February 13th, 2019 by
Trefis Team
UnitedHealth Group (NYSE:UNH) is the largest
health insurance provider in the United States, with a 13% market share in
direct premiums written (per a 2018 FIO Report). The company has been
consistently beating street estimates in recent quarters, supported by strong
growth in revenue.
Our interactive dashboard on What to expect from UnitedHealth Group in 2019? outlines
the company’s recent performance, as well as our key drivers and forecasts for
the company. You can modify any of our forecasts to gauge the impact of changes
on the company’s valuation, and see all of our Health Care data here.
UnitedHealthcare serves its customers through
risk-based products, fee-based products, Medicare Advantage plans, Medicaid
services and other services. The company’s Medicare & Retirement division
contributes 40% of its total revenues, the highest among all divisions.
As the population ages, more people apply for
Medicare, and a consistent increase in Medicare enrollments is observed in the
chart below. Medicare Advantage is an alternative to original Medicare
services, managed by the federal government. Medicare Advantage had a market
share of 34% in 2017, compared to 28% in 2013. It has been growing at a CAGR of
7.5% compared to only 0.7% for original Medicare enrollments. Americans are
increasingly opting for privately managed Medicare Advantage over its
traditional counterpart.
UnitedHealthcare Leading Medicare Market
As can be observed in the below chart, there
has been a consistent increase in Medicare Advantage customers served by
UnitedHealthcare. The number of enrollments has been increasing at a CAGR of
10.5%, much higher than the market. The company had a market share of 7.5% in
2015, which grew to 22% in 2017. Per Gorman Health Group, large organizations
such as UnitedHealth Group and Humana are gaining in the market because of
their diversified product portfolios. Considering these trends, we expect
UnitedHealthcare to continue to gain from increasing penetration of Medicare
Advantage products.
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