UnitedHealthcare benefits less from denials, more from the pandemic

UnitedHealth Group’s health insurer UnitedHealthcare’s profits, which soared during the pandemic, have tempered as medical costs rise as Americans receive more care now that the Covid-19 pandemic is over.

In the wake of the shooting death of UnitedHealthcare CEO Brian Thompson, there has been a focus on health insurers’ denial of medical care. trolls on social media and industry critics. Health insurers have delayed approvals of medical treatments and outright denials of procedures, hospital stays or other care, handing these companies bigger profits, say critics of UnitedHealthcare and other health insurers.

But health insurers’ profits started to rise not long after the coronavirus hit the US in 2020, as people didn’t seek care amid lockdowns, office closures and limited time for doctor appointments. If people don’t go to the doctor, no claim is made to the health plan, so the insurance company makes more money.

In addition, America’s public health emergency has kept record numbers of people alive by not kicking anyone off Medicaid, while Congress offered more Americans increased subsidies to afford individual Obamacare coverage under the Affordable Care Act.

These trends resulted in most health insurers achieving record profits. UnitedHealth Group, which reported net income of $22.3 billion last year, had net income of $20.6 billion in 2022, after reporting $17.3 billion in 2021 and $15.4 billion in 2020. Before the pandemic, UnitedHealth earned in 2019, $13.8 billion.

Despite rising profits, financial reports show the company spent more on medical care as the pandemic subsided. Here’s what UnitedHealthcare’s parent company, UnitedHealth, has said in recent years about the company’s annual medical care ratio, or MCR, the percentage of premium revenue that goes toward medical expenses.

“The full-year 2020 medical care ratio decreased to 79.1% from 82.5% in 2019,” partly due to “disrupted care patterns earlier this year,” UnitedHealth Group said in its report. full year earnings report in 2020, the year Covid started spreading.

That percentage gradually increased as the COVID-19 pandemic continued and more people returned to the doctor’s office or hospital for surgeries. And it has really taken off over the past year as Americans, especially seniors insured by UnitedHealthcare’s Medicare Advantage plans and other health care plans, seek care. In this way, insurers pay for pent-up demand from seniors for medical care.

The medical care ratio for the full year 2021 was 82.6% and in 2022 it was 82.0%, rising to 83.2% in 2023 and amounted to no less than 85% in the fourth quarter of last year. And in 2024, the “third quarter 2024 medical care ratio was 85.2%, compared to 82.3% last year,” UnitedHealth says. reported for UnitedHealthcare in October.

The higher medical costs have also hit UnitedHealth’s rivals, including Humana and CVS Health’s Aetna, which have seen historic spikes in costs, especially in their Medicare Advantage plans, in part because seniors are seeking more medical care than in the past. “The industry is facing significant regulatory changes while absorbing unprecedented increases in medical cost trends,” says Humana said in January this year.

UnitedHealth’s annual medical costs were $210.8 billion in 2022, rising to $241.9 billion in 2023 when President Biden ended America’s public health emergency in May of that year. In the first nine months of this year UnitedHealth’s medical costs were $197 billion and are on track to exceed even last year.