Insurers and Managed Care

UnitedHealth Group began in 1974 as Charter Med, a Minnesota company that sold management services to the new health maintenance organisations created under the HMO Act; in 1977 it became UnitedHealthcare. It was a services company before it was an insurer, and that instinct produced the most important strategic move in American health insurance. In 2011 UnitedHealth combined its services, pharmacy-benefit and data businesses under a new brand, Optum. Over the next decade Optum bought physician groups, surgery centres, home-health agencies, the PBM Catamaran and, in 2022, after defeating a Justice Department challenge, the claims clearinghouse Change Healthcare. By 2025 UnitedHealth's revenue was $447.6 billion, UnitedHealthcare served about 49.8 million people, and Optum had grown from about a third of operating earnings in 2011 to roughly half or more by the early 2020s (reported).

Then the model met its limits in public. In February 2024 the Change Healthcare attack froze much of the country's claims traffic. In December 2024 UnitedHealthcare's chief executive was killed in New York, and the public reaction turned on denials. In 2025 Medicare Advantage costs ran far ahead of what UnitedHealth had priced: its medical care ratio, the share of premium spent on care, rose from a historical ~82–83% to about 85% in 2024 and about 89% in 2025. Each point on roughly $340 billion of premium is worth more than $3 billion of pre-tax profit. The company cut guidance in April 2025, suspended it on 13 May, and replaced its chief executive with his predecessor, Stephen Hemsley; it later confirmed it was cooperating with federal civil and criminal inquiries into its Medicare business (reported). Optum Health's margin on value-based care fell to about 1% in the third quarter of 2025 from about 8% a year earlier (reported). This chapter explains the business UnitedHealth built and why its scale became its exposure.