UnitedHealth Issues Warning Over Medicare Advantage Cuts

UnitedHealth attributed a 14 percent drop in profits in the first quarter to higher medical costs. The nation's largest insurer also warned that cuts to Medicare Advantage plans could hamper its earnings growth next year.

The Wall Street Journal: UnitedHealth's Outlook Cautious Amid Medicare Debate
UnitedHealth Group Inc. on Thursday sounded a cautious tone as it deals with the near-term impact of the government's crackdown on spending and looks ahead to lower funding for its Medicare plans. The comments, from the nation's largest managed-care company by both revenue and members, indicate the uncertainty that the industry is experiencing as insurers gear up for fuller implementation of the Affordable Care Act in 2014. That process has been made more complicated by the recent automatic U.S. spending cuts known as the sequestration and expectations for lower incoming payments for Medicare Advantage plans next year (Kamp, 4/18).

Kaiser Health News: Capsules: Despite Win, UnitedHealth Criticizes Medicare Rates, Eyes Pruning Business
If the Obama administration expected the biggest health insurance company to give thanks for this month’s decision to reverse cuts to private Medicare plans, it was wrong. UnitedHealth Group CEO Stephen Hemsley said Thursday that Medicare Advantage rates are still far too low and that the company may shrink its business of managing care for seniors. ... But in Thursday’s call to discuss the company’s quarterly profits of $2.1 billion on revenue of $30.3 billion, Hemsley said other changes — including the Affordable Care Act’s long-term reduction in Medicare Advantage payments – would still lead to a net reduction next year of more than 4 percent. That's inadequate when medical costs are rising in the 3 percent neighborhood, he said" (Hancock, 4/19).

Los Angeles Times: UnitedHealth Reports Lower First-Quarter Profit, Higher Costs
UnitedHealth Group Inc., the nation's largest health insurer, said its first-quarter profit dropped 14 percent as medical costs climbed higher. The Minnetonka, Minn., company said its health plan membership increased 18 percent in the quarter to 42 million people, boosted by international growth (Terhune, 4/18).

The Associated Press: UnitedHealth Warns Of Medicare Profit Squeeze
UnitedHealth Group, the largest provider of Medicare Advantage plans, warned Thursday that funding cuts for the privately-run versions of the federal Medicare program will force it to reconsider its expectations for earnings growth next year. CEO Stephen Hemsley told analysts that the government-subsidized coverage for elderly and disabled people faces a reimbursement cut of about 4 percent next year (Murphy, 4/18).

In the meantime, Humana has launched an internal investigation after leak of a significant government policy change led to some suspicious stock trading --

The Wall Street Journal: Humana Fires Lobbying Firm, Launches Internal Review
Health insurer Humana Inc. said it has started an internal probe into the circumstances surrounding the leak of a significant change in government health-care policy. "We have launched an internal review primarily to determine whether our interests were harmed" by the tie between an outside lobbyist employed by Humana and an investment firm that sent out early word of the policy shift, a Humana spokesman said. That alert set off a sudden jump in shares of Humana and other insurers late April 1 (Mullins and Mathews, 4/18).

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