UnitedHealth Group’s annual revenue soars past $200 billion for first time
UnitedHealth Group had a banner 2017. The nation’s largest health insurer saw its revenue crack the $200 billion mark for the first time, while fourth-quarter profits more than doubled over 2016.
On top of those stellar results, the Minnetonka, Minn.-based company will reap an extra $1.7 billion in earnings in 2018 thanks to the Trump administration’s recent tax overhaul that reduced the corporate tax rate from 35% to 21%.
During a conference call with investors last week, UnitedHealth CEO David Wichmann said the company plans to use its proceeds from tax reform to invest in ways to improve healthcare affordability and quality.
He didn’t get into specifics, or discuss whether the extra cash would be used to lower insurance rates for customers.
UnitedHealth had a busy fourth quarter. The company’s Optum unit announced a proposed acquisition of DaVita Medical Group for $4.9 billion, which helps advance UnitedHealth’s strategy of shifting care away from costly hospitals and into outpatient sites.
The insurer also expanded its footprint globally through its proposed buyout of Santiago, Chile-based insurer BanMedica for $2.8 billion, “establishing a foundation for growth in South America for decades to come,” Wichmann said.
He also expressed support for the Trump administration’s recent executive orders meant to expand the use of association health plans and short-term health plans. UnitedHealth already has experience offering association health plans.
“We are supportive of these efforts to improve
UnitedHealth CEO David Wichmann said the company plans to use its proceeds from tax reform to invest in ways to improve healthcare affordability and quality.
choice and frankly provide access to lower-cost alternatives,” Wichmann said, though he added that the plans “must be designed carefully in order to enhance coverage options and to ensure they don’t destabilize other aspects of the health insurance market, like the small group market.”
Many health insurance experts say that the expansion of association health plans and short-term plans will harm the individual and small-group markets by siphoning away healthy members needed to balance out the costs of the sicker members.
In the fourth quarter, UnitedHealth grew revenue by 9.5% to $52.1 billion year over year. For the full year, revenue increased 8.8% to $201.2 billion. Both of UnitedHealth’s segments posted strong financial results.
The company’s insurance arm, UnitedHealthcare, reported fourth-quarter revenue of $41.6 billion, up 9.6% over the same period in 2016. Its 2017 net income grew 9.9% to $163.3 billion.
Optum, the insurer’s health services segment, posted fourth-quarter revenue of $24.4 billion, up 10% year over year. Its profit increased 9.1% to $91.2 billion for the full year.
UnitedHealthcare served 49.5 million customers during 2017, about 1.9% more than in 2016. The insurer gained 800,000 Medicare Advantage members in 2017.
Its Medicaid membership grew by 815,000 during the year as UnitedHealthcare entered new states and expanded the number of members it served in Iowa after another insurer, AmeriHealth Caritas, pulled out of the state in late 2017.
Meanwhile, commercial membership dipped slightly by 715,000 members to 29.9 million members largely because of UnitedHealthcare’s retreat from the ACA individual market. The insurer covered 485,000 individual members, down from nearly 1.4 million in 2016.
UnitedHealthcare’s full-year 2017 medical-loss ratio, which represents the amount per every premium dollar spent on medical care and quality improvement activities, was 82.1%. In the fourth quarter, the MLR was 82.2%.
Net income in the fourth quarter more than doubled over the same period in 2016 to $3.6 billion. UnitedHealth Group recorded a full-year profit of
● $10.6 billion, up 50.5% over 2016.