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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