Over the course of the five Sundays this month, I’ll be publishing here chapter-length excerpts from my book The Hidden History of American Healthcare with a few words up front about the chapter and its context in the larger book.
Each of the chapters I’m publishing references fights we’re taking on this fall, starting with the Medicare Advantage scam, which you’ll be hearing about on TV because open enrollment begins on October 15 and they’re already advertising.
When I wrote this book in the fall of 2020, about a third of the people who thought they were on Medicare were actually on privatized Medicare Advantage plans. Today it’s 55 percent, more than 35 million people, and some surveys suggest most all of them think they’re actually on Medicare. This is one of the GOP’s most successful bait-and-switch campaigns in American history.
Congress’s own nonpartisan Medicare Payment Advisory Commission tells us that the federal government is now paying those private plans around 14 percent more per person this year than it would spend if those same people had been enrolled in traditional Medicare. That’s an extra $76 billion in 2026 alone, and every penny of it is going to the fatcats in the health insurance industry.
And the company at the center of this chapter, UnitedHealth — still has grabbed 26 percent of all Medicare Advantage enrollment mostly through their deal with AARP — is now the subject of criminal and civil Justice Department investigations into the “upcoding” practices you’re about to read about. The company put it this way in a securities filing on July 24, 2025:
“The Company has now begun complying with formal criminal and civil requests from the Department.”
This chapter tells three stories. There’s the physician-turned-CEO nicknamed “Dollar Bill” who walked away from UnitedHealth with more than a billion dollars.
There’s the 2003 law that created “risk adjustment,” which lets insurance companies send a nurse to your home to look for ways to raise their payments from the feds without having to provide any additional services. (Yeah, it’s as grim as it sounds.)
And there’s a friend of mine I call Sam, who signed up for a “free” Advantage plan at an urgent care clinic, got a cancer diagnosis, and discovered that the best cancer center in New York wouldn’t take his insurance. To add injury to insult, he couldn’t get back into real Medicare without a Medigap policy that the insurers — because he’d been off real Medicare for more than 12 months — were now free to deny him.
The text below is as it appeared in the book published in 2021, so the figures in it are from that period. Where they’ve changed since, they’ve gotten worse.
“Dollar Bill” McGuire and the Privatization of Medicare
A billion dollars is a mind-bending amount of money. It’s a million dollars a thousand times—more money than any human being could possibly need to live a full and satisfying life, and enough to ensure that children, grandchildren, and generations to come will never, ever have to work. It’s dynastic money.
Yet that’s what you can make in healthcare in America if you’re willing to say to sick people, “No, I won’t pay for that surgery or medication even though it may save your life.”
“‘Dollar Bill’ has made lots of news with cash-and-stock paydays that have topped $100 million in recent years—and he’s still sitting atop stock options valued at $1.6 billion,” wrote Neal St. Anthony in 2007 for the Minneapolis Star-Tribune, the largest newspaper in UnitedHealth’s home state of Minnesota.[i]
“Dollar Bill” was Bill McGuire, then the CEO of UnitedHealth, the nation’s largest health insurance operation. And although trained as a physician, McGuire didn’t make his money healing anybody.
On the contrary, he made that money by aggressively enforcing the fine print in his company’s contracts with people who’d bought health insurance from UnitedHealth, particularly that fine print that talked about preexisting conditions, lifetime caps, not paying “out-of-network expenses,” and requiring doctors and hospitals to jump through a never-ending series of exhausting hoops to get “authorization” to treat sick people.
Not to mention his (and his senior executives’) manipulation of stock options; after all, if you’re going to run a grift on your customers, why not do the same to your shareholders?
