasn’t receiving enough government money despite massive profits and favorable Medicare reimbursement rates, and is one of several companies using Obamacare as a scapegoat for its extravagant rate increases.

In fact, arbitrary rate increases were par-for-the-course long before Obamacare’s passage, and the reform law actually contains protections against sticker shock and fallback measures for Americans who cannot afford private insurance coverage. But given UnitedHealth’s and other insurers’ quests for ever-increasing profits, many state insurance commissioners are looking to more closely scrutinize rate requests to see if they are reasonable.

By all appearances, UnitedHealth Group is having a stellar year. The mammoth company, which is the largest health insurer in America and the biggest manager of private Medicare Advantage plans, announced on Thursday that despite a 14 percent decline in earnings, it had still made a profit of $2.1 billion — and that was just in the last fiscal quarter. UnitedHealth also won a major policy victory at the beginning of this month when the Obama Administration reversed course on its plan to cut reimbursements to Medicare Advantage plan providers by two percent. In fact, the Administration went the entirely opposite direction and announce it would raise these rates by 3.3 percent — a swing of 5.3 percent in UnitedHealth’s favor. Apparently, that isn’t enough for the insurance company. UnitedHealth is now threatening to reduce its involvement in managing Medicare plans, claiming that its government reimbursements are still too low.

“We did not expect the fastest growing, most popular and most effective Medicare benefit option serving America’s seniors to be underfunded to this extent in 2014,” UnitedHealth Group CEO Stephen Hemsley said on a conference call with investment analysts. He went on to clarify that the company will likely have to pull out of the Medicare market as it “reshape[s] Medicare networks and benefits to respond to the continuing underfunding of this [Medicare Advantage] program.” But Hemsley’s claims conflict with the company’s own earnings report, as well as the questionable performance of private insurance plans that service Medicare beneficiaries.

Conservatives often claim that having private insurers, rather than a public entity, manage programs like Medicare helps cut costs and make care more efficient. That’s why they have held up programs like Medicare Advantage and used it as a model for dismantling traditional Medicare to turn the public entitlement into a private insurance voucher. But as numerous studies and government reports have shown, private insurers game the Medicare Advantage program as much as they can by encouraging seniors to cherry-pick their health plans relative to their health. That allows companies like UnitedHealth to pay out less in benefits by offering healthier seniors alluring rates — but it raises prices for everybody in the traditional Medicare program by siphoning off less costly beneficiaries. And yet, Medicare Advantage still consistently comes in over-budget while regular Medicare manages to save money. Profit-motivated announcements like UnitedHealth Group’s today help explain why that is.

Obamacare contains cuts to these excess payments to private providers, consequently preserving the more generous and efficient traditional Medicare program. While those cuts are likely the source of Hemsley’s ire, he shouldn’t fret too much. Since Obamacare’s began being implemented, enrollment in Medicare Advantage has actually gone up, while seniors’ premiums have gone down.

UnitedHealthcare — one of the nation’s largest health insurers — has announced that it will preserve a provision of the health care law that allows young adults to stay on their family health care plans up to age 26, even if the high court rules the law unconstitutional later this month.

The measure is one of several so-called “Patients’ Bill of Rights” included in the law that UnitedHealthcare will keep in place. The company will also continue offering preventive health care services without out-of-pocket costs and end lifetime limits on insurance payouts:

“The protections we are voluntarily extending are good for people’s health, promote broader access to quality care and contribute to helping control rising health care costs,” Stephen J. Hemsley, president and chief executive of UnitedHealth Group, said in a statement. “These provisions are compatible with our mission and continue our operating practices.” [...]

A spokesman at UnitedHealthcare said officials chose to announce their intentions now because “people in this uncertain time are worried about what might happen to their coverage and we think the time is right to let people know that these provisions will continue and they can count on us.”

The announcement applies to the roughly 9 million consumers in plans that they or their employer have purchased from UnitedHealthcare.

So far, 6.6 million young adults between 19 and 25 years old have signed up for insurance coverage through their parents’ policies. It’s a popular provision that even Republicans, such as Tea Party favorite Rep. Allen West (FL), support. During an appearance on Fox News Monday morning, Sen. John Barrasso (R-WY) — one of the staunchest opponents of the law — also defended the insurer’s decision, noting, “to allow them to stay on that family plan, just helps the family until that person goes to school [and is] established in life.”

The growing bipartisan support for some provisions of the law will complicate the GOP’s efforts to repeal the Affordable Care Act, particularly as Americans start to benefit from it. The measure expands access to health insurance for millions of Americans, and UnitedHealthcare’s decision to continue at least some of its provisions means that Obamacare has already changed the health care system — no matter what the Supreme Court decides.

Building on their pledge to reduce health care spending by $2 trillion and responding to President Obama’s request for specific cost-containment proposals, UnitedHealth’s new Center for Health Reform and Modernization released a report demonstrating that the federal government could save $540 billion over the next decade if it adopted (through Medicare Fee For Service) existing United Health Care cost-saving measures:

The new research paper provides policymakers and health care leaders with a range of “real world” savings options, based on empirical data and actual results from a selection of UnitedHealth Group programs…. Most of the savings estimates derive from applying more broadly the approaches UnitedHealth Group has found to work either in its commercially-insured or Medicare programs.

Their argument is this: plug United’s existing initiatives into Medicare and save billions over a decade. Some of the savings:

- Member Incentives to Use Highest Quality Providers ~$37 billion

- Cancer Support Programs: Voluntary guidance on cancer treatment best practices and patient options, including hospice care ~$5 billion

- Institutional Preadmission Program: Provision of onsite nurse practitioners at skilled nursing facilities to manage illnesses and prevent avoidable hospitalizations ~$166 billion

Fair enough, but if United is so certain of the savings then why hasn’t it implemented the measures across its entire network, lowered its rates, and attracted millions of new customers? Efficiency, after all, is a competitive advantage. And, as Robert Laszewski asks, “If United Health knows how to save $500 billion in Medicare costs why has it been lobbying for years to maintain the hundreds of billions of dollars in extra payments private Medicare plans–of which United is the biggest player–get from the government? It would seem to me that if they know how to save all of this money in Medicare they wouldn’t need the extra 14% the government pays United and all the other private Medicare plans above what it pays itself under the traditional Medicare plan.”

United cost-containment measures are voluntary and they’re being presented as an alternative to a new public option. But why why can’t both coexist? A new public plan could lead the way in greater cost containment innovation, implementing some of United’s so-called “real-world” solutions with other innovations. It can take what United is calling a voluntary effort and transform it into standard practice across all public programs, muscling private health care insurers to follow suit and reduce spending across the board.