Star Tribune (Minneapolis, MN) October 17, 2018
With quarterly
profits again soaring beyond expectations, UnitedHealth Group executives on
Tuesday predicted more growth in the market for Medicare health plans, which
includes new offerings in Minnesota.
The
Minnetonka-based company's UnitedHealthcare division is the nation's largest
health insurer and largest seller of Medicare Advantage plans, which a growing
number of beneficiaries purchase as a way to obtain government health benefits
through a private insurer.
Minnesota's market
for Medicare coverage is in flux this fall, with the elimination next year in
66 counties of Medicare Cost plans -- a different form of government coverage
via private insurers that is used by more than 300,000 people in the state.
UnitedHealthcare is
launching Medicare Advantage plans here in the midst of the change, as is a
joint venture between insurance giant Aetna and the Minneapolis-based Allina
Health System.
"We expect a
strong year from Medicare Advantage," David Wichmann, UnitedHealth Group
chief executive, said in a conference call with investors.
While Wichmann
didn't specifically mention Minnesota in his comments, the company has
previously disclosed its plans for growth in its home state. UnitedHealthcare
plans on offering standard individual Medicare Advantage plans in 119
additional counties next year including nine counties in Minnesota. The
expansion will bring the overall Medicare Advantage tally to 1,759 counties --
more than half of the roughly 3,000 counties in the United States, overall.
Third-quarter
profit was up 28 percent at UnitedHealth Group, as the company easily beat
analyst expectations for earnings and raised financial guidance for the year.
The company's shares advanced more than 4.7 percent Tuesday.
Medicare has
emerged as one of the company's largest sources of health-insurance revenue.
During the third quarter, UnitedHealthcare saw nearly $18.8 billion in revenue
from Medicare and retirement products including Advantage plans.
The plans are a
type of coverage offered by private companies that contract with the federal
government to provide all of an enrollee's Medicare benefits. A March report
from the market-research firm Mark Farrah Associates listed UnitedHealthcare as
the nation's largest Medicare Advantage company with more than 5.2 million members.
The annual shopping
season for Medicare coverage started Monday, and it's unusual in Minnesota due
to the disappearance of many Medicare Cost plans. As mandated by law, the
government is "sunsetting" the plans in 66 counties where there's
significant competition from Medicare Advantage plans, which the government has
favored for taking the financial risk in managing enrollees' health care use.
The long-term
growth rate with Medicare Advantage has been 7 percent to 8 percent, said Brian
Thompson, chief executive of UnitedHealthcare's Medicare business.
"Our planning
is certainly to outpace that rate, as we have now for four or five years,"
Thompson said.
Cost-plan enrollees
don't have to pick a Medicare Advantage plan, and can opt instead for original
Medicare. People who use the traditional government program often buy Medigap
supplementary insurance policies as well as Part D drug coverage -- markets
where UnitedHealthcare also is one of the nation's largest insurers.
More than 4.9
million people were enrolled in Medicare Advantage plans from UnitedHealthcare
at the end of September. Among those on original Medicare, 4.5 million people
were buying Medigap policies from UnitedHealthcare last month, while 4.7
million people were buying stand-alone Part D prescription drug plans from the
insurer.
Health insurance
continued to generate most of UnitedHealth Group's revenue, its new quarterly
results showed, but the company's Optum unit for health care services generated
a bigger profit margin. Optum includes direct patient care, a division for
analytics and information technology and a pharmaceutical benefits management
(PBM) business that's growing with acquisitions.
UnitedHealth
announced Tuesday that the PBM business acquired a Phoenix-based specialty pharmacy
called Avella, but did not disclose financial terms. Last month, UnitedHealth
acquired Genoa Health, which runs pharmacies in behavioral health clinics, for
a reported $2.5 billion.
"Drug
companies are free to increase prices at will. The PBM acts as a mechanism to
discipline that process," Andrew Witty, Optum's chief executive, said on
the call with investors.
For the quarter,
UnitedHealth Group's net income rose 28 percent to $3.2 billion. Revenue rose
12.5 percent to $56.6 billion.
On a per-share basis,
adjusted earnings of $3.41 beat by 12 cents the earnings expected among
analysts surveyed by Thomson Reuters.
For full-year 2018,
UnitedHealth now expects its per-share profit to approach $12.10, up from the
prior range of $11.80 to $12.05. It said that adjusted per-share earnings,
which exclude the effects on one-time events, will approach $12.80 for the full
year, above its previously forecast range of $12.50 to $12.75.
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