Tuesday, July 23, 2019

UnitedHealth Group's Medicare Advantage Enrollment Jumps 10% And Boosts Profits


Bruce Japsen Senior Contributor Jul 18, 2019, 09:30am

UnitedHealth Group said its privatized Medicare Advantage enrollment grew by more than 10% as the company's second-quarter profits rose and the healthcare giant increased its financial forecast for the rest of the year.

Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines, with some even providing vision and dental care and wellness programs. And the federal government has changed regulations to allow Medicare Advantage plans to provide broader coverage in the future, which is also expected to boost enrollment.

"The outlook for further growth in this category – and more broadly in group and individual Medicare Advantage – remains exceptional," Dirk McMahon, who was recently elevated to be CEO of UnitedHealth's UnitedHealthcare health insurance business from a top role at Optum, told analysts Wednesday morning on the insurer's second-quarter earnings call. "Year-over-year, we’ve grown by more than 540,000 people across all these important areas, greater than 10 percent. We see significant macro revenue growth opportunities in these categories for years to come."

UnitedHealth ended the second quarter with 5.19 million Medicare Advantage enrollees compared to 4.79 million in the year-ago period.

The increased enrollment helped boost 2019 revenues in UnitedHealth's "Medicare and Retirement" business revenues by $2 billion or nearly 11% to $20.9 billion. That helped the company's total revenues rise 8% to more than $60 billion.

Profits, meanwhile, increased 13% to $3.3 billion compared to $2.9 billion in the year-ago quarter.

The increase in Medicare Advantage enrollment helped convince UnitedHealth executives to raise its full year net earnings outlook to "$13.95 to $14.15 per share."

UnitedHealth and rivals Humana, Anthem, Cigna and CVS Health’s Aetna health insurance business dominate the Medicare Advantage business with others including Centene and Bright Health expanding into new markets. This growth was recently highlighted in a report by L.E.K. Consulting that projected enrollment of seniors in private Medicare Advantage plans could reach 70% of those eligible for federal health benefits for the elderly between 2030 and 2040.

Also contributing to UnitedHealth's rising overall profits was the company's fast-growing Optum 
health services business. In particular, the company highlighted the pharmacy benefit manager, OptumRx, and OptumHealth, which continues to add new medical care providers to the business. Optum revenues jumped 13.4% to $28 in the quarter, the company's earnings report said.


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