UnitedHealthcare Added 0.25 Million Medicaid Enrollments in 4Q15
UnitedHealth Posts 4Q15 Results: Growth Is Strong, Diversified
UnitedHealthcare Community & State business
UnitedHealthcare Community & State business earned revenues of $28.9 billion in 2015, a year-over-year (or YoY) increase of 23%. Revenues were $7.4 billion for 4Q15, a YoY increase of about 14%. The strong growth is attributed to continual growth in enrollments and an increase of the number of people with higher medical needs such as those enrolled in state-sponsored long-term care programs. To know more about UnitedHealth Group’s (UNH) Community & State business, please refer to UnitedHealth Group’s community and state-based insurance business.
The above graph shows that in 4Q15, Medicaid enrollments rose by about 4.9% on a YoY basis. In full year 2015, UnitedHealth Group added 250,000 new Medicaid enrollees, a YoY increase of about 5%. The company served approximately 5.3 million people across 100 distinct state-based programs. In 2014 and 2015, UnitedHealth Group acquired new Medicaid contracts for more than 2 million people.
Iowa Medicaid program
On August 17, 2015, the state of Iowa contracted with four health insurance carriers—UnitedHealth Group (UNH), WellCare Health Plans, Anthem (ANTM), and AmeriHealth Caritas—to offer managed Medicaid services in the state. These contracts, which were originally effective January 1, 2016, have been deferred. On December 18, 2015, federal regulators instructed Iowa’s government to delay the privatization of its Medicaid program by at least 60 days.
Iowa originally operated its hawk-i (Healthy and Well Kids in Iowa) program through Wellmark and UnitedHealth Group. Hawk-i is a program for uninsured children of working parents that have incomes within the hawk-i determined limit. But with the impending Medicaid privatization on January 1, 2016, the state terminated the hawk-i program.
With the privatization of the Medicaid program now planned to be effective March 1, 2016, Iowa asked WellMark and UnitedHealth Group to continue the hawk-i program. Wellmark rejected this, bringing the number of carriers involved in Iowa’s Medicaid program to three. A decrease in the number of health insurers in the Iowa Medicaid program implies a greater number of Medicaid enrollments for UnitedHealth Group. Peers such as Cigna (CI) and Aetna (AET) also consider managed Medicaid to be a solid revenue driver for the long term.
You can invest in the iShares Core S&P 500 ETF (IVV) and reduce excessive company-specific risks of investing directly in UnitedHealth Group. UnitedHealth Group accounts for about 0.6% of IVV’s total holdings.
Browse this series on Market Realist:
