Executives at UnitedHealth Group Inc. (NYSE:UNH) did not use the words “agent,” “broker,” “consultant” or “commission” today when they went over the company’s first-quarter earnings with securities analysts.
Company executives did say, during a conference call that was streamed live on the Internet, that they fear the 795,000 enrollees in their public health insurance exchange plans will be even sicker than they warned in January. In January, they estimated high claims would lead to $525 million in 2016 policy year exchange plan losses. The company has increased the 2016 exchange plan enrollee loss forecast by $125 million, to $650 million.
But executives also sounded less cheery about the Medicare plan markets, and more interested in bread-and-butter commercial business.
For more about what the executives said, read on.
1. Medicare Advantage plan benefits may wilt in 2017.
UnitedHealth as a whole reported $1.6 billion in net income for the first quarter on $45 billion in revenue, compared with $1.4 billion in net income on $36 billion in revenue for the first quarter of 2015.
The company’s health insurance unit, UnitedHealthcare, is reporting $1.9 billion in operating earnings on $36 billion in revenue, compared with $1.9 billion in operating earnings on $33 billion in revenue for the year-earlier quarter.
The company ended the quarter providing or administering major medical coverage for 48 million people, up from 46 million a year earlier.
Medicare supplement (Medigap) enrollment increased to 4.2 million, from 3.9 million.
Medicare Advantage enrollment rose to 3.5 million, from 3.2 million. Enrollment in Medicare Part D prescription drug policies fell to 5 million, from 5.1 million.
David Wichmann, UnitedHealth’s president, said the company believes its Medicare Part D business will be better positioned in 2017.
“We’ve pulled back in a number of markets this year to reposition products,” Wichmann said. The company boosted enrollees through a modest acquisition, he added.
Wichmann said the company’s Medicare Advantage plans continue to appeal to consumers with their networks and benefits stability.
But Steve Nelson, the head of the UnitedHealthcare retirement product unit, said lower-than-expected federal funding for the Medicare Advantage program is forcing the company to think about how to offer stable benefits in an underfunded environment.
“It will be something that we’ll consider and be able to talk more about after we get through our planning season,” Nelson said.
2. Big national accounts are not so easy to reel in.
A year ago, UnitedHealth executives were saying sales of group plans to large employers looked good.
Today, Jeff Alter, the head of the company’s UnitedHealthcare employer product unit, said the national account selling season has been slow this year.