Medicare Funding Decreases, Hurts UnitedHealthBy: Rachel Kolman - January 18, 2014
The UnitedHealth Group (UNH) spoke out this Thursday about its fourth-quarter profits, which was the first quarter under ObamaCare. UNH says that they still saw a slightly better than expected fourth quarter, due to an “overall lower medical spending trend” as fewer customers were checking into hospitals. (The rise was from $29 billion to $31 billion, about 8%.) However, funding cuts to their Medicare Advantage plan hurt the company in its shares, which fell 3%.
The Medicare Advantage plan is a program provided by private companies (like UnitedHealth) to provide both Part A and Part B benefits to people already enrolled in Medicare. The insurer claims that overall, their Medicare Advantage program has always been “underfunded.” UnitedHealth estimated that the government underfunded the Advantage program by almost 7% in 2013. CEO Stephen Hemsley says the cuts are to be blamed on “ObamaCare savings,” and that the company will “continue to be watchful of funding pressure” and “advocate for strong and reasonable funding.”
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Despite the cuts, UnitedHealth is still sticking to its pre-ObamaCare outlook, which projects a revenue of $128 billion for 2014, and around $5.40 per share. The projections are based on an upward trend of more and more people signing up for the program; UnitedHealth added 425,000 Medicare Advantage members in 2013, a 17% gain.
The Centers for Medicare are expected to announce a proposed funding plan in February.
Image via Dept. of Health & Human Services