Executives also said that the company may sell individual major
medical insurance in more markets.
UnitedHealth Group
Inc. should produce solid earnings this year, but the company’s main focus is
on overcoming the COVID-19 pandemic, company executives said Wednesday.
David Wichmann, the company’s chief executive
officer, told securities analysts, during a conference call, that the effort to
fight COVID-19 is deeply personal to everyone at UnitedHealth.
UnitedHealth is now a major health care
services provider as well as health insurer.
“We are committed to applying the full
capacity of our enterprise to serve, not just our patients, members, and
customers, but also the hundreds of millions of people impacted across the
nation and around the world,” Wichmann said.
One concern, he said, is that COVID-19-related
disruption could end up benefiting United Health at the expense of
doctors, hospitals and customers.
Because the current situation is so unusual,
UnitedHealth is not sure what its insurance claims, health care revenue, and
earnings will be like, Wichmann and other executives said.
The Affordable Care Act (ACA) already includes
a minimum medical loss ratio (MLR) provision. The minimum MLR provision
requires health insurers to provide rebates if health care spending amounts to
less than 85% of revenue for large-group health coverage, or less than 80% of
revenue for individual or small-group health overage.
Because health care providers and patients are
putting off as much care as possible, both to conserve health care resources
and to reduce the risk that patients and providers will infect each other with
the virus that causes COVID-19, it’s possible that reductions in health
insurance claims will outweigh any COVID-19-related claim costs from now
through June, Wichmann said.
If health claim reductions are really bigger
than the added COVID-19-related costs, “not only would there be normal MLR
rebate situations, but we may very well find ourselves in a position where we
can provide some additional premium relief to those clients,” Wichmann said.
“It remains to be seen whether or not we are able to do so, and to what extent.
But it is something that we’re deeply committed to doing.”
Wichmann also talked about worries about
potential “financial imbalances” at several other points during the call.
“While there is still much to understand, we
can be very clear with you today that we are committed to ensuring that any
financial imbalances which arise from this situation will be reconciled
proactively and addressed fairly for all those we serve,” Wichmann said.
UnitedHealth has already paid about $2 billion
to health care providers early, to help the providers cope with the effects of
COVID-19 on their operations, Wichmann said.
UnitedHealth held the conference call to go
over earnings for the first quarter.
Resources
The quarter ended March 31.
UnitedHealth executives noted that, because
COVID-19 began to have much more of an effect in March, and major government
rule changes took effect in March, the pandemic has not yet much effect on its
earnings.
The Earnings
UnitedHealth is reporting $3.5 billion in net
income for the first quarter on $64 billion in revenue, compared with $3.6
billion in net income on $60 billion in revenue for the first quarter of 2019.
The UnitedHealthcare health insurance unit is
reporting $2.9 billion in operating earnings on $51 billion in revenue,
compared with $3 billion in operating earnings on $49 billion in revenue for
the year-earlier quarter.
The company is providing or administering
health coverage for 49 million people, down from 50 million people a year
earlier.
Here’s what happened to the number of
people with key types of UnitedHealth health coverage:
·
Risk-based: 8.2 million (down from 8.3 million)
·
Fee-based: 19.2 million (flat)
·
Medicare
Advantage: 5.6 million ( up from
5.2 million)
·
Medicaid: 5.9 million (down from 6.4 million)
·
Medicare
Supplement (Standardized): 4.4 million (down from 4.5 million)
·
International: 5.6 million (down from 6.1 million)
The COVID-19 Response
Wichmann said health care providers at
UnitedHealth’s Optum unit have provided care for about 10,000 of the 644,000
U.S. residents who’ve had COVID-19.
The Optum unit is running about 400 COVID-19
test sites, and it’s helping New Jersey set up a field hospital, Wichmann said.
Optum’s own health care providers had trouble
getting personal protective equipment, he said.
“We are resolved and committed to making sure
that not only our health workforce, but the health workforce broadly, stays
protected,” he said.
UnitedHealth has been working on getting more
protective equipment, and also on testing that can help reduce the need for
protective equipment, he said.
The company offered a special enrollment
period for all people who wanted to get coverage in time to cope with COVID-19
risk, and “tens of thousands” of people took UnitedHealth up on that offer,
Wichmann said.
UnitedHealth has also offered payment
extension arrangements for employers facing financial problems.
The percentage of commercial premiums affected
by extensions has increased to 3% this month, from a typical level of about
0.4% of the premium base, according to Dirk McMahon, the chief executive
officer of the UnitedHealthcare unit.
The Individual Market
UnitedHealth has moved in and out of the ACA
individual major medical market since 2014, when the ACA public health
insurance exchange program came to life.
The company began looking at participating in
more ACA exchanges before the COVID-19 crisis came along, McMahon said.
“We’re still in the process of going through
market-by-market, evaluating the relative efficiency of our network, our
ability to compete, and states where we would like to extend Medicaid,” he
said.
McMahon said UnitedHealth will probably have a
better idea of what it will do about the individual major medical market in
July, when it releases its second-quarter earnings.
Allison Bell, ThinkAdvisor's insurance editor, previously
was LifeHealthPro's health insurance editor. She has a bachelor's degree in
economics from Washington University in St. Louis and a master's degree in
journalism from the Medill School of Journalism at Northwestern University. She
can be reached at abell@alm.com or on Twitter at @Think_Allison.
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