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UnitedHealth Says Narrower Group Distribution Helps Sales

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Fully insured commercial group health enrollment is still growing at UnitedHealth Group Inc. partly because of the way the company works with distributors, a company executive said today.

Jeff Alter, chief executive for the Minnetonka, Minnesota-based company’s UnitedHealthcare employer and individual business unit, talked a little about the company’s group health sales strategy as the company went over second-quarter earnings with securities analysts.

The Earnings

UnitedHealth as a whole is reporting $2.4 billion in net income for the second quarter on $50 billion in revenue, compared with $1.8 billion in net income on $46 billion in revenue for the second quarter of 2016.

(Related: 3 UnitedHealth Earnings Highlights for Agents)

The company ended the quarter providing or administering major medical coverage for 49.5 million people, up from 48 million people a year earlier.

Commercial employer and individual health revenue fell to $13 billion, from $13.5 billion.

Commercial individual enrollment fell to 540,000, from 1.5 million, because of the company’s retreat from the Affordable Care Act public exchange market. Commercial group insurance plan enrollment increased to 7.8 million, from 7.2 million.

The Affordable Care Act 

Stephen Hemsley, UnitedHealth’s CEO, began cooling on the Affordable Care Act public health insurance exchange system in late 2015. During the conference call, he took pains to emphasize that the company is now focusing on activities such as helping self-insured employer health plans and public health programs control their own health care costs.

“UnitedHealth Group is a difference organization than it was just 10 years ago,” Hemsley said.

UnitedHealth believes company-specific factors, such as its ability to control health care costs and keep existing clients happy, will provide helpful tailwinds in 2018, Hemsley said.

The unhelpful headwinds are largely the result of external factors, such as policymakers’ discussions in Washington, Hemsley said.

“Speculation about any outcomes here would just be that,” Hemsley said.

UnitedHealth executives did not talk about any plans for returning to the individual major medical market any time soon. New York state has reported requiring the commercial insurers in its managed Medicaid program to sell coverage through its Affordable Care Act exchange system. UnitedHealth executives said, with evident relief, that there does not seem to be any obvious new trend for states to require Medicaid plan providers to participate in Affordable Care Act exchange programs.

Group Distribution

In recent years, UnitedHealth has not said much about distribution of commercial health insurance or health plan administration services during earnings calls.

Jeff Alter said today, in response to an analyst’s question, that UnitedHealth is doing better in the fully insured group market partly because it does a good job at holding down costs, but also because of other factors.

“The market moves on value,” Alter said.

UnitedHealth offers employers a solid menu of coverage choices, and it also has taken a different approach to distribution than some competitors, Alter said.

The company has worked to narrow its distribution network, focuses resources on favored brokers and consultants, and offered those most favored distributors tools that make moving clients into UnitedHealth plans as easy as possible, Alter said.

“One of the things that we’ve learned over the years is that our brokers and consultants in the marketplace seek to do business with those that make it easier for them to do business with,” Alter said.

Buy Down Choices

Alter said UnitedHealth has focused on giving cash-strapped employers and their advisors five different, prepackaged opportunities to manage costs, by “buying down” benefits, without having  to change carriers.

Employers seem to be especially interested in opportunities to cut costs by designating some health care providers within a provider network as premium providers, based on a combination of efficiency measures and quality measures, Alter said.

“It helps our clients achieve price points that are affordable and also gives them the comfort that people are getting better oucomes,” Alter said.

— Read Blue Cross Carrier to End Iowa Individual Sales in 2018 on ThinkAdvisor.


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