Current Events in February 2025

The U.S. Department of Justice has reportedly launched a civil fraud investigation into insurance giant UnitedHealth concerning its practices involving Medicare Advantage plans.

According to the Wall Street Journal, which cites “people familiar with the matter,” the probe is examining UnitedHealth’s practices for recording a patient’s diagnosis that results in an extra payment by Medicare. Those payments allegedly went to the company’s Medicare Advantage plans.

Under Medicare Advantage, health insurance companies receive payments from the U.S. government to monitor and manage recipients’ benefits. If a patient has a certain diagnosis, the payments increase. 

The Journal has been investigating the matter for several months and has interviewed a number of healthcare providers. The newspaper’s reporting claimed that Medicare paid UnitedHealth billions of dollars for “questionable diagnoses.”

The Journal’s previous reporting cited doctors who claimed UnitedHealth trained them to make “revenue-producing diagnoses,” some that were described as “obscure or irrelevant.”

According to the Journal, neither UnitedHealth nor any government agency has offered a comment on the report.

Mortgage rates continue to trend lower as the spring homebuying season approaches. Freddie Mac reports its Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage (FRM) averaged 6.85% this week.

“Mortgage rates decreased slightly this week,” said Sam Khater, Freddie Mac’s chief economist. “The 30-year fixed-rate mortgage has stayed just under 7% for five consecutive weeks and in that time has fluctuated less than 20 basis points. This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season.”

Average rates

The 30-year FRM averaged 6.85% as of February 20, 2025, down from last week when it averaged 6.87%. A year ago at this time, the 30-year FRM averaged 6.90%.

The 15-year FRM averaged 6.04% this week, down from last week when it averaged 6.09%. A year ago at this time, the 15-year FRM averaged 6.29%.

But home prices continue to rise in most U.S. metros, suggesting rates need to fall even more before buyers are drawn back to the market. The Mortgage Bankers Association reports purchase applications rose in January from December but were 6% lower than in January 2024.

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Patients increasingly complain that it is difficult to win approval from health insurance companies for certain types of treatment. Now, the ALS Association has introduced a new tool, the ALS Insurance Navigator, aimed at assisting individuals living with amyotrophic lateral sclerosis (ALS) and their families in navigating the often complex and challenging landscape of health insurance. 

The app is free and the ALS Association describes it as a user-friendly resource is designed to address the significant issue of insurance denials, which affect nearly one-third of the ALS community, according to a recent ALS Focus survey.

The survey highlights the critical services often denied, including medications, power wheelchair modifications, and in-home care, which result in treatment delays, financial burdens, and increased stress for families. 

Despite the daunting nature of these denials, research from the Kaiser Family Foundation shows that 80% of Medicare drug coverage denials are overturned upon appeal, yet only a small fraction -- 10% -- are ever contested.

Melanie Lendnal, senior vice president of Public Policy and Advocacy at the ALS Association, emphasized the growing frequency of these denials and their severe impact on patients' quality of life and survival, reporting that “anecdotally, these challenges are becoming more common." 

Guiding appeals

The ALS Insurance Navigator equips users with the knowledge to understand the reasons behind claim denials and offers guidance on interpreting the complex language found in denial letters. It provides a comprehensive, step-by-step approach to the appeals process, complete with letter templates, timelines, and strategic tips for building a robust case. 

It also connects individuals with essential resources, such as the ALS Association's care services team and the Patient Advocate Foundation, which offers personalized case management assistance through The ALS Insurance and Benefits Resource Line.

The association said the ALS Insurance Navigator is designed to empower individuals, whether they are new to managing insurance or currently engaged in an appeal, by helping them advocate for the needed coverage and benefits. 

New York Attorney General Letitia James is suing over a dozen of the biggest vape manufacturers for targeting kids and teens with their products. 

The lawsuit claims that the companies market their products directly toward young people, making vaping seem “cool,” while also spreading misinformation about the health risks of vaping, and ultimately contributing to a widespread trend of young people vaping. 

“The vaping industry is taking a page out of Big Tobacco’s playbook: they’re making nicotine seem cool, getting kids hooked, and creating a massive public health crisis in the process,”  James said in a news release. 

“For too long, these companies have disregarded our laws in order to profit off of our young people, but we will not risk the health and safety of our kids. Today, we are taking critical steps toward holding these companies accountable for the harm they have caused New Yorkers.” 

What companies are involved?

James has named over a dozen companies in the lawsuit, including: 

• Puff Bar

• Elf Bar

• Geek Bar

• Breeze

• MYLE

• EVO Brands

• Demand Vape

• Magellan

• Happy Distro

• Midwest Goods

• Pod Juice

• Safa Goods

• Mi-One 

• MVH 1 

• Price Point 

What are the charges?

The lawsuit alleges that the companies in question deceived young people in their marketing and packaging. Many of them have utilized social media and prominent internet personalities to promote their products directly to teens. 

The companies have also used bright, colorful, and cartoon packaging to make their products look more appealing to the younger demographic, as well as highlight candy and fruit flavors – like “Blue Razz Slushy,” “Sour Fruity Worms,” “Fruity Pebbles,” “Unicorn Cake,” and more. 

In addition, many of the companies have touted their products as being a safer health alternative than traditional cigarettes.  

