A big insurer is expecting to see strong growth at the Patient Protection and Affordable Care Act public exchange system in 2015.

Stephen Hemsley, the chief executive officer of UnitedHealth Group Inc. -- a company that is selling qualified health plans through only a few PPACA exchanges this year -- said today during a conference call with securities analysts that the company will sell QHPs through "nearly two dozen state exchanges in 2015," up from four this year.

Another executive, Gail Boudreaux, head of the company's UnitedHealthcare health insurance unit, made a point of talking about the company's hopes for the PPACA exchange system.

"We see this market a really good long-term growth opportunity," Boudreaux said.

Jeff Alter, the head of the commercial health insurance division, said the company has no confidence in anyone's exchange QHP enrollment forecasts but believes growth will be strong.

"We think the second vintage will be better," Alter said. "We think the third vintage will be better yet."

Earlier, UnitedHealth executives had talked about not including the new PPACA temporary risk-management programs, and a permanent risk-adjustment program, in pricing.

Alter said the company will be using a temporary reinsurance program, which protects QHP issuers against enrollees with catastrophic claims, and the permanent risk-adjustment program, which is supposed to help shift money to issuers with high-risk enrollees from issuers with low-risk issuers as the year goes on, but that the company will not use the risk corridors program. The risk corridors program is supposed to use cash from insurers with good underwriting results to help individual coverage issuers with poor underwriting results.

The executives talked about the exchange system while going over the company's third-quarter earnings.

UnitedHealth is reporting $1.6 billion in net income for the quarter on $33 billion in revenue, compared with $1.6 billion in net income on $31 billion in revenue for the third quarter of 2013.

The company ended the quarter providing or administering health coverage for 45 million people, about the same as a year earlier. Enrollment in commercial plans fell 4 percent, to 29 million.
New PPACA taxes cost the company $1.3 billion in the third quarter, and taxes increased the company's income tax rate for the quarter 5.8 percentage points, to 41.8 percent.
Despite concerns that PPACA might increase claims costs, at UnitedHealth, the commercial medical ratio fell 2.2 percentage points year-over-year, to 79.1 percent. The underlying cost of medical care may increase about 5.5 percent this year, up from an increase of 5 percent in 2013, Alter said.

The company said the consumers who were able to enroll in Medicaid because of the PPACA Medicaid expansion program are using somewhat more care than other Medicaid enrollees, but that the company expected the increase and included the effects of the increase in the rates it's charging states to participate in their Medicaid programs.

Boudreaux also took a question about "dumping" -- decisions by small employers to shut down health plans and dump workers into the PPACA exchange system.

UnitedHealth sees a continuing decrease in the percentage of employers that offer health benefits, but it has seen no sudden increase in the number of small employers shutting down their health plans. In some cases, Boudreaux said, UnitedHealth might see small employer decisions to shut down their plans as a way to get workers who were in self-funded plans that UnitedHealth simply administered into fully insured UnitedHealth QHPs.

Instant Insights /

UnitedHealth still optimistic about PPACA exchanges

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