UnitedHealth execs skimp on commercial health talk

UnitedHealth Group executives seemed to avoid associating their company with commercial health insurance today as they talked about third-quarter earnings during a conference call with securities analysts.

Stephen Hemsley, the chief executive officer, described UnitedHealth as a company that works "to improve [the] overall health care system," and, later, as a company that helps "make the health system work better for everyone."

The Minnetonka, Minnesota-based company had Larry Renfro, the head of its Optum health services unit, talk about the performance of his unit before it brought out Dave Wichmann, the head of the UnitedHealthcare insurance unit. Wichmann talked about the unit's Employer & Individual health coverage division only briefly.

"The market continues to respond positively to the value UnitedHealthcare Employer & Individual plans offer," Wichmann said during the call, which was streamed live on the Web. "Excluding individual plans, our commercial group business grown to serve 775,000 more people year-over year, continuing its consistent pattern of growth.

Wichmann then went on to spend much more time talking about the unit's Medicare and Medicaid operations.

UnitedHealth as a whole reported $2 billion in net income for the quarter on $46 billion in revenue, up from $1.6 billion in net income on $41 billion in revenue for the third quarter of 2015.

The UnitedHealthcare insurance unit is reporting $2.1 billion in operating earnings for the quarter on $37 billion in revenue, up from $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 44 million people in the United States and 48 million people around the world, up from 42 million in the United States and 46 million around the world Sept. 30, 2015.

The company did not mention the Affordable Care Act public health insurance exchange system, or the ACA-compliant individual major medical market, in its earnings release for the quarter, except in a footnote at the bottom about "factors that could cause actual results to differ materially from results discussed or implied in forward-looking statements."

The company and its executives did not mention insurance agents or brokers in the earnings release or during the conference call.

For a look at more of what the company said about its U.S. commercial health insurance operations, read on:

UnitedHealth used to employ Andrew Slavitt, the currrent head of the Centers for Medicare & Medicaid Services. (Image: House Energy hearing video screen capture)

UnitedHealth used to employ Andrew Slavitt, the current head of the Centers for Medicare & Medicaid Services. (Image: House Energy hearing video screen capture)

Individual exchange plans lost more than expected

Andrew Slavitt, the acting administrator of the Centers for Medicare & Medicaid Services (CMS), the agency that oversees the ACA exchange system, worked for UnitedHealth before he went to CMS, but UnitedHealth is showing no interest in reversing the decision it made earlier this year to cut back sharply on exchange program participation.

UnitedHealth ended the third quarter with 770,000 people enrolled in individual exchange plans and about 210,000 enrolled in off-exchange, ACA-compliant individual coverage, according to Daniel Schumacher, the chief operating officer of UnitedHealthcare.

UnitedHealth already had $120 million in a premium deficiency reserve for the ACA exchange plan business, because it knew premiums were lower than they ought to be for the plans to break even.

The exchange plan unit actually lost $200 million, and $80 million in losses flowed into the company's current earnings total, Schumacher said.

The $200 million loss on exchange plan business amounts to an average loss of about $260 per exchange plan enrollee.

The percentage of exchange plan enrollees who have come in through the special enrollment period process is now in the mid-teens, down from about 20 percent a year ago, Schumacher said.

One analyst asked the UnitedHealth executives if they think any states will use the ACA Section 1332 process, which lets states adjust some ACA provisions, to change their health insurance markets in a significant way.

Hemsley said the company does not want to talk about the ACA at this time, as a new presidential administration is about to come in.

"Our position is to be very constructive about making the marketplace work most effectively, and making the system simpler and more usable for everybody," Hemsley said.

UnitedHealth executives said several times, however, that they see the ACA Medicaid expansion program as a big success.

Jeff Alter, the CEO of the UnitedHealthcare Employer division, said the market for commercial group coverage is competitive.

"We see firming of pricing, particularly in the fully insured market," Alter said. "It's a pretty benign environment."

UnitedHealth lost some business in some markets to lower-priced competitors in 2014. Now that prices are rising, "we're growing in those marketplaces," Alter said.

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