Unit­edHealth to ex­pand ex­change pres­ence

Modern Healthcare - - NEWS - By Paul Demko

Unit­edHealth Group, the na­tion’s largest in­surer, has over­come its ini­tial reser­va­tions about the Oba­macare ex­changes and will com­pete in up to two dozen state mar­ket­places dur­ing the 2015 open en­roll­ment pe­riod. That’s at least twice as many as it par­tic­i­pated in this year.

United used the 2014 open en­roll­ment pe­riod to mon­i­tor and learn about the fledg­ling ex­change mar­ket, com­pany ex­ec­u­tives said last week on a call with in­vestors. “This was con­sis­tent with how we po­si­tioned this right from the be­gin­ning,” said Stephen Hem­s­ley, Unit­edHealth Group’s CEO. “We’re think­ing this is about the right time.”

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 2 cents from the prior year. But that was well ahead of an­a­lysts’ con­sen­sus es­ti­mate of $1.26 earn­ings per share.

United slightly in­creased its fi­nan­cial projections for 2014. The com­pany now an­tic­i­pates that it will reap rev­enue 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.

The in­surer added a to­tal of 270,000 cus­tomers dur­ing the sec­ond quar­ter of 2014. The ad­di­tion of 380,000 Med­i­caid ben­e­fi­cia­ries off­set some falloff in other sec­tors. In to­tal, it has added 635,000 Med­i­caid mem­bers to its rolls 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 ex­pand 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.

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 United of­fi­cials said the ex­change cus­tomer base is still ex­pected to ex­pand by 75% in the com­ing years.

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