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UnitedHealth: It's time to work the exchanges

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UnitedHealth Group Inc. (NYSE:UNH) could soon be selling qualified health plan (QHP) coverage through almost half of the Patient Protection and Affordable Care Act (PPACA) public exchanges. 

Stephen Hemsley, the president of UnitedHealth, said the company wants to sell individual QHPs in 24 exchanges in 2015, up from five this year.

See also: UnitedHealth may expand PPACA exchange effort

“By participating moderately this year, and then watching closely and listening, we have learned about pricing, networks, regulatory structures, distribution, and the consumer’s mindset,” Hemsley said. That experience should help the company do a good job with managing exchange risk in 2015, Hemsley said.

UnitedHealth wants the QHP programs to be sustainable on their own, and not “overly rely” on the PPACA risk-management programs, Hemsley said.

Exchange QHPs now have about 8 million paid enrollees. The Congressional Budget Office has estimated that QHP enrollment could eventually be about four times higher, Hemsley said.

UnitedHealth expects to see “meaningful membership activity” in the QHP market next year, Hemsley said. Hemsley and other UnitedHealth executives talked about PPACA exchange program during a conference call with securities analysts. The company held the call to review second-quarter earnings.

One analyst asked executives why the company is confident enough about the exchange market to expand its participation in the exchanges next year, rather than waiting until 2016. Hemsley said the company now believes the public exchange system will be an established sector of the health insurance market.

“We have to choose to participate at some point,” Hemsley said. “We don’t want to get in too late.”

UnitedHealth is reporting $1.4 billion in net income for the quarter on $33 billion in revenue, compared with $1.4 billion in net income on $30 billion in revenue for the second quarter of 2013. The company ended the quarter providing or administering commercial health coverage for 29 million people, down 4.1 percent from the total for the second quarter of 2012.

Because of big gains in Medicaid and Medicare supplement plan enrollment, government plan enrollment increased 11 percent, to 11 million.

The company was also insuring the health of 4.8 million people outside the United States.

Total worldwide health plan enrollment held steady at about 45 million.

During the earnings call, company executives said new Medicaid enrollees use a great deal of medical care, but that their utilization levels are in line with projections.

UnitedHealth has two few exchange QHP enrollees to come to conclusions about their utilization levels, but it sees no evidence that PPACA has led to a surge in care utilization, executives said.


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