UnitedHealth Group reported its “strongest
ever” growth in Medicare Advantage enrollment as the company added hundreds of
thousands of seniors to its health plans for 2020 amid a competitive
environment among rival health insurers.
The growth in Medicare Advantage enrollment
will help UnitedHealth Group meet its lofty earnings targets for the year and
helped the nation’s largest health insurer beat Wall Street’s earnings
expectations for the fourth quarter.
In the fourth quarter of 2019, UnitedHealth
reported a 19% increase in earnings to $3.5 billion, or $3.68 per share,
compared to $3.04 billion, or $3.10 a share in the year ago quarter. Revenue
jumped 7% to $47.6 billion in the quarter helped by continued growth from its
Optum health services businesses.
“We finished the year encouraged by continued
performance improvement in Medicaid, early market interest in our new
innovative line of employer-sponsored benefit offerings and 2020 individual
Medicare Advantage annual enrollment results, which were our strongest ever,”
UnitedHealth Group chief executive David Wichmann, told analysts Wednesday
morning on the company’s earnings call. “Within our Medicare Advantage
offerings, including dual eligible growth, we expect to serve 700,000 more
people in 2020, nearer to the upper-end of the range of performance offered at
the (December) investor conference.”
UnitedHealth’s strong Medicare Advantage
growth comes amid unprecedented competition given a record number of health
plans are participating in a program that offers seniors the same benefits as
traditional Medicare plus extras like preventative care and outpatient
healthcare services.
UnitedHealth’s Medicare Advantage growth and
projections for 2020 indicate the insurer performed well against rivals in the
health insurance business including Anthem, the Aetna unit of CVS Health,
Cigna, Humana and Centene. All of these big health insurers as well as smaller
plans and startups are also expected to see big gains in Medicare Advantage
enrollment this year.
Health insurers have been selling perhaps
their richest benefit packages for Medicare Advantage, thanks to new rules that
allow Medicare Advantage plans to offer more benefits to seniors. 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 also offering vision, dental care and wellness programs.
UnitedHealth said its Medicare and retirement
revenues jumped by more than 10% to $83.3 billion in 2019, “as the business
grew to serve 5.3 million people in Medicare Advantage at year end, an increase
of 325,000 in 2019,” the company said in its report.
With the Medicare Advantage growth and the
strong performance of other businesses, including Medicaid coverage for poor
Americans, UnitedHealth affirmed its full year 2020 earnings outlook that
includes “net earnings of $15.45 to $15.75 per share and adjusted net earnings
of $16.25 to $16.55 per share,” the company said.
Total company revenues and profits continue to
be helped by Optum, which had another record year in 2019. Optum’s 2019
revenues rose 12% to $113 billion while “operating earnings grew 14% to $9.4
billion,” said Andrew Witty, president of UnitedHealth Group and CEO of Optum.
Optum owns one of the nation’s largest
pharmacy benefit managers in OptumRx as well as an array of medical care
provider businesses, including doctor practices, surgery centers and urgent
care sites across the country. “We are steadily expanding into new geographies
and expanding the depth and breadth of services in existing regions to better
provide patients with the highest quality, convenient and affordable health
services,” Witty said.
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