Dive Brief:
- UnitedHealth plans to offer some medicines at zero cost share to eligible members in 2023, including insulin and other emergency-use drugs, in a bid to address inflationary pressures and keep patients out of the emergency room, CEO Andrew Witty announced.
- The offering from the Minnetonka, Minnesota-based company, which operates the largest private payer in the U.S., applies to UnitedHealth’s standard insured group plans. But the larger cost containment of drugs must come from pharmaceutical manufacturers lowering prices, Witty told investors during UnitedHealth’s second-quarter earnings call on Friday.
- UnitedHealth beat Wall Street expectations for earnings and revenue in the quarter with revenue of $80.3 billion, up 13% year over year. Profit of $5.2 billion was up 19% year over year. UnitedHealth increased its full-year earnings expectations on the results.
Dive Insight:
Healthcare prices are continually on the rise, which could become a greater concern as the U.S. stares down the barrel of a potential recession. As a result, UnitedHealth’s health benefits arm UnitedHealthcare and its pharmacy benefit manager OptumRx are partnering to bring zero co-pay and out-of-pocket costs to certain expensive and life-saving medications, Witty said.
Apart from insulin, the other four preferred medications are epinephrine for allergic reactions, naloxone for opioid overdoses, albuterol for asthma attacks and glucagon for low blood sugar.
Management told investors that UnitedHealth’s employer clients are concerned about driving value in conversations during the benefits selling season, leading the payer to prioritize bringing down emergency room use while increasing virtual care and digital engagement.
“Obviously we all see the inflationary pressures around us and we all know that really focuses people’s minds on how they prioritize their spend,” Witty said.
UnitedHealth, which kicked off the earnings season for managed care organizations, delivered a quarter that “validates investors’ anticipation of strong MCO results,” Jefferies analyst David Windley wrote in a note on the results.
The payer’s medical loss ratio of 81.5%, down from 82% in the first quarter, was the “clear highlight” of the quarter, Windley said. It was lower than analysts expected, as payers normally see MLRs — the share of healthcare premiums spent on patient care — grow between the first and second quarter.
Over the pandemic, UnitedHealthcare has seen a balanced relationship between COVID-19 and non-COVID-19 care utilization. But that’s shifted over the past few months, CFO John Rex said.
The payer in the second quarter had a lower level of COVID-19-related care that wasn’t accompanied by a higher level of non-COVID-19 utilization. Utilization of some care, including pediatrics and emergency departments, remained below historical levels. But some pockets of care are returning to normal, including annual wellness visits and preventative care like colonoscopies, Rex said.
Management is watching rising COVID-19 hospitalizations in the U.S. UnitedHealthcare has seen COVID-19 hospitalizations increase among its members, but patients have a shorter length of stay compared to prior periods, according to the CFO.
UnitedHealth remains “enormously respectful of the outlook of future impacts from COVID hospitalizations” in 2022 and 2023, Rex said.
The health benefit segment’s revenue grew 12% year over year to $62.1 billion. Its operating earnings grew to $3.9 billion from $3.1 billion same time last year.
UnitedHealthcare’s total medical membership grew by 280,000 people sequentially to 51.2 million members. Medicaid was the primary driver of upside, with membership increasing 2.3% sequentially.
The payer thinks the impact of states resuming eligibility checks for Medicaid will be experienced next year, Rex said.
Optum, UnitedHealth’s healthcare services arm, grew revenue 18% year over year to $45.1 billion. Operating earnings grew to $3.3 billion from $2.9 billion same time last year.
