Healthcare Business News
Stephen Hemsley, UnitedHealth Group president and CEO

UnitedHealth poised to expand exchange presence

By Paul Demko
Posted: July 17, 2014 - 12:00 pm ET

UnitedHealth Group will compete for customers in up to two dozen health insurance exchanges during the 2015 open enrollment period. That's at least twice as many markets as the country's largest insurer sold products in during the initial enrollment period which ended earlier this year.

The expanded presence in the government-run marketplaces during the second year of operations was planned, company officials indicated on a call with investors Thursday. United utilized the initial open-enrollment period to monitor and learn about the fledgling marketplaces.

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“We plan to grow steadily from this point forward,” said Stephen Hemsley, UnitedHealth Group's president and CEO.

The Minnetonka, Minn.-based insurer's profits dipped slightly from 2013, but exceeded analysts' expectations. United's net earnings for the second quarter were $1.41 billion, a 2% decrease from the comparable period in 2013.

Earnings per share for the quarter were $1.42, up two cents from the prior year. But that was well ahead of analysts' consensus estimate of $1.26 earnings per share.

On the strength of its performance so far this year, United slightly increased its financial projections for 2014. The company now anticipates that it will have revenues of $130 billion, up from its previous estimate of $128 billion to $129 billion. In addition, United tightened its earnings-per-share estimate to between $5.50 and $5.60 for the full year, previously forecast at $5.40 to $5.60.

United added 270,000 customers during the second quarter of 2014. Growth was particularly robust in the Medicaid sector. The company added 380,000 Medicaid beneficiaries in the second quarter, and has added 635,000 individuals to its roles since the start of the year.

United officials also expressed confidence that changes to its Medicare Advantage program—especially its controversial steps to narrow provider networks—have positioned the company well to grow that sector of its business. In particular, they indicated that the insurer has improved its performance in the CMS' star-rating system that determines bonus payments to carriers.

“We have taken the steps that were necessary,” Hemsley said. “They were the most disruptive.”

The CMS recently announced that most individuals who signed up for coverage through the exchanges in 2014 will be automatically re-enrolled for the next year unless they take steps to change their coverage. That could make it difficult for companies like United that are looking to increase their market share to compete for customers. But company officials pointed out that the customer base for the exchanges is still expected to expand by 75% in the coming years.

“This was consistent with how we positioned this right from the beginning,” Hemsley said. “We're thinking this is about the right time.”

Follow Paul Demko on Twitter: @MHpdemko

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