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October 17, 2013 at 07:52 AM
UnitedHealth Group Inc. executives say the company is facing Medicare funding pressure, problems with increasing Medicare plan quality ratings and the effects of health system change on commercial customer psychology.
The executives talked about the market headwinds today during a call with securities analysts.
UnitedHealth (NYSE:UNH) organized the call to discuss third-quarter earnings. The company is reporting $1.6 billion in net income for the quarter on $4.3 billion in revenue. Net income was down 0.4 percent, and revenue was down 0.8 percent.
The company ended the quarter providing or administering health coverage for 45 million people, up 24 percent from the number it was covering a year earlier.
One challenge is that the government is trying to shift some funding for Medicare Advantage plans to plans that earn ratings of four stars or higher on a five-star scale. UnitedHealth has been increasing plan quality ratings, but not as quickly as it would like, and some of the increases will not help the company collect star-linked bonus payments until 2015, executives said.
In the commercial market, executives said that many employers that have had fully insured coverage are moving to self-funding, and that many buyers of group and individual health insurance are moving to high-deductible, account-based health plans. Account-based plans typically have lower premiums than conventional plans.
About 20 percent of the consumers with UnitedHealth individual or group commercial insurance now have account-based coverage, the company said.
In the commercial individual and small-group markets, the company is trying to stick with a disciplined, consistent approach to pricing, even if that means giving up some market share in the short-term, executives said.
