United Healthcare and the Bankruptcy of US Shareholder Capitalism

United Healthcare is in the news these days after its CEO was killed by a gunman in New York. The words Delay, Deny, and Depose were inscribed on the bullet casing.

Clearly the killing was motivated by a grievance against the company and the industry in general.

United Healthcare stands out as a particularly vicious player in one of the most despised industries in the US. It has an industry leading claim denial rate of 32%. It uses AI to process most claims and has an astounding 90% error rate (I wonder what they used to train such an AI system – a database of anti-social psychopath precedents:).

The company has no doubt ruined countless lives and families. One commentator on YouTube pointed out, hilariously, that this is a killing with millions of potential suspects. 77,000 smile and celebration emojis were posted on United Healthcare’s Facebook page announcing the death of its CEO before the page was taken down. And the sentiment expressed about the incident has been overwhelmingly sympathetic to the killer.

It seems the only people paying respect to the dead are the politicians who have received political donations from the healthcare industry.

What does this incident say about the state of healthcare business in the US, the largest industry representing 18% GDP? What does it say about the general state of the shareholder capitalism and corpocracy in the country?

This calls in mind the recent scandal involving Boeing and the quality problems with its aircrafts. Can consumers have faith in businesses that put profit ahead of safety and the welfare of its customers?

The list of such corporate malfeasance is long and varied. Many once household names suffer massive negative public image problem and a collapse of consumer trust.

One fundamental reason behind this zero-sum game played by corporations against their own customers is the drive for profit, all under the philosophy of so called shareholder value maximization.

This goes hand-in-hand with the fundamentalist neoliberal free market dictates advocated by the University of Chicago school of economics led by Milton Friedman since the 1980s.

- Deregulation – instead of government providing oversight on businesses so that they adhere to basic rules of consumer protection and product safety, the government delegates such oversight to the businesses they are supposed to regulate. A case in point is Boeing, who issues its own airworthiness certification on behalf of FAA. Similarly, most healthcare legislations are written by lobbyists working for healthcare insurers and big pharm on the Capitol.

- Privatization – according to the same free-market economic philosophies, governments in the west have pursued aggressive privatization of public services and infrastructure with disastrous results – higher prices, poorer services, job losses. The US government has privatized basic state functions such as prison system and war fighting (e.g. Blackwater mercenaries). The UK government privatized Thames Water, the water utility for greater London, which has led to increased water prices, poorer water quality, lack of maintenance and a variety of other issues for its 13 million customers.

Exasperating the situation, private equity is running rampant buying up low-cost housing, nursing homes, medical practices, etc. The highly leveraged buyouts and takeovers have directly contributed to increasing cost of living and reduced services in affected businesses. These malpractices are well documented in Brendan Ballou’s book Plunder: Private Equity’s Plan to Pillage America.

- Profit obsession – as stock price becomes the sole criteria to evaluate business performance, executives are focused on cost cutting, outsourcing, and financial engineering (loading up debt or share buybacks) to improve the bottom line.

One good example of this profit obsession that will really hurt the country at some point is the military industrial complex in the US. As the defence industry is privately owned in the US, companies are effectively organized as a cartel with 5 top defence contractors taking up 90% market share. There is little motivation to compete on costs as profit is guaranteed in a cost plus procurement system.

These defence companies produce overengineered systems that are extremely expensive and take a long time to produce. The military industrial complex has become, in effect, a money laundering scheme to enrich the companies and the politicians at the expense of taxpayers.

As a result, despite having a military budget bigger than the next 10 countries combined, the US cannot even produce enough ammunition for its proxy war against Russia in Ukraine, barely the high intensity war it needs to fight with China or Russia directly.

This profit obsession has also led to the kind of management practices as with the railway operators. They have reduced the number of workers per train, increased the railcar length and weight, cut back on maintenance and safety measures and implemented so-called precision scheduled railroading (basically maximizing the hours worked by the staff).

The direct result is repeated rail accidents like the derailment in East Palestine, Ohio. The US reports 10,000 railway accidents per year, which makes it the worst performing rail safety country in the world behind India.

- Weak leadership – the profit focus of US shareholder capitalism has directly led to the rise of professional managers with background as bean counters rather than engineers or technologists, who barely understand the products of their own companies.

As the goals of businesses have increasingly become purely financial, financial engineers are becoming CEOs rather than real engineers. This is what happened to once iconic companies like GE, Intel, and Boeing which all have such financially-oriented CEOs preceding their decline. This phenomenon is well documented in David Gelles’ book The Man Who Broke Capitalism – How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America.

The killing of the United Healthcare CEO is a tragic consequence of shareholder capitalism taken to the extreme. The result of unhinged financialized capitalism as practiced in the US today will eventually lead to violent revolutions by its population as the interests of the elites are diagonally opposite the mass.

Hopefully that day will soon come.