UnitedHealth Group saw a 31% rise in profits in the second quarter over the same period last year, driven by strong enrollment and lower than expected costs. The strong results from the nation's largest health insurer by revenue bodes well for other major insurers, which also will release second-quarter earnings over the next two weeks, analysts said.
UnitedHealth reports 31% rise in profits
The Minnetonka, Minn.-based insurer posted total revenue of $23.26 billion, up 7% from $21.65 billion a year ago. Net earnings were $1.12 billion compared with $859 million last year in the quarter ended June 30.
The insurer shed 440,000 members in employer-based and individual plans, attributed to high unemployment, but overall commercial enrollment remained relatively steady with 24.6 million customers, compared with 24.5 million enrollees a year ago.
Gains were made in the Medicare and Medicaid market with UnitedHealth Group adding 1.1 million members in these government-sponsored plans.
Stephen Hemsley, president and CEO of UnitedHealth Group, said the strong quarter was due to growth in the health benefits and health services sectors.
The company earned $21.1 billion on premiums, up from $19.7 billion in the second quarter of 2009, and spent $17.2 billion on medical costs, compared with $16.5 billion last year.
About 82.2% of premium revenue was spent on medical care for commercial members. The Patient Protection and Affordable Care Act requires that insurers spend at least 85% of premium dollars for large group coverage and 80% for small group and individual coverage on medical care, starting next year. Detailed rules on this so-called medical-loss ratio provision of the law are expected this summer from HHS.
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