From Payroll to Ozempic: How UnitedHealth Could Unlock Billions in Savings
The insurer’s two biggest costs: labor and chronic disease, are colliding with two disruptive forces: automation and weight-loss drugs.
UnitedHealth Group is a behemoth. With nearly 440,000 employees worldwide, it ranks alongside Amazon and Walmart in sheer workforce scale. That size is both its strength and its vulnerability. Managing hundreds of thousands of employees in insurance operations, pharmacy benefit management, and provider networks requires enormous payroll and benefits expense. At an estimated $100,000 per worker in salary and benefits, labor alone costs UNH more than $40 billion per year. The question investors should ask is simple: how can this cost base be made leaner without sacrificing service or quality?
The first lever is technology. UNH has already deployed AI across claims processing, prior authorization, fraud detection, and call center support. But the opportunity is far larger. Automating repetitive back-office tasks, using AI-driven triage in customer service, and expanding straight-through processing of prior authorizations could displace tens of thousands of administrative roles over time. That doesn’t mean cutting doctors or nurses, it means trimming the layers of manual review that add cost but little value. Even a modest five percent efficiency gain in labor costs could boost EPS by nearly 8%, while a ten percent improvement could lift earnings by more than 15%. For a company with UNH’s scale, the economics of automation are transformative.
The second lever is healthcare itself, specifically, obesity and diabetes. These two conditions represent a crushing burden on the U.S. healthcare system, with obesity-related costs estimated at $173 billion annually and diabetes at over $400 billion. Within UnitedHealthcare’s own employer plans, an obese member costs more than double a non-obese one: nearly $1,000 per month compared to $421. That gap compounds across millions of members and weighs heavily on claims costs. For decades, insurers have had little leverage other than wellness programs, but the rise of GLP-1 drugs; Ozempic, Wegovy, Mounjaro, has changed the equation.
The math, however, is messy. These drugs carry list prices of $10,000 to $15,000 per year, and studies so far suggest they increase total healthcare spending in the first two years, not reduce it. Patients on GLP-1s have seen annual costs rise by nearly 50%, driven by pharmacy spend and poor adherence, with only a fraction staying on therapy after two years. In the short term, insurers like UNH are absorbing higher costs with no clear offset in reduced hospitalizations or complications. That is why coverage remains tightly controlled, with prior authorizations and clinical criteria.
Yet the long-term story could be very different. If prices come down, some analyses suggest they need to fall by 50% or more to meet cost-effectiveness thresholds and adherence improves, the downstream benefits could be massive. Preventing diabetes onset, reducing cardiovascular disease, and lowering obesity-related complications could cut billions from medical claims. A Washington Post analysis recently argued that at $1,500 per year, GLP-1s could save as much as $28,000 per patient over a lifetime. For UNH, which insures tens of millions, that kind of shift would be profound. The challenge is bridging the short-term cost spike with a long-term savings curve that has not yet materialized.
Together, these two strategies; AI-driven efficiency and obesity drug adoption, frame the future of UnitedHealth Group’s cost management. The workforce piece is within management’s control today, a matter of execution and capital investment. The obesity and diabetes piece is harder, dependent on drug pricing, patient behavior, and regulatory shifts such as potential Medicare and Medicaid coverage starting in 2026. If UNH can align both levers; streamlining operations with AI while reshaping its risk pool with GLP-1-driven outcomes, it could reduce costs, improve margins, and still deliver quality care at scale.
The key question for investors is not whether UNH can cut costs. It is whether they can do so without undermining service or alienating patients. If they succeed, the company won’t just be the largest insurer in America, it will be the most efficient healthcare platform in the world.