The Wall Street Journal pointed out in March 2006 that McGuire had backdated some of his stock options, increasing his income by hundreds of millions in what the Journal called “one of the most lucrative stock-option grants ever.”[ii]
The Securities and Exchange Commission later agreed, and as Reuters reported the following year, McGuire had to “forfeit more than $400 million in stock options and other compensation and pay a $7 million fine to settle an investigation into the health insurer’s options practices.”[iii]
In 2003, President George W. Bush and his congressional Republicans gave UnitedHealth a huge gift (which good-government advocates would argue was in exchange for massive lobbying and campaign contributions, so it was more of a quid pro quo). They carved a hole in Medicare, the government healthcare payment system for people over 65, and let private for-profit health insurance companies fill it.
This semi-privatization of Medicare was called Medicare Part C, or Medicare Advantage. Although it has the name “Medicare,” it’s not Medicare. It’s private, for-profit insurance, with almost all of the costs paid for with funds extracted from the government’s Medicare trust fund.
While Dollar Bill left UnitedHealth in 2006 with his billion-plus dollars (and a trail of dead and dying customers), the company jumped into Medicare Advantage with the same gusto for making money as it had under McGuire’s stewardship.
The headline from Kaiser Health News, the gold standard publication for reporting on the healthcare industry in America, says it all: “UnitedHealth Doctored Medicare Records, Overbilled U.S. by $1 Billion, Feds Claim.”[iv]
In a massive fraud reminiscent of Republican Senator Rick Scott’s 1990s tenure as CEO of Columbia/HCA, the hospital group that had to pay the government $1.7 billion for Scott’s company’s Medicare fraud,[v] UnitedHealth ripped off America in a way that could only be described as breathtaking. Or at least second only to Rick Scott.
“In a 79-page lawsuit filed in Los Angeles,” Kaiser Health News reported, “the Justice Department alleged that the insurer made patients appear sicker than they were in order to collect higher Medicare payments than it deserved. The government said it had ‘conservatively estimated’ that the company ‘knowingly and improperly avoided repaying Medicare’ for more than a billion dollars over the course of the decade-long scheme.”[vi]
The “Advantage” War against Medicare
Medicare Advantage is a massive, trillion-dollar rip-off, of the federal government and of taxpayers, and of many of the people buying the so-called Advantage plans.
It’s also one of the most effective ways that insurance companies could try to kill Medicare for All, since about a third of all people who think they’re on Medicare are actually on these privatized plans instead.
Nearly from its beginning, Medicare has allowed private companies to offer plans that essentially compete with it, but they were an obscure corner of the market and didn’t really take off until the Bush administration and Republicans in Congress rolled out the Medicare Modernization Act of 2003. This was the big chance for the GOP (and a few corporatist Democrats) to finally privatize Medicare, albeit one bite at a time.
That law created a brand known as Medicare Advantage under the Medicare Part C provision, and a year later it phased in what are known as risk-adjusted large-batch payments to insurance companies offering Advantage plans.
Medicare Advantage plans are not Medicare. They’re private health insurance most often offered by the big for-profit insurance companies (although some nonprofits participate, particularly the larger HMOs), and the rules they must live by are considerably looser than those for Medicare.
Even more consequential, they don’t get reimbursed directly on a person-by-person, procedure-by-procedure basis. Instead, every year, Advantage providers submit a summary to the federal government of the aggregate risk score of all their customers and, practically speaking, are paid in a massive lump sum.
The higher their risk score, the larger the payment. A plan with mostly very ill people in it will get much larger reimbursements than a plan with mostly healthy people. After all, the former will be costly to keep alive and healthy, while the latter won’t cost much at all.
Profit-seeking insurance companies, being the predators that they are, have found a number of ways to raise their risk scores without raising their expenses. The classical strategies of tying people to in-network providers, denying procedures routinely during first-pass authorization attempts, and having very high out-of-pocket caps are carried over from regular health insurance systems to keep costs low and profits high.
But with Medicare Advantage, the big insurance companies have invented a whole new way to rip us all off while padding their bottom lines.
