UnitedHealth Group’s second-quarter results make it clear that even as the company’s losses on the Affordable Care Act continue to climb, the rest of the its diverse business lines are performing well.
United posted $200 million of additional full-year losses from ACA-compliant individual products above its previous projections, according to its earnings release.
Yet United’s overall second-quarter revenues, which totaled $46.5 billion, grew 28 percent year over year--reflecting "broad-based growth” in which all business lines drove sequential quarterly revenue increase, the company says. Healthcare services arm Optum’s revenues grew 52 percent year over year to $20.6 billion, while UnitedHealthcare’s revenues grew 14 percent to $37.6 billion.
Driving United’s ACA exchange losses is a combination of a higher volume of exchange customers than expected and higher consumption of healthcare services, Dan Schumacher, chief financial officer of UnitedHealthcare, said on the company’s earnings call. The severity of exchange customers’ chronic conditions, including HIV, COPD, hepatitis C and diabetes, was high to begin with and only increased in 2016, he added.
Due to its mounting losses, United has said previously that it plans to pull out of all but a few individual exchange markets in 2017. That effort, according to CEO Stephen Hemsley, is on track, and the company does not expect “any meaningful financial exposure” for its 2017 individual exchange business in markets where United will remain.
Beyond exchange market products, United’s development in the second quarter was favorable, according to Hemsley. “We believe our businesses remain well positioned for continued broad-based growth for the balance of 2016, 2017 and the years to come,” he said on the earnings call.
- here’s the earnings release