UnitedHealth Group sees profits double due to Covid-19

UnitedHealth Group saw its earnings nearly double to $6.6 billion during the second quarter, as fewer patients sought out appointments or non-essential procedures due to the pandemic.

At the height of the Covid-19 pandemic, UnitedHealth Group saw its profits double, as patients deferred planned surgeries and avoided going into hospitals.

The insurer released its second quarter financial results on Wednesday. UnitedHealth saw its earnings balloon to $6.63 billion in the quarter ending June 30, up from $3.29 billion during the same period last year. The company chalked up the high profits to the “unprecedented, temporary deferral of care.”

At the lowest point in April, CFO John Rex said inpatient care — including Covid-19 cases — was at about three-quarters of normal levels. In June, this recovered to nearly 95%.

Outpatient care fell to 60% of the baseline during that same period, but has since recovered to about 90%. In an earnings call, Rex told investors that these trends have continued in July, despite several states seeing a spike in Covid-19 cases.


Patients expected to return

The company didn’t change its earnings outlook for the end of the year, anticipating costs to increase as patients return for deferred care as well as costs related to Covid-19 testing and treatment.

There’s also a possibility that patients who had missed treatment due to the pandemic might be sicker when they return for care, though Rex said that “isn’t showing up yet.”

“It’s kind of hard to ignore the number of new diagnoses that dropped off. It’s hard to ignore the drop-off in heart attack and stroke,” UnitedHealthcare CEO Dirk McMahon said in an earnings call. “You can imagine it was fear of consumers going to an ER that caused them not to access the health system, so — it may be speculative here — but I think the data that we see suggests that there will be some intensity in the services that people receive.”

As unemployment levels soared in April, insurers were asked if they expected to see a drop off in commercial customers as a result. Some reports have tried to estimate the number of people who will lose employer-sponsored health insurance, with a recent analysis by the Urban Institute pegging that number around 10 million.

So far, UnitedHealth Group hasn’t seen a big impact from this, as more employers have opted for furloughs over layoffs, allowing workers to keep their benefits. Stimulus funding to ensure people keep their jobs has also helped.

“The impact on commercial enrollment hasn’t been as great as we would have otherwise thought based on the unemployment data, just because of the stimulus as well as the furloughs,” CEO David Wichmann said.


Public option possibilities

Analysts also asked about the elephant in the room for commercial insurers: growing discussions around universal coverage options. Washington was the first state to jump in with a public option last year, where it contracted with private insurers to offer state-procured plans, effectively serving as an extension of its ACA exchange plans.

Wichmann confirmed that UnitedHealth was a successful bidder to offer plans through this new program, which will cap payments at 160% of Medicare.

“There is kind of a unique program design there that uses, I’ll call it roughly a reference-based pricing, and we’re curious to see how we perform… We actually think this will be a nice test to see what the competitiveness of our business will be,” Wichmann said. “Generally speaking, we’re not a strong supporter of these public option proposals, and primarily because they disrupt current coverage platforms which consumers value and appreciate.”

Washington’s new plans will go into effect in 2021.

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