Morning Briefing
Summaries of health policy coverage from major news organizations
UnitedHealth Expects $1.7B Windfall From Republicans' Tax Bill For Next Year
The Associated Press: Tax Break Helps UnitedHealth 4Q Earnings, 2018 Guidance Soar
UnitedHealth Group's earnings more than doubled in the final quarter of 2017, and the nation's largest insurer hiked its forecast well beyond expectations largely due to help from the federal tax overhaul. UnitedHealth said Tuesday that it added $1.2 billion in 2017 non-cash earnings, as its fourth-quarter and full-year corporate tax rates were cut. (Murphy, 1/16)
The Wall Street Journal: UnitedHealth Says Tax Overhaul To Boost 2018 Earnings
The health-care giant also beat analysts’ expectations on its fourth-quarter earnings, but investors are likely to focus even more closely on the first concrete preview of the tax law’s impact on the managed-care industry. UnitedHealth said the overhaul would likely boost its cash flow by about $1.7 billion this year. The company also said it thought benefits of the tax overhaul would be sustainable over time, though it refrained from offering details of its 2019 outlook. UnitedHealth raised its 2018 earnings outlook to between $11.65 and $11.95 per share, from $10 to $10.30 previously; the new net earnings projection amounts to a range of $11.48 billion to $11.78 billion. The company’s adjusted earnings guidance became $12.30 to $12.60 a share, compared with $10.55 to $10.85 previously. (Wilde Mathews, 1/16)
The Hill: UnitedHealth Expects $1.7B Windfall From Tax Law
In a fourth quarter earnings call, Dave Wichmann told investors the company will “accelerate” investing the windfall in new technology and local community-based health-care initiatives. The legislation signed by President Trump last month slashed the corporate tax rate in an attempt to boost wages and add new jobs in the U.S. However, Wichmann did not mention that UnitedHealth would be using the additional cash for higher wages for its employees. (Weixel, 1/16)
The Star Tribune: UnitedHealth Group Doubles Its Profit, Surpasses $200B In Revenue
The tax overhaul will result in UnitedHealth Group’s rate falling from about 37 percent to 24 percent, analysts say. The savings will allow for investments in everything from data analytics and digital health to the application of artificial intelligence in delivering health insurance benefits. “We concluded that our ambitions for better health and a better health system are best achieved through investment in ways that will make health care far more affordable and of far higher quality,” David Wichmann, the UnitedHealth Group chief executive, said during a conference call with investors. It’s too soon to detail the 2019 impact, Wichmann said. (Snowbeck, 1/16)
Modern Healthcare: UnitedHealth Revenue Cracks $200 Billion Mark
The insurer also expanded its footprint globally through its proposed buyout of Santiago, Chile-based insurer BanMedica for $2.8 billion, "establishing a foundation for growth in South America for decades to come," Wichmann said. He also expressed support for the Trump administration's recent executive orders meant to expand the use of association health plans and short-term health plans. UnitedHealth already has experience offering association health plans. "We are supportive of these efforts to improve choice and frankly provide access to lower cost alternatives," Wichmann said, though he added that the plans "must be designed carefully in order to enhance coverage options and to ensure they don't destabilize other aspects of the health insurance market, like the small group market." (Livingston, 1/16)
Modern Healthcare: Healthcare Companies Mulling What To Do With GOP Tax Bill Benefits
For-profit healthcare companies last week were buzzing about the savings they expect to reap from the Trump administration's sweeping tax overhaul, which reduced the corporate tax rate to 21% from 35%. Details were sparse on just how much they expect to save due to the lower tax rate—although the Express Scripts CEO said the pharmacy benefit manager would see a $850 million reduction in taxes thanks to the changes. The St. Louis-based PBM's 2016 net income totaled $3.4 billion. (Livingston, 1/16)
The Wall Street Journal: The Bad Bet That Insurers Can’t Shake
General Electric Co.’s looming $6.2 billion charge in its GE Capital unit is one of the biggest yet in a corner of the insurance industry that has reeled from pricing miscalculations made decades ago. About 7.3 million of the policies are in consumers’ hands, some with generous lifetime benefits. Although GE sold much of its financial-services operations after the 2008 financial crisis, it kept on its books responsibility for billions of dollars of coverage for long-term-care policies that had been sold by other insurers to consumers. Those policies—about 300,000 of them—promise to pay for nursing homes and other care for individuals. (Scism, 1/16)
