There may be a link between rising insurance premiums and increased utilization of services, particularly across the Medicare Advantage space.
In its first quarter earnings report, UnitedHealth Group reduced its year-end earnings outlook amid rising use of physician and outpatient services among its Medicare Advantage membership and “unanticipated changes in the profile of Optum Health members.”
One key insight that emerged from the company was a major rise in elective care activity, which was associated with higher premiums faced by some of UnitedHealth’s group MA members. The company reported that among some public sector retiree groups, premiums had increased dramatically (in some cases by as much as $150 a month) from $50 to $200. Instead of disengaging from using their benefits, these members appear to have engaged more than usual.
“We’re seeing a significant and disproportionate increase in utilization largely within our public sector group retiree business. This population experienced the greatest year-over-year premium increases,” UnitedHealthcare CEO Tim Noel told investors. “We did assume that we would see some care activity level increases in this population, but what we’re seeing far surpasses what we would have recently anticipated. And in that population as well, we are seeing more preventative care, more annual wellness visits, more in-home clinical assessments. The driver there is also really the follow-on care that results from that.”
Mr. Noel noted that the company has observed this trend previously within its individual MA business when premiums increased, but it was more pronounced in group MA plans during the first quarter.
“We’ve never seen this dynamic before in the group MA business,” he said.
In January, UnitedHealth projected net earnings of $28.15 to $28.65 per share and adjusted net earnings of $29.50 to $30.00 per share. The company’s revised 2025 outlook is now $24.65 to $25.15 per share and adjusted earnings of $26 to $26.50 per share.
The average deductible for a Medicare Advantage plan more than doubled to $315 from 2024 to 2025, according to a March survey from online broker eHealth.