For example, many Medicare Advantage plans promote an annual home visit by a nurse or physician’s assistant as a “benefit” of the plan. What the companies are doing, though, is trying to upcode their customers to make them seem sicker than they are to increase their overall Medicare reimbursement risk score.
“Heart failure,” for example, can be a severe and expensive condition to treat . . . or a barely perceptible tic on an EKG that represents little or no threat to a person for years or even decades. Depression is similarly variable; if it lasts less than two weeks, there’s no reimbursement; if it lasts longer than two weeks, it’s called a “major depressive episode” and rapidly jacks up a risk score.
The home health visits are designed more to look for illnesses or codings that can increase risk scores than to find conditions that require medical intervention. They’re so profitable that an entire industry has sprung up of companies that send nurses out on behalf of the smaller insurance companies.
In summer 2014, the Center for Public Integrity (CPI) published an in-depth investigative report titled Why Medicare Advantage Costs Taxpayers Billions More Than It Should.[vii]
They found, among other things, that one of the most common scams companies were running involved that very scoring of their customers as being sicker than they actually were, so that their reimbursements were way above the cost of caring for those people.
Here are a few quotes from the report:
“Risk scores of Medicare Advantage patients rose sharply in plans in at least 1,000 counties nationwide between 2007 and 2011, boosting taxpayer costs by more than $36 billion over estimated costs for caring for patients in standard Medicare.”
“In more than 200 of these counties, the cost of some Medicare Advantage plans was at least 25 percent higher than the cost of providing standard Medicare coverage.”
The report documents how risk scores rose twice as fast for people who joined a Medicare Advantage health plan as for those who didn’t.
Patients, the report lays out, never know how their health is rated because neither the health plan nor Medicare shares risk scores with them—and the process itself is so arcane and secretive that it remains unfathomable to many health professionals.
“By 2009, government officials were estimating that just over 15 percent of total Medicare Advantage payments were inaccurate, about $12 billion that year.”
Based on its own sampling of data from health plans, the report shows how CMS has estimated that faulty risk scores triggered nearly $70 billion in what officials deemed “improper” payments to Medicare Advantage plans from 2008 through 2013.
CMS decided, according to the report, not to chase after overcharges from 2008 through 2010 even though the agency estimated through sampling that it had made more than $32 billion in “improper” payments to Medicare Advantage plans over those three years. CMS did not explain its reasoning.
The report documents how Medicare expected to pay the health plans more than $150 billion in 2014, the year the study was published.[viii]
Companies are almost never nailed for these overcharges, and when they are, they usually pay back pennies on the dollar.
For example, when the Office of Inspector General, Health and Human Services (which oversees Medicare), audited six out of the hundreds of plans on the market in 2007, they found that just those six companies “had been overpaid by an estimated $650 million” for that one year. As the Center for Public Integrity states, “CMS settled five of the six audits for a total repayment of just over $1.3 million.”[ix]
The Centers for Medicare and Medicaid Services also, in 2012, decided to audit only 30 plans a year going forward. As CPI noted, “At that rate, it would take CMS more than 15 years to review the hundreds of Medicare Advantage contracts now in force.” And that’s 15 years to audit just one year’s activity!
Things haven’t improved since that 2014 investigative report from CPI. In September 2019, Senator Sherrod Brown of Ohio and five Democratic colleagues sent a letter to President Donald Trump’s CMS administrator, Seema Verma.
“The recent HHS Payment Accuracy Report exposes that taxpayers have overpaid Medicare Advantage plans more than $30 billion . . . over the last three years,” Brown wrote. “This report comes on the heels of a 2016 Government Accountability Office (GAO) report and a 2013 GAO report on [Medicare Advantage] plan overcharges and the failure of the Centers for Medicare and Medicaid (CMS) to recoup billions of dollars of improper payments from MA plans.”[x]
Meanwhile, during the four years of the Trump administration, CMS went out of their way to illegally promote Medicare Advantage plans (which typically cost CMS far more than a regular Medicare plan).
