Even after the disastrous rollout of the healthcare.gov web site a year ago, health insurance companies and providers of medical care are reporting more promising profits as third quarter earnings emerge.
Although the next enrollment period for uninsured Americans seeking coverage from government-run exchanges under the Affordable Care Act doesn’t begin until next month, individuals are still signing up for the expanded Medicaid insurance for poor Americans under the health law in droves. Unlike the open enrollment window for private coverage purchased on exchanges, eligible individuals and families can sign up for Medicaid year round.
The influx of newly insured Americans, particularly as more state and local governments seek private insurers to administer Medicaid benefits has become the October surprise of health insurance profits.
Take UnitedHealth Group UnitedHealth Group (UNH), which is seen as a barometer for the entire health insurance industry given its size and because the company last week was the first major health plan to report its third-quarter results.
“I think Medicaid has been one of the strong successes of the ACA effort,” Stephen J. Hemsley, chief executive officer, president and executive director of UnitedHealth Group said on the company’s third quarter earnings call last week.
UnitedHealth increased its full year earings outlook to a range of $5.60 to $5.65 per share on bullish forecast for myriad businesses including the company’s “launch of our individual products on health exchanges in 19 new states.”
To be sure, UnitedHealth, the nation’s largest health insurer, and decisions by Aetna Aetna (AET), Cigna Cigna (CI) and others to expand to new markets has increased consumer choices for private coverage under the health law by more than 20 percent across the country, the Obama administration has said.
A parade of health insurers have already raised their earnings guidance at least once in the last nine months in large part because of new business they are reaping thanks to the health law.
This means they are making more money than they thought they would. Aetna (AET), Cigna (CI) and Wellpoint (WLP) report third quarter earnings later this month and Humana Humana (HUM) reports in early November.
Providers of medical care such as hospital chains, too, are reporting profits they have not seen in more than a decade in some cases. Last week, HCA Holdings (HCA), also known as Hospital Corporation of America, owns 165 hospitals and 115 freestanding surgery centers in 20 states.
HCA, also considered a bellwether as the first major hospital operator to disclose quarterly profits issued a “preview” of its 2014 third quarter earnings and raised its full year guidance to $4.40 to $4.60 per share just three months after saying in July that its 2014 guidance would be $4.00 to $4.25 per fully-diluted share.
Admissions for paying patients are up, and admissions for those who can’t pay are down.
“Same facility admissions for the third quarter of 2014 increased 2.8 percent while same facility equivalent admissions increased 4.1 percent,” HCA said in its third quarter earnings preview. “Same facility uninsured admissions and equivalent admissions for the third quarter of 2014 declined 14.8 percent and 8.9 percent, respectively.”
HCA anticipates a complete third-quarter earnings announcement Oct. 28.
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