UnitedHealth to expand exchange presence
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.