UnitedHealth Group Inc. (NYSE:UNHD) just reported a 56% increase in profits in the quarter ending December 2016. The increase resulted from 3 things - growth in the company’s core insurance and Optum health-services arms as well as savings realized by pulling back from Affordable Care Act business.
Net income was $1.9 billion or $1.96 per share. This compares to $1.22 billion or $1.26 per share a year ago. In addition to items named above some analysts also attributed better-than-expected profits to strong investment income.
Exiting ACA – Focus On States
The company set aside funds against expected losses on its ACA business. Enrollment in individual plans dropped and UnitedHealth said it planned to effectively exit the ACA marketplace this year.
With Republicans in charge and promising to repeal and replace the ACA, UnitedHealth appears to be focusing on state-based health care products. This would offer the company more flexibility on a state by state basis, especially when compared with a centralized federal plan like the ACA.
Americans Want ACA
According to a new Wall Street Journal/NBC News poll, however, 45% of Americans think the 2012 health law is a “good idea’’ versus 41% who think it’s a “bad idea.” That’s the first time since the ACA was enacted that the % of poll respondents in favor of the program was larger than the % against the law.
These findings suggest the battle between Republicans who want to repeal the law and Democrats who oppose those efforts could be contentious. Among Republicans 76% oppose the law while 80% of Democrats favor it.
A Fitness Diversion?
Meanwhile, UnitedHealth, Fitbit Inc. (NYSE: FIT) and Qualcomm Inc. (NASDAQ:QCOMC) have joined together in a program designed to reward users up to $1,500 in health care credits for activities completed on their Fitbit Charge 2 devices. The program, called Motion, utilizes QualcommLife's 2net remote care cloud-based platform and offers users up to $4 a day for reaching fitness goals tracked by their Fitbit devices.
Fitbit co-founder James Park said, "We've worked closely with employers, but the insurance industry has taken a while because there [are] a lot of dollars at stake, so they've [done] very thorough research [and] a lot of internal studies that validate that using wearables can actually result in health care savings."
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Uncertainty About What Comes NextWith UnitedHealth now selling ACA coverage in just a handful of states and the status of the program uncertain at best, the company still sees promise in offering Medicaid coverage which is now offered in 31 states.
Beyond that, things are very muddy. This caused UnitedHealth CEO Stephen J. Hemsley to say recently, “We remain positive and constructive with respect to what ultimately evolves in the next phase of health care change.”