Favorable medical cost trends helped UnitedHealth Group Inc. increase third-quarter net earnings 21%.[@@]

UnitedHealth, Minneapolis, Minn., is reporting $842 million in net income for the latest quarter on $11 billion in revenue, up from $698 million in net income on $9.9 billion in revenue from the third quarter of 2004.

The company ended the latest quarter providing or administering health coverage for 13 million people, up from 12.4 million a year earlier.

Third-quarter operating earnings improved over third-quarter 2004 totals at every company division that reports its earnings separately, according to UnitedHealth Chairman Dr. William McGuire.

McGuire is predicting that UnitedHealth will continue to report strong results well into next 2006.

Matthew Borsch, a securities analyst at Goldman Sachs Group Inc., New York, writes in a note about UnitedHealth’s earnings that a slowdown in medical cost increases should help the entire managed care industry in 2006.

The debut of the new Medicare managed care and prescription drug programs could lead to several years of growth at UnitedHealth and many of its competitors, by reducing those companies’ exposure to the effects of recessions on commercial health plans, Borsch writes.