More members, including sicker ones, drive UnitedHealth revenue, profit higher
(Updated at 1 p.m. ET)
UnitedHealth Group recorded higher revenue and profit in the third quarter of 2018, as it served more members, including those with higher acuity health conditions.
Minnetonka, Minn.-based UnitedHealth, which includes insurance arm UnitedHealthcare and health services subsidiary Optum, said Tuesday that it served 2.8 million more members in the three months ended Sept. 30 compared with the same quarter a year ago.
Membership in its Medicare Advantage program—up by 12% year over year to 4.9 million—and Medicaid program—up by 4% to 6.6 million—grew fastest.
UnitedHealthcare CEO Steve Nelson said during a call with investment analysts that the growth of its Medicaid membership was led by "higher need and therefore higher revenue membership," including those dually eligible for Medicaid and Medicare or those who participate in long-term services and support programs.
High acuity populations "remain an extraordinary growth opportunity" for the company, Nelson said. "We believe UnitedHealthcare is uniquely positioned to serve in the high growth, higher acuity submarkets, like Medicare, duals or patients with complex and chronic conditions," he said.
Meanwhile, UnitedHealthcare's commercial membership, which includes people who buy insurance through their employers or in the individual market, dipped slightly to 26.8 million. The insurer's total membership reached nearly 49 million, up 6% year over year.
UnitedHealthcare said it expects to grow its Medicare Advantage membership in 2019. It said 90% of its Advantage members will experience no premium increase or a decrease, despite adding new benefits and increasing access to senior fitness and wellness services, virtual visits and transportation for medical appointments.
Medicare open enrollment is in full swing, and the CMS recently said it expects Advantage membership to grow by 11.5% year over year to 22.6 million next year.
In the third quarter, UnitedHealthcare grew revenue 12.7% to $45.9 billion compared with the same period a year ago. The insurer said premiums grew 12.8% to $44.6 billion year over year. And its medical loss ratio was 81%, a decrease of 40 basis points, despite serving those higher-acuity members.
A UnitedHealth spokesman said in an email the insurer is "doing a better job of filling gaps in care and helping individuals who have health care needs."
Meanwhile, UnitedHealth's Optum business recorded revenue of $25.4 billion, up 11% year over year. Revenue grew across each of Optum's units, including pharmacy benefit management unit OptumRx, care delivery business OptumHealth and analytics segment OptumInsight.
OptumHealth recorded the highest revenue growth within Optum, as its OptumCare business, which has been gobbling up medical practices across the nation, served 14 million patients, 23% compared with one year ago.
"Building out this high performing ambulatory care system will occupy us for the next decade, as we progressively deliver significantly improved outcomes, quality and value to patients," Optum CEO Andrew Witty said.
Witty said Optum supports the federal government's efforts to transform pharmacy pricing. John Prince, CEO of OptumRx, said the company's move to provide point-of-sale drug rebates to its fully insured group health plan members starting in 2019 will return about $150 back to the individual consumer at the pharmacy counter.
Overall, UnitedHealth posted revenue of $56.6 billion in the three months ended Sept. 30, an increase of 12.4% of the same period in 2017. Its net income was $3.3 billion, up 28.2% year over year.
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