Looks like size does indeed matter at least to UnitedHealth Group Inc., the nations largest health insurer, which is poised for HIX-related growth in 2015 on the heels of solid third-quarter revenue that was not even tied to the emerging online marketplace.
The carrier sold plans on public exchanges in just four states in 2014, but is bullish about its pricing in many of the 23 states where it is now participating for the first time. They include blockbuster markets, such as Florida and Texas, as well as Alabama, Louisiana, Mississippi, Nevada, North Carolina, Pennsylvania and Missouri, where plan UHG plan offerings will be available for 2015 both on and off the exchanges.
We think based on what weve seen so far we are actually going to be very competitive in key states, Jeff Lucht, senior vice president with UHG, recently told Reuters.
UHG, which serves 44.9 million members in group, individual and government markets, reported 7% growth in its third-quarter revenue from the previous year. The $32.8 billion figure was driven by the adoption of Medicare plans and Medicaid expansion in 24 states and the District of Columbia last year. UHG also noted a 4% improvement in third-quarter revenue from Medicare-related business, which reached $11.5 billion, as well as a 34% increase in community and state business, which topped $6.1 billion.
Its estimated that the number of insurers selling HIX plans will increase by 25% this year, Reuters reported, with some carriers expecting as much as 20% growth to at least double their 2014 enrollment. Wall Street analysts expect 3% to 5% profit margins in the HIX sector.
Also see: State exchanges look ahead to 2015
While analysts expect UHGs earnings per share will grow by 8.7% next year, the carrier that could benefit most from exchange-related expansion is the much smaller Molina Healthcare, whose 2015 earnings per share some believe could surge by as much as 106%. A focus on state Medicaid programs was credited for the huge jump.
Bruce Shutan is a Los Angeles-based freelance writer.
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