In 3Q15, UnitedHealth Group’s (UNH) UnitedHealthcare segment generated revenues of $32.8 billion in 3Q15, 9.3% more than the $30 billion it earned in 3Q14. However, the segment’s operating earnings declined by $100 million over 1Q14. The segment also delivered an operating margin of 5.7%, lower than the 6.8% reported in 3Q14.
In 3Q15, UnitedHealth Group’s (UNH) UnitedHealthcare segment added 1.7 million people year-over-year across the commercial, Medicare, and Medicaid benefits markets in the US. The UnitedHealthcare segment is responsible for offering healthcare benefits and services to employers, Medicare, Medicaid, and TRICARE beneficiaries.
In 3Q15, commercial enrollments accounted for 70.2% of UnitedHealthcare’s total enrollments in the US. These enrollments, both risk-based and fee-based, are either employer-sponsored or paid for by individuals. UnitedHealthcare increased the total number of commercial enrollees by 775,000 in 3Q15 on a year-over-year basis. However, commercial revenues, which were about $11.2 billion, did not increase in tune with the enrollment rise as people have been increasingly buying low premium plans, including those purchasing on public health exchanges. To know more about UnitedHealth Group’s employer-sponsored and individual plans, please refer to UnitedHealth Group’s employer-sponsored and individual insurance.
Health insurance companies such as UnitedHealth Group, Humana (HUM), Aetna (AET), and Anthem (ANTM) offer health coverage to Medicare beneficiaries through their Medicare Advantage (or MA), Medicare Supplement, and Medicare Part D plans. UnitedHealthcare serves one in five Medicare beneficiaries in the US.
In 3Q15, UnitedHealth Group earned $12.3 billion in revenues from these Medicare plans. The company has also been investing substantial amounts in improving the quality for its Medicare plans, which is expected to be a major growth driver of its MA business in the future years.
Community and state beneficiaries
In 3Q15, UnitedHealthcare earned revenues of $7.4 billion from its community and state-based insurance business, involving Medicaid, dual eligibility, and long-term support services (or LTSS) programs. Coupled with strong enrollment growth, this business also witnessed a rise in high acuity members. High acuity members translate into higher payment rates for the health insurance plan from the state government. As a result, in 3Q15, community and state business realized a strong revenue growth of about 21% on a year-over-year basis.
You can get exposure to UnitedHealth Group through the Vanguard Health Care ETF (VHT). UnitedHealth Group accounts for 3.7% of VHT’s total holdings.