UnitedHealthcare Profits Less About Denials, More About The Pandemic

The profits of UnitedHealth Group’s health insurance business UnitedHealthcare that soared during the pandemic have tempered as medical costs rise from Americans getting more care now that the Covid-19 pandemic has passed.

In the wake of the shooting death of UnitedHealthcare chief executive Brian Thompson, a focus on health insurer denials of medical care emerged from social media trolls and industry critics. Health insurers slow-walking approvals of medical treatment and outright denials of procedures, hospital stays or other care led these companies to greater profits, critics of UnitedHealthcare and other health insurers say.

But health insurance company profits began to soar not long after the coronavirus hit the U.S. in 2020 because people weren’t seeking care amid lockdowns, office closures and doctor appointment windows that were limited. When people don’t go to the doctor, a claim isn’t filed with the health plan so the insurance company makes more money.

What’s more, the U.S. public health emergency kept record numbers of people covered by not kicking anyone off Medicaid while Congress offered enhanced subsidies for more Americans to afford individual Obamacare coverage under the Affordable Care Act.

These trends helped most health insurers achieve record profits. UnitedHealth Group, which reported net come of $22.3 billion last year, had net income of $20.6 billion in 2022 after making $17.3 billion in 2021 and $15.4 billion in 2020. Before the pandemic UnitedHealth made $13.8 billion in 2019.

Despite the rising profits, financial reports show the company spending more on medical care as the pandemic subsided. Here’s what UnitedHealthcare’s parent UnitedHealth has said in recent years about the company’s annual medical care ratio, or MCR, which is the percentage of premium revenue that goes toward medical costs.

“The full year 2020 medical care ratio of 79.1% declined from 82.5% in 2019” due in part to “disrupted care patterns earlier in the year,” UnitedHealth Group said in its full-year earnings report in 2020, the year Covid began its spread.

That percentage gradually rose as the COVID-19 pandemic wore on and more people returned to their doctor’s office or hospital for surgeries. And it really has kicked in in the last year as Americans, particularly seniors insured by Medicare Advantage plans operated by UnitedHealthcare and other health plans, seek care. Thus, insurers are paying for seniors’ pent up demand for medical care.

The full year 2021 medical care ratio was 82.6% and it was 82.0% in 2022, rose to 83.2% in 2023 and was as high as 85% in the fourth quarter of last year. And in 2024, the “third quarter 2024 medical care ratio was 85.2% compared to 82.3% last year,” UnitedHealth reported for UnitedHealthcare in October.

The higher medical expenses have also hit UnitedHealth’s rivals, including Humana and CVS Health’s Aetna, which have seen historic spikes in costs, particularly in their Medicare Advantage plans in part due to seniors seeking more medical care than in the past. “The sector is navigating significant regulatory changes while also absorbing unprecedented increases in medical cost trends,” Humana said in January of this year.

UnitedHealth’s annual medical costs were $210.8 billion in 2022, rising to $241.9 billion in 2023 when President Biden ended the U.S. Public Health Emergency in May of that year. In the first nine months of this year, UnitedHealth medical costs were $197 billion and on pace to have even more than last year.