(Corrects first paragraph to show growth compared to 2012 not
growth for 2012)
Nov 27 UnitedHealth Group Inc, the
nation's largest private insurer, said on Tuesday it would add
3.5 million to 4 million new members next year, indicating
slower growth than expected from 2012 because of a decline in
fully insured commercial customers.
UnitedHealth, whose membership is expected to grow about 6
percent this year, said growth in 2013 would be the result of
adding customers in its Medicare Advantage government healthcare
programs for the elderly, its international business and its
commercial fee-based plans, or self-insured business.
UnitedHealth, which expects to have 83 million members at
the end of 2012, said providing full insurance to companies will
contract next year as more businesses hire it to manage
healthcare benefits, but cover those costs themselves.
The detailed outlook came during a presentation for analysts
that was webcast one day after UnitedHealth said in a statement
that it expects 2013 earnings of $5.25 to $5.50 per share.
"We assume modest growth in employment with the unemployment
rate hovering around 8 percent," Chief Financial Officer David
Wichmann said on Tuesday.
He said UnitedHealth has not factored into its outlook the
possible effects of the "fiscal cliff" - tax increases and
spending cuts scheduled for Jan. 1 that could throw the United
States back into recession and lead to automatic cuts in
government medical payments and funding.
The insurer forecast operating costs would rise next year
and expects to pay $165 million to comply with the new
healthcare regulations, down slightly from the $195 million it
estimated for 2012.
UnitedHealth shares were down 65 cents, or 1.2 percent, at
$52.88 in afternoon trading on the New York Stock Exchange.
The United States is in the midst of massive healthcare
reform that will speed up in 2014 with the creation of
healthcare exchanges that offer policies to individuals and
small groups. The 2010 Patient Protection and Affordable Care
Act already has begun to transform the healthcare industry,
requiring insurance plans to offer more preventative services to
UnitedHealth said it was not sure how much it would cost to
prepare health exchanges because it was awaiting specific
regulations, but it expected to spend around $50 million to $100
million a year to be ready. It expects the plans offered on the
exchanges to be about as profitable as its government programs,
which have about a 3 percent to 5 percent return.
Wichmann still expects government payments for medical
services, known as reimbursements, to continue to fall and that
consumer use of medical services will remain the same in 2013 as
in 2012. This low utilization rate has benefited insurers as
they spend less on customer medical services.
The company expects the percentage of premiums paid toward
medical costs to rise slightly in 2013 to 81 percent from the
anticipated 80.5 percent in 2012 because of an increase in
government business and related reimbursement pressures. It said
lower costs at Brazil's Amil Participacoes SA, which
it is in the process of buying, would help offset some of those
(Reporting By Caroline Humer in New York. Editing by Jilian
Mincer and Andre Grenon)