Bill McGuire Friday tried to put the options scandal behind him.
Don’t forget that he did (at least) two very questionable things before the scandal came to light. First he formally abandoned utilization review at United in 2001. That to me was a signal to employers and providers that health plans were giving up on trying to control the behavior of providers. So the way they were going to make money in the future was the old fashioned way—risk selection and adding a pass through chunk on top to what providers charged them—and sticking that to their end customer.
That failure of the managed care business to contain costs has directly led to more uninsured Americans. OK, so it wasn’t all their fault, but who’s picking up the slack? Yes, it’s the lower paid worker whose employer stopped providing insurance and the taxpayer who’s paying more for the people in government programs who previously would have had insurance at work. Had managed really worked to change health care, perhaps that wouldn’t have been the case.
But McGuire did fine despite that, of course. (And he’s paid much less tax personally than he would have done in the 1990s because of the way the Bush tax cuts were slanted to the super-rich). United instead did fine being an old fashioned risk-shifter.
Which leads to the second questionable thing. Buying Patrick looney Rooney’s company, Golden Rule—the insurer that made a living selling health insurance only to those who didn’t need it—for some $900 million. (And of course it was Rooney that pushed the MSA/HSA into the forefront of Republican policy).
Now in what looks like a desperate attempt to remain a free man, McGuire has given back a big chunk of the gains he got when he was backdating the options and pay a civil penalty to the SEC of $7m. Big to most of us, chicken-feed to him.
Of course the other people involved in option backdating in other companies are currently heading to court. The first two, from Brocade, have already been found guilty and are awaiting sentencing with a potential 20 years in the slammer. Other than United did well under McGuire and Brocade did badly, as a securities law neophyte I am struggling to tell the difference.
CODA: Funnily enough United’s current CEO has been making strange mea culpas about the company’s current customer service. Anyone who can figure that out should add their 2c in the comments. And United’s hometown paper the Minneapois Star Tribune had a long article Sunday detailing their "issues" with paying claims correctly over the years
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