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Life Health > Health Insurance

UnitedHealth Sees Health Care Use Springing Back Up

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UnitedHealth Group did as well in the third quarter as its managers wanted it to do, and the health insurance giant’s results may be a rough indicator of how health care providers and the U.S. job market are doing.

The third quarter ran from July 1 through Sept. 30 — after the end of the first big wave of COVID-19 deaths, while major U.S. pandemic response subsidy programs were still in effect, and before the effects of the summer COVID-19 wave were clear.


  • Links to UnitedHealth earnings documents and conference call recordings are available here.
  • An article about UnitedHealth’s earnings for the second quarter is available here.

UnitedHealth’s earnings seem to be giving the message that doctors’ and hospitals’ patient volume is close to pre-pandemic levels, but that the number of people who have the kinds of good jobs that provide major medical coverage may have dropped about 5%.

The Basics

UnitedHealth is reporting $3.3 billion in net income for the third quarter on $65 billion in revenue, compared with $3.6 billion in net income on $60 billion in revenue for the third quarter of 2019.

UnitedHealth said in its earnings announcement that net income was down partly because the company made a conscious decision to spend money on support programs for customers, health care providers and local communities.

In March and April, in the first quarter, the COVID-19 pandemic filled some hospitals’ intensive care units with patients on ventilators.

But COVID-19 emptied out most other U.S. hospital units, clinics and physician offices.

Many health care providers postponed nonessential services, because of worries that COVID-19 would lead to a sudden rush of severely ill patients; fear that close encounters might lead to providers or patients getting COVID-19; and shortages of some basic supplies, such as surgical masks, cotton swabs and Tylenol.

UnitedHealth and other health insurers took steps to keep hard-hit health care providers in business in the second quarter, by providing emergency grants and loans, in some cases, and by speeding up claim payments.

The company’s medical care ratio, or ratio of health insurance claim costs to premium revenue, was 81.9% in the third quarter.

That was down some from 82.4% in the third quarter of 2019, but up, sharply, from a medical cost ratio of 70.2% in the second quarter of 2020.

The numbers reflect the fact that UnitedHealth was continuing to speed up payments to health care providers in third quarter, to give them the cash they needed to survive, and that use of ordinary health care services is starting to return to normal lives, UnitedHealth says.

“We’re encouraged to see those we serve respond to the incentives we offered to safely seek care as the health system continued to recover in the quarter,” David Wichmann, UnitedHealth’s chief executive officer, said in a comment on the results included in the earnings announcement.

Over on the demand side, group health operations shrank, and Medicaid operations grew.

“Commercial revenue was impacted by member attrition due to economic factors,” UnitedHealth says.

Commercial Coverage and Government Plan Coverage

The company ended the quarter providing or administering health coverage for about 26 million people with some kind of ordinary commercial health coverage, or about 1.5 million fewer enrollees than it had a year earlier.

Revenue at the company’s UnitedHealthcare Employer & Individual unit, which provides commercial coverage, fell 1.5%, to $14 billion.

UnitedHealth also runs Medicaid plans for states. Medicaid enrollment increased by about 470,000, to 6.4 million.

Revenue at the UnitedHealthcare Community & State unit, which provides coverage through Medicaid and other government programs aimed at low-income people, increased 11%, to $12 billion.


UnitedHealth ended  the quarter providing or administering health coverage for about 48 million people, down from about 49 million people a year earlier.

Here’s what happened to the number of people with key types of UnitedHealth health coverage between the end of the third quarter of 2019 and the end of the latest quarter:

  • Risk-based: 7.9 million (down 7.6%, from 8.6 million)
  • Fee-based: 18.million (down 4.3%, from 19 million)
  • TOTAL COMMERCIAL: 26 million (down 5.3%, from 28 million)
  • Medicare Advantage: 5.7 million (up 8.4%, from 5.2 million)
  • Medicaid: 6.4 million (up 7.9%, from 5.9 million)
  • Medicare Supplement (Standardized): 4.45 million (down 1.3%, from 4.5 million)
  • TOTAL PUBLIC AND SENIOR: 17 million (up  5.4%, from 16 million)
  • TOTAL DOMESTIC MEDICAL: 43 million (down 1.5%, from 43.5 million)
  • International: 5.3 million (down 9.6%, from 5.8 million)
  • WORLDWIDE TOTAL: 48 million (down 2.4%, from 49 million)

What These Numbers Might Mean for the Broader Economy

Here are three possible takeaways for agents and others with an interest in the health of the U.S. economy as a whole.

1. Important parts of the economy may be able to get back to close to normal quickly, which pandemic-related constraints go away.

The quick rebound in UnitedHealth’s medical cost ratio shows how fast the health care delivery sector was able to move to normal mode, to shutdown mode, and back to normal mode.

2. Even companies that provide essential products and services aren’t made of rubber.

UnitedHealth says in its earnings announcement that it expects that “future periods will reflect the ..continued backdrop of an uncertain economic recovery.”

3. The Medicare Advantage and managed Medicaid programs may be the hot places to be. 

Some economic theorists in free-market think tanks might dream of a world where everyone uses health savings accounts to pay primary care providers directly, and insurance exists solely to insure patients against catastrophic claims.

In this world, UnitedHealth is emphasizing that the health insurance unit’s “growth highlights  include strong positioning in Medicare Advantage in 2021; expected Medicaid membership gains in 2021 through entry into Kentucky, Indiana and North Carolina and expansion in Nebraska.”

— Read Q3 Life, Health and Annuity Earnings Season Starts Todayon ThinkAdvisor.

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