UnitedHealth Scare
This Week In Blunders - May 11-17
When CEOs decide to step down from their multimillion-dollar gigs for “personal reasons,” you can bet it’s not to spend more time with their long-neglected families.
UnitedHealth Group CEO Andrew Witty made a surprise exit on Tuesday, sending shares of the company into a nosedive. It was for “personal reasons,” the company said in a press release.
Witty is abandoning a job paying him annual compensation of $26 million because … well, it’s personal.
And that’s Sir Witty to you, commoner.
As the former CEO of British pharmaceutical giant GlaxoSmithKline, Witty was knighted in 2012 for services to the U.K. economy and pharmaceutical industry.
Some services this knight in tarnished armor provided here.
In April, he presided over UnitedHealth’s first earnings miss since 2008, and its stock is down 42% year-to-date. But that may be the least of Witty’s “personal reasons.”
One day after his resignation announcement, The Wall Street Journal reported that UnitedHealth is “under criminal investigation for possible Medicare fraud.” The company responded in a press release, saying that it has not been notified by the Justice Department and called the report “deeply irresponsible.”
Time will tell who is deeply irresponsible. For now, it’s abundantly clear that the health care giant hasn’t been responsible to its customers or its shareholders.
The company has the highest denial rate in the industry, 32%, and besides this latest report of a probe, it has been under a Justice Department investigation for antitrust practices.
Under Witty, the company has also suffered a major cyberattack. Then there’s all that public outrage – which burst like a swollen blood vessel following the street killing of Brian Thompson, who was CEO of UnitedHealth’s health care insurance division.
Internet trolls have suggested that Witty should be next, particularly after a December 2024 video leaked to Substacker Ken Klippenstein in which Witty defended the company’s practice of denying claims.
“We guard against the pressures that exist for unsafe care or for unnecessary care to be delivered in a way which makes the whole system too complex and ultimately unsustainable,” he said.
Maybe what was unsustainable was Witty’s corporate blundering at $26 million a year while sickened patients suffer aggressively denied claims.
Our credit score just dropped again
Moody’s dropped a bombshell after the market closed on Friday, downgrading U.S. debt one tick to Aa1 from Aaa.
The move could eventually jack interest rates on government debt and dampen interest in U.S. markets – as if we don’t have enough trouble with a global tariff war. It will also make it more difficult for consumer interest rates to soften.
Put simply, this is what happens when you max out your credit cards. And our Uncle Sam is a free-spender – particularly when it comes to his billionaire friends and their massive corporations.
“Over more than a decade, US federal debt has risen sharply due to continuous fiscal deficits,” the ratings agency said in a press release. “Federal spending has increased while tax cuts have reduced government revenues. As deficits and debt have grown, and interest rates have risen, interest payments on government debt have increased markedly.”
The national debt is at nearly $37 trillion and counting.
Business Blunders noted after the November election, that if you voted for Republicans thinking they were going do do something about it, you will be disappointed. Despite all their bluster, they have no such plans.
In President Donald Trump’s first 100 days, the U.S. government spent $200 billion more than it did in the first 100 days of last year. Apparently, our Republican-controlled Congress doesn’t have many fiscal conservatives left, and Elon Musk doesn’t really know how to operate a chainsaw.
Everyone is guilty. Some more than others. In his first term, Donald Trump added nearly $7 trillion to the nation’s debt. Joe Biden added nearly $5 trillion.
As Moody’s downgraded U.S. debt on Friday, the House Budget Committee rejected a massive tax cut package, which includes extending Trump’s 2017 tax cuts. (Hey, at least there are some fiscal conservatives left in the GOP. We’ll see if they get “primaried.”)
Here’s what Moody’s had to say:
“If the 2017 Tax Cuts and Jobs Act is extended, which is our base case, it will add around $4 trillion to the federal fiscal primary (excluding interest payments) deficit over the next decade.
“As a result, we expect federal deficits to widen … driven mainly by increased interest payments on debt, rising entitlement spending and relatively low revenue generation.
“We anticipate that the federal debt burden will rise to about 134% of GDP by 2035, compared to 98% in 2024.″
Once a nation’s debt reaches 100% of its gross domestic product it’s at high risk of default, and if that happens the American Dream is really over.
Moody’s is actually the last of the major credit ratings agencies to downgrade U.S. debt. Standard & Poor’s cut it to AA+ from AAA in August 2011, and Fitch Ratings slashed it to AA+ from AAA, in August 2023.
Our reverse-Robinhood taxation policy is not stainable. But, what? Me worry? Like climate change, it’s old news and a slow-burning crisis.
Crypto convictions keep coming
Top executives of a bankrupt crypto lending service, Cred, copped plea deals on Tuesday, Law360 reported.
CEO Daniel Schatt and CFO Joseph Podulka admitted to misleading customers about the firm’s financial troubles and pleaded guilty to wire fraud connected to the company’s collapse.
Following a grand jury indictment in May 2023, Justice Department said the debacle cost customers more than $783 million. Schatt and Podulka agreed that they caused losses between $65 million and $150 million.
The crypto klepto list keeps getting longer – including FTX founder Sam Bankman-Fried, Terraform Labs founder Do Kwan, and Binance founder Changpeng Zhao.
Last week, Alex Mashinsky, 59, CEO of crypto banker Celsius Network was sentenced to 12 years in prison for fraud and market manipulation.
First, investors have to think about the underlying value of a crypto currency – which is basically what some bigger idiot is willing to pay for it.
Then they have to worry about who is going to steal it.
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