By Matthew Holt

In an attempt to put that messy options back-dating business behind it, yesterday
UnitedHealth Group settled with CalPERS (the ever vigilant pension fund of California state employees) and other class action suit members. And they settled for a bunch — $985 million. That’s even more than ex-CEO Bill McGuire gave back in his long running attempt to apologize without admitting criminal liability. Although, of course, United’s stock is down so much from the halcyon days of 2006 that it would require me to take my socks of both feet to work out if McGuire’s remaining options are worth anything these days!

Meanwhile, the CEO of Brocade is in jail (or may be out on appeal, I’m not sure) for back-dating options that helped his employees — and hurt his shareholders. Yet, McGuire (and for that matter Steve Jobs) seem to my untrained eye to have done the same thing without severe consequences. I’m still baffled.

United’s business seems to be heading into more trouble. Profits are down, lay-offs are up, and overall membership is down. More people and employers can’t afford health insurance in a weakening economy. And don’t forget total enrollment in commercial employment-based insurance plans fell during the most recent economic expansion!

The only logical rescue comes from an expansion of government plans. But there’s of course the little issue of how much they get paid for those government plans! The long-term question is whether they will lose more on the Medicare Advantage roundabout under the next Administration than they make up on any universal health care swings.

UPDATE: Wall Street didn’t like it too much. UNH is down 9% today