A February 2020 report in the New York Times stated, “Under President Trump, some critics contend, the Centers for Medicare and Medicaid Services, which administers Medicare, has become a cheerleader for Advantage plans at the expense of original Medicare.”[xi]
The report pointed to the draft release of the 2019 Medicare & You handbook, which is mailed every year to all enrollees and posted online. “Advocates and some lawmakers criticized language describing Advantage as a less expensive alternative to original Medicare.”
The National Bureau of Economic Research (NBER) compared Medicare Advantage with traditional Medicare and found the Advantage programs to be mind-bogglingly profitable: “MA insurer revenues are 30 percent higher than their healthcare spending. Healthcare spending for enrollees in MA is 25 percent lower than for enrollees in [traditional Medicare] in the same county and [with the same] risk score.”
At the same time, Medicare Advantage often screws its customers. According to the NBER study, people with Medicare Advantage got 15 percent fewer colon cancer screening tests, 24 percent fewer diagnostic tests, and 38 percent fewer flu shots.[xii]
Speculation is rife as to why CMS would allow—much less promote—privatized plans that cost Medicare far more than original Medicare to rip off taxpayers to the tune of billions of dollars a month.
One possibility is regulatory capture—people working in CMS know that if they go along and get along, very well-paid jobs are waiting for them at for-profit insurance companies after a few years of government service. This is a chronic problem at other regulatory agencies, particularly those overseeing pollution, pharmaceuticals, telecommunications, and banking.
Another answer is that the Bush administration—where Medicare Advantage started—was so enamored of the idea of privatizing Medicare to eventually destroy the program (George W. Bush campaigned extensively from the late 1970s through his presidency to privatize both Social Security and Medicare) that they turned a blind eye to abuses.
The Obama administration had other priorities, as they were trying to push through the Affordable Care Act and didn’t want to upset the apple cart. And when Trump came into power, his folks saw anything that drained resources out of Medicare and into the pockets of multimillionaire health insurance executives—a group notoriously generous when it comes to making political contributions—as a plus.
You Are Locked-in to Medicare Advantage
A fellow I’d known decades ago recently bubbled back into conversation among a few of us who’d hung out together in New York back in the 1970s. Sam, I’ll call him, had turned 65 and hadn’t had employer-provided health insurance in years. He spent a few hours trying to figure out how to sign up for Medicare and then gave up, totally confused, decided he’d try again in a few months.
Unfortunately, his prostate intervened. When Sam started experiencing pain urinating, he visited a local “doc in a box” urgent care clinic, where they gave him a PSA test. The result was shocking: his PSA was so high that it was a virtual certainty he had prostate cancer, and possibly it had even metastasized, a situation that is the second-leading cause of cancer death in American men.[xiii]
Telling him that he’d be facing hefty doctor and hospital bills regardless of the outcome, the urgent care clinic signed him up for a Medicare Advantage plan offered by an affiliate that almost certainly paid them a commission for the sign-up. Sam was excited, though, because he now had insurance, and it was a “no dollar” plan that didn’t cost him a penny.
Sam then got on the phone to find a urologist who specialized in cancer. He found that the best worked out of Memorial Sloan Kettering Cancer Center in New York, and, telling them he was “on Medicare,” he made an appointment to see one of their top docs. A month later, when his appointment finally opened up, the person who was checking him into the system told him that he’d have to pay cash because his Advantage plan didn’t include Sloan Kettering.
In fact, more than a third of all Medicare Advantage plans nationwide do not include any of the National Cancer Institute centers, and none of the Advantage plans offered in the New York City area include the nation’s most famous one, Memorial Sloan Kettering Cancer Center.[xiv]
Shocked, Sam contacted Medicare to see if he could transfer from Medicare Advantage to regular Medicare. This all happened in fall 2020, so they told him that he could make the change during the “open enrollment period” of October 15 to December 7. He made the change and called Sloan Kettering back.
