Earns UnitedHealth

UnitedHealth Group Inc.'s campus in Minnetonka, Minnesota. UnitedHealth Group Inc. on Tuesday reported stronger performance as it distanced itself from the health insurance exchange marketplace established under the Affordable Care Act.  

Jim Mone, Associated Press

UnitedHealth Group's second-quarter earnings soared as the nation's largest insurer dove deeper into government-funded health coverage like Medicare and Medicaid and continued to distance itself from the turbulent Affordable Care Act insurance exchanges.

The insurer also said Tuesday that it drew $1.52 billion in operating earnings from its rapidly growing Optum business, which doesn't sell health insurance.

The latest Republican push to dismantle and replace the Affordable Care Act collapsed Monday in the Senate, more than a year after UnitedHealth said it had had enough of that market. The insurer had expanded quickly into the law's state-based insurance exchanges and was selling coverage in 34 states last year.

But UnitedHealth and other insurers struggled with a sicker-than-expected patient population and other problems on the exchanges, which provided a small slice of their business. Last summer, UnitedHealth reported that losses from that business had come in about $200 million higher than expected, and CEO Stephen Hemsley promised analysts that his company would have no meaningful exposure to the exchanges this year.

He kept his word. The insurer is selling coverage on exchanges in only three states this year. United took a $1.8 billion revenue hit in the second quarter because of that pullback and a pause in a health insurance tax.

But that was more than offset by top line gains of $2.5 billion from the insurer's Medicare and retirement business and $2 billion from the Optum segment, which provides pharmacy benefits management and technology services and also operates clinics and doctor's offices.

Overall, UnitedHealth's earnings jumped 30 percent to $2.28 billion in the second quarter. 

The insurer's total enrollment climbed 3 percent compared to last year's quarter, to more than 49 million people.

UnitedHealth also raised its 2017 forecast again. The company, based just outside Minneapolis, said Tuesday that it now expects 2017 adjusted earnings of between $9.75 and $9.90 per share. 

UnitedHealth is the first health insurer to announce earnings every quarter. Many analysts and investors see it as a bellwether for other insurers.

Other big insurers like Humana, Aetna and the Blue Cross-Blue Shield carrier Anthem have since left the exchanges entirely or scaled back their presence in that market, which allows people to buy individual insurance with help from an income-based tax credit. Partially due to the dwindling competition, the exchanges are expected to give consumers fewer choices and higher prices in many parts of the country when 2018 enrollment starts this fall.

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