New York banned the sale of flavored tobacco products in 2020, and the suit claims these companies have continued to illegally sell such products to consumers.  

What’s next?

In the suit, James is seeking “hundreds of millions of dollars, including financial penalties for wide-ranging violations of local, state, and federal laws; damages and restitution for the public health impact of the companies’ illegal actions; the recovery of all revenue made from unlawful activity; and the establishment of an abatement fund to address the youth vaping crisis in New York.” 

In addition, she’s looking for the companies to publicly address their health claims about vaping, and a permanent ban on selling flavored e-cigarettes in New York. 

“Nicotine is a potent mind- and mood-altering drug that potentially develops into a physical and psychological dependence,” said Steve Chassman, executive director of the Long Island Council on Alcohol and Drug Dependence. 

“The implications of nicotine intoxication and dependence for young people on their mental, physical, academic, and social well-being are far reaching when dangerous levels of nicotine are consumed at a vulnerable age. These dangerous products are being callously marketed as ‘candy-like’ materials, distorting the harmful effects the drug has on human development.”

How will the economy fare under the second Trump Administration? It began with a step backward.

The Conference Board reports its Leading Economic Index fell by 0.3% in January to a reading of 101.5, following a modest 0.1% increase in December. This decline reverses most of the gains observed in the previous two months and highlights ongoing economic challenges. 

Over the six-month period ending in January, the LEI recorded a 0.9% decline, which is an improvement compared to the 1.7% decline in the preceding six months.

Justyna Zabinska-La Monica, senior manager of Business Cycle Indicators at The Conference Board, noted that consumer pessimism regarding future business conditions and reduced manufacturing work hours contributed significantly to the January decline. 

Despite these challenges, there are signs of stabilization, as manufacturing orders have nearly steadied, and the yield spread has positively impacted the index for the first time since November 2022. 

Growth rates trending upward

Only four of the LEI's ten components were negative in January, and the index's six-month and annual growth rates continue to trend upward, suggesting milder economic obstacles ahead. The Conference Board forecasts a 2.3% expansion in U.S. real GDP for 2025, with stronger growth anticipated in the year's first half.

But a new administration’s economic policies could be a wild card, especially if steep tariffs are widespread. Insurance comparison website Insurify has predicted that 25% tariffs on vehicles imported from Mexico and Canada would lead to a significant increase in insurance rates for U.S. motorists.

Tariffs on steel and aluminum might have the unintended consequence of making cans of beer and soft drinks more expensive. But that’s in the future. For now, the economy appears stable.

Current conditions show improvement

In January, The Conference Board’s Coincident Economic Index, which reflects current economic conditions, rose by 0.3% to 114.3, maintaining the same growth rate as in December. Over the six-month period from July 2024 to January 2025, the CEI increased by 1.0%, slightly above the previous six months' growth of 0.9%. 

All four components of the CEI—payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production—improved in January, with industrial production making the largest positive contribution for the second consecutive month.

Meanwhile, the Lagging Economic Index also showed positive movement, increasing by 0.5% to 119.3 in January, marking the first positive six-month change since summer 2024. This growth indicates a potential shift in economic momentum, as the index had previously shown no change in December.

Overall, while the decline in the LEI points to some economic uncertainty, the positive trends in the CEI and LAG suggest that the U.S. economy may overcome these challenges, with expectations of continued growth in the coming months.

Car insurance rates could rise rapidly if President Trump slaps tariffs on Canada and Mexico.

Assuming a 25% tariff on the countries, costs for full-coverage car insurance would rise 60% faster in 2025, according to research from insurance-comparison website Insurify.

That that would be an average cost of $2,502 a year for full-coverage car insurance after tariffs by the end of 2025, instead of $2,435, which represents an 8% climb versus 5%.

Insurify said tariffs on Canada and Mexico would boost car insurance rates because the U.S. imports steel and aluminum to make car parts.

“As the price of replacement parts increases, premiums will have to increase accordingly,” said Daniel Lucas, carrier relations manager at Insurify, in the report.

Canada and Mexico supplied around 35% of U.S. steel imports in 2024 and Canada supplied around half of aluminum imports, Insurify said.

The U.S. also imports around 32% of its auto parts from Canada and Mexico.

Supporters of tariffs say they will force automakers and repair shops to buy more U.S.-made parts, which would strengthen domestic manufacturing.

But Insurify said it will take time to move to more U.S. manufacturing and car insurance rates would still increase in the short term.

And parts such as wire harnesses, seat trims and armrests are entirely made abroad because they’re too expensive to make in the U.S., Insurify said, citing Wolfe Research, a New York-based financial research firm.

“All these factors can add to the cost of a claim — more expensive parts, lower domestic supply, and a longer supply chain that adds to rental costs, since vehicles take longer to repair,” Lucas said.

How would tariffs affect car insurance rates in U.S. states?

New York state would be particularly hit hard.

Insurify said full-coverage auto insurance costs would be $4,293 a year in New York, with $110 of the increase coming from tariffs.

Without tariffs, Insurify said car insurance rates would remain flat or decrease in five states: Vermont, New Hampshire, Hawaii, New Mexico and Idaho.

But with tariffs, Insurify said rates would increase in every state.

Email Dieter Holger at dholger@consumeraffairs.com.