By Zachary Tracer
July 18,
2017, 5:20 AM CDT July 18, 2017, 6:18 AM CDT
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Republicans in Senate give up on latest Obamacare repeal bill
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Adjusted earnings of $2.46 a share beat estimates of $2.38
UnitedHealth Group Inc. is putting its Obamacare
struggles behind it just as Republicans in the Senate are trying to do the
same.
The
biggest U.S. health insurer reported second-quarter results Tuesday showing
expanded membership as it moved away from the Affordable Care Act and added
customers mainly in the government funded programs for the elderly and poor:
Medicare and Medicaid. The company largely quit Obamacare going into this year,
after racking up losses selling policies to individuals last year.
UnitedHealth’s
Medicare and retirement unit, which sells private health plans to seniors,
increased revenue by 17 percent to $16.7 billion, and added 935,000 people, the
company said in a statement.
Its employer and individual unit revenue declined 4 percent, after the
insurer’s pullback from Obamacare. UnitedHealth had 540,000 customers in the
individual market, down from 1.5 million a year earlier.
Earnings
for the quarter, excluding some items, were $2.46 a share, rising from a year
ago and beating analysts’ estimates. The company boosted its
full-year adjusted earnings guidance to $9.75 to $9.90 per share, from
$9.65 to $9.85 a share.
UnitedHealth
shares fell 1.1 percent to $184.35 at 10:03 a.m. in New York.
Sheryl
Skolnick, an analyst with Mizuho Securities, said the company’s ability to
control medical expenses was the brightest spot in a strong quarter. Insurers
measure costs with what’s called a medical loss ratio, or MLR. In the second
quarter, UnitedHealth spent 82.2 cents of every dollar in premium revenue on
care.
“That
the MLR has been well-controlled recently, especially since the exit from the
exchanges, and that this is not just a one-time event, makes us even more
comfortable that the driver is the culmination of many factors,” Skolnick said.
“The fact that UNH is years ahead of peers suggests that this could be a
meaningful competitive and valuation advantage.” She has a buy rating on the
stock.
Most
for-profit insurers have scaled back from the chaotic Obamacare markets, and
instead are targeting steadier business such as Medicare Advantage. The program
is still government-funded but isn’t in the political crosshairs of Republicans
who want to repeal the Affordable Care Act.
The
strategy of shrinking away from Obamacare was further ratified late Monday, as
the GOP’s latest efforts to repeal and replace parts of the health law
was dealt yet another defeat, likely ensuring continued
uncertainty in the markets. Two additional senators announced their opposition,
dooming the bill.
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