UnitedHealth Group Continues To Lead Medicare Market

by Trefis Team
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UnitedHealth Group (NYSE:UNH) is the largest health insurance provider in the United States, with a 13% market share in direct premiums written (per a 2018 FIO Report). The company has been consistently beating street estimates in recent quarters, supported by strong growth in revenue.

Our interactive dashboard on What to expect from UnitedHealth Group in 2019? outlines the company’s recent performance, as well as our key drivers and forecasts for the company. You can modify any of our forecasts to gauge the impact of changes on the company’s valuation, and see all of our Health Care data here.

Business Overview

UnitedHealthcare serves its customers through risk-based products, fee-based products, Medicare Advantage plans, Medicaid services and other services. The company’s Medicare & Retirement division contributes 40% of its total revenues, the highest among all divisions.

As the population ages, more people apply for Medicare, and a consistent increase in Medicare enrollments is observed in the chart below. Medicare Advantage is an alternative to original Medicare services, managed by the federal government. Medicare Advantage had a market share of 34% in 2017, compared to 28% in 2013. It has been growing at a CAGR of 7.5% compared to only 0.7% for original Medicare enrollments. Americans are increasingly opting for privately managed Medicare Advantage over its traditional counterpart.

UnitedHealthcare Leading Medicare Market

As