UnitedHealth Group continues to feel financial pressure from higher medical utilization among older members, the company reported Friday.
UnitedHealthcare recorded an 83.2% medical loss ratio for 2023, 1.5% higher than 2022, and a 2.7% increase to 85% for the fourth quarter. UnitedHealth Group attributed the trend to Medicare beneficiaries obtaining costly treatments last year. UnitedHealth Group has warned of higher medical expenses since the second quarter.
Related: Executives detail UnitedHealthcare, Optum Health's growth plans
“Activity levels continue to be led by outpatient care for seniors, with orthopedic and cardiac procedure categories among the more prominent,” Chief Financial Officer John Rex said on a call with investor analysts. “Our benefit design approach assumed these activity levels persist throughout 2024, and the care patterns we observed exiting 2023 reconfirmed that decision.”
UnitedHealth Group net earnings rose 12% to $23.14 billion for full-year 2023 on a 14.6% revenue increase to $371.62 billion. Fourth-quarter net earnings grew 15.6% to $5.68 billion and quarterly revenue went up 14.1% to $94.43 billion.
Medicare Advantage members seeking vaccinations against respiratory syncytial virus, known as RSV, and other ailments contributed to more office visits, especially among patients who had not recently seen primary care providers, according to UnitedHealth Group. COVID-19 hospital spending rose because costs per case were higher and admissions rose. The novel coronavirus sent 50% to 60% more UnitedHealth Group members to the hospital in December than the average number through October and November, Rex said.
Escalating medical costs are affecting the health insurance industry at large, with companies such as Aetna and Cigna reporting similar trends.
Medicare Advantage claims are likely to drive Aetna's fourth-quarter medical loss ratio above the 86% projected, Thomas Cowhey, chief financial officer for parent company CVS Health, said Monday at the J.P Morgan Healthcare Conference in San Francisco. At the same event, executives from Cigna, Centene and Alignment Healthcare also said their companies believe the fourth quarter featured higher Medicare Advantage utilization.
UnitedHealth Group cautioned its Medicare Advantage enrollment growth would be more modest in 2024 amid intensified competition. In November, the company predicted a 5% Medicare Advantage membership increase this year, below the Centers for Medicare and Medicaid Services' 7% growth projection for the program overall.
UnitedHealthcare signed up 100,000 additional Medicare Advantage members during the open enrollment period that ended Dec. 7, and now claims 7.7 million customers in this segment. On Friday, UnitedHealthcare Medicare and Retirement CEO Tim Noel characterized that as “a little bit light” relative to expectations, although the company still anticipates meeting its 2024 goal of 550,000 new Medicare Advantage policyholders as the year goes on.
The company's Optum subsidiary reported growth in pharmacy and direct care. Revenue spiked 24% to $226.6 billion in 2023 and 24.2% to $59.5 billion in the fourth quarter.
UnitedHealth Group shares closed at $521.51 on the New York Stock Exchange Friday, down 3.4% from Thursday.