This time, they wanted to know what Medigap policy he’d signed up for to fill in the 20 percent of billing that Medicare doesn’t cover. That sent Sam back to the internet and, ultimately, to an insurance agent, who told him that while Medigap plans can’t refuse you because of preexisting conditions when you first sign up when you turn 65, if you shift from Medicare Advantage back to traditional Medicare after that first enrollment, particularly if you’re older or sick, they can simply refuse to cover you.
Reporter Mark Miller wrote for the New York Times in February 2020 about Ed Stein, a 72-year-old man with bladder cancer and a Medicare Advantage plan that didn’t cover the cancer docs in his area who specialized in his type of cancer. He tried to shift back to traditional Medicare to cover what promised to be complex and expensive surgery and chemotherapy. As Miller wrote, “That was when he ran up against one of the least understood implications of selecting Advantage when you enroll in Medicare: The decision is effectively irrevocable.”[xv]
As of this writing (November 2020)[ER7] [TCH8] , my friend Sam still hadn’t seen a doctor. This is the state of healthcare in America as it’s been sliced and diced by the multibillion-dollar insurance industry.
Meanwhile, every fall, Americans are inundated with hundreds of millions of dollars’ worth of TV, direct mail, and internet advertising for Medicare Advantage plans. And where does the money come from to pay for that advertising?
It comes from the same place that provided over $1 billion in personal income to the former CEO of United Healthcare and over $100 million a month in compensation to senior executives in the largest health insurance companies: denying claims while collecting risk adjustment claims from your tax dollars and mine.
The simple solution to the Medicare Advantage problem is to kill off the program. It was just a Trojan horse to privatize Medicare, and its presence will make Medicare for All even harder to implement. At the same time, the 20 percent hole that the GOP insisted on for skin in the game with real Medicare needs to go, too.
A comprehensive Medicare for All program would eliminate both of these problems.
I wrote this book before Medicare Advantage had grabbed the more-than-half of Americans they now “serve” and the risk scores are still secret while the infrequent audits rarely get more than pennies on the dollar. While Republicans scream about the cost of Medicare For All or even traditional Medicare, the $76 billion in overpayments our tax dollars will make to these insurance giants will let their CEOs buy new yachts and Swiss chalets.
So if you’re on Medicare or about to be, please read the fine print on anything that has the word “Advantage” attached to it. And you may want to ask your politicians why if Medicare Advantage is about saving money and “choice” we’re paying 14 percent more for it than real Medicare, just to feather the nests of health insurance billionaires.
Next Sunday we go back to a pivotal year, 1896, to meet the man who convinced America that helping sick people was scientifically wrong if they’re Black.
As always, I deeply appreciate your rundown of the planned decay of our national well being and our democracy that's been going on for over 50 years. As a boomer, i have been fortunate enough to catch the tail end of what was a promising post- WW2 luberal consensus. And unfortunate enough to experience the purposeful, despicable dismantling of that world.
Your insights help me both sort it out, and validate the "blink" reaction that I had in 1980, just months after proudly receiving my doctorate in Social Work and Social Research from Bryn Mawr College . When Reagan got elected, I came home and told my husband "the field I just busted my ass to enter is dead". I spent the ensuing years watching both my once useful field devolve and watching my civic world decay. Your analysis of many of the components of this demolition is validating in a gruesome way.
But my real question is this: How in the face of seeing all of this decay and corruption so clearly, do you maintain optimism? I have fought long and hard to maintain the values and dreams that I came into this field with. But seeing the depravity and avarice that underlies this systematic multi- decade assault is often overwhelming. In the end your force and optimism in the face of this destruction gives me hope and the strength to keep fighting the darkness .
All of America could and should know this, but we don't. Why? Because of corporate media.
We the people keep corporate media in power, by our subscriptions and buying the crap that they advertise in print, TV or on the internet