UnitedHealth Group CEO Witty bullish on Medicare Advantage

UnitedHealth Group remains optimistic about its Medicare Advantage business after a challenging year and a half for the program at large, CEO Andrew Witty said Tuesday.

The healthcare conglomerate that owns UnitedHealthcare, the leading Medicare Advantage carrier by market share, responded to financial and regulatory setbacks for the sector by emphasizing stability in its offerings, and will continue efforts to improve its star ratings quality scores, Witty told investor analysts when announcing the company's third-quarter results.

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“The way in which the team led us through 2024 in terms of benefit design has proven out to be on balance,” Witty said. “It really gives us confidence, as we look out over the next four or five years, that we don't feel like we're having to fix significant problems.”

Competitors such as Humana and CVS Health subsidiary Aetna have cut down the number of plans offered and scaled back supplemental benefits to boost margins in their Medicare Advantage books. The Medicare annual enrollment period began Tuesday and ends Dec. 7.

“We believe we will continue to be a top choice for consumers,” Witty said.

Nevertheless, UnitedHealth Group confronts headwinds in its government health insurance line, which includes Medicare and Medicaid.

Medical spending was higher than expected during the third quarter, driven by high-intensity coding from a few health systems and costly medications for cardiovascular disease, autoimmune disorders and cancer, UnitedHealth Group President and Chief Financial Officer John Rex said. In addition, Medicaid rates did not match costs, he said.

“We are clearly in an unusual situation right now in terms of the various pressures that we've seen coming externally from particularly government funding reductions and, to some extent, the continued strength of [medical expense] costs,” Witty said.

The medical loss ratio, which measures the share of premiums spent on care, rose across the company's insurance products from 82.3% to 85.2% during the third quarter, UnitedHealth Group reported.

Membership declined 4% to 50.7 million as growth in U.S. commercial insurance and Medicare Advantage wasn't enough to offset losses in Medicaid and international commercial insurance, the company reported.

UnitedHealth Group earnings rose 3.7% to $6.1 billion as revenue increased 9.2% to $100.8 billion during the third quarter. The company downgraded its adjusted profit per shared guidance from $27.50 to $27.75, mainly owing to high medical costs and the continuing fallout from a cyberattack against Change Healthcare, a unit of UnitedHealth Group subsidiary Optum.

The company projects the Change Healthcare breach will cost it $2.2 billion this year and that, while costs will diminish over time, expenses will carry over into 2025, Rex said.

UnitedHealth Group shares closed at $556.29 on the New York Stock Exchange on Tuesday, down 8.1% from the previous day's closing price.