MW What happens when your insurer owns your doctor - and why that's a problem
By Neal K. Shah
Health insurers increasingly employ the doctors who provide the medical care they pay for, creating a conflict of interest
A recent study found that UnitedHealth's insurance arm pays its own Optum doctors 17% more than it pays independent doctors for the same services.
When my wife was diagnosed with cancer, I thought the hardest part would be the illness itself. Instead, it was the health-insurance denials, the endless appeals, and the uncertainty of knowing whether essential treatment would be covered. After that experience, I couldn't stop wondering how the system could be so cruel in its design, and I made it my life's work to find out.
No company captures that cruelty by design better than UnitedHealth Group $(UNH)$. Think Standard Oil, but instead of oil fields and refineries, UnitedHealth owns the insurance, the clinics, the pharmacies and the data. Its subsidiary, Optum, employs over 90,000 doctors, making the company both payer and provider - meaning it's both the referee and the team.
A new study published last month in Health Affairs shows how this structure quietly turns regulation into profit. UnitedHealth's insurance arm pays its own Optum doctors 17% more than it pays independent doctors for the same services. In the markets where UnitedHealth dominates, its doctors make 61% more than other physicians.
The trick hinges on a seemingly noble safeguard known as the medical loss ratio. As part of the Affordable Care Act, insurers must spend at least 80% to 85% of premiums on medical care. But when an insurer owns the doctor, inflated internal payments still count as "medical spending." Essentially, UnitedHealth's left hand writes a check to its right hand, and the regulators nod. The money never leaves the corporate bloodstream.
It's a masterpiece of accounting - and a quiet betrayal of trust. When UnitedHealth sends one of its millions of members to an Optum clinic for a routine procedure, it might pay $500. The same clinic charges a competing insurer just $300 for identical care. That extra $200 counts toward the required medical spending, but both divisions belong to the same corporation. One pocket lines the other.
The evidence suggests UnitedHealth deliberately exploits this structure where it faces little competition. Researchers found the payment premium was much higher in regions where UnitedHealth dominated. Health-policy experts have warned that intracompany transactions like these may mask profits and hinder enforcement.
As we know, this isn't UnitedHealth's only questionable practice. The Justice Department has opened both criminal and civil investigations into the company's Medicare billing practices, including allegations that UnitedHealth pocketed $50 billion after diagnosing patients with conditions they didn't have. Last month, the company began closing dozens of New Jersey medical practices with 30 days' notice, forcing thousands of patients to scramble for new doctors during flu season.
Through my University of Pennsylvania-funded research helping patients fight health insurance denials, I see the human cost of corporate consolidation daily. When insurers own the entire care chain, both patients and providers lose their rights. The algorithms optimizing claim rejections serve the same master that employs your doctor and fills your prescriptions. Every transaction becomes a conflict of interest.
The real danger isn't just what UnitedHealth has done, but what its model enables. CVS Health $(CVS)$ (which owns Aetna), Elevance Health (ELV), and Humana $(HUM)$ also operate vertically-integrated structures. If the shell game is profitable, every major insurer will replicate it.
Federal regulators are beginning to wake up. The Justice Department is reportedly investigating whether UnitedHealth's integration violates antitrust laws. But I think that an investigation alone won't fix a regulatory framework that inadvertently incentivizes consolidation. When consumer-protection rules create loopholes this profitable, companies will definitely exploit them.
The solution requires acknowledging that the medical loss ratio rules were designed for an era when insurers and providers operated independently. (UnitedHealth accelerated its purchases of physician practices after the ACA became law in 2010.) In a world in which insurers own the entire care delivery chain, these regulations need fundamental redesign. At a minimum, the government should require transparent disclosure of all intercompany payments and potentially exclude such transactions entirely from MLR calculations.
Even then, transparency only addresses the symptoms. The deeper question is whether we can maintain competitive healthcare markets when insurers buy the providers, own the pharmacies, and control the data systems connecting them all. History suggests the answer is "no." Standard Oil's monopoly worked the same way.
When your insurance company pays itself first, you pay the price through higher premiums, fewer choices and care decisions made by algorithms optimized for profit rather than health. The difference between UnitedHealth's 17% premium to its own doctors and what independent physicians receive has to come from somewhere. That somewhere is your wallet, your employer's benefit costs and the economic security of American families struggling with healthcare expenses that dwarf every other developed nation.
I started this work because watching my wife fight both cancer and her insurer taught me that the cruelty isn't accidental but rather the business model. The question facing policymakers is simple: Will we redesign the rules for an age of healthcare consolidation? Or will we let vertically integrated companies like UnitedHealth continue gaming the systems that were supposedly built to protect us?
Neal K. Shah is a healthcare researcher specializing in artificial intelligence. He is the principal investigator on the Johns Hopkins YayaGuide AI for Caregiver Training project and co-principal investigator on the University of Pennsylvania's Counterforce Health project. Shah also serves on North Carolina's Steering Committee on Aging. He is CEO of CareYaya, chair of Counterforce Health and the author of "Insured to Death: How Health Insurance Screws Over Americans - And How We Take It Back."
-Neal K. Shah
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December 10, 2025 08:24 ET (13:24 GMT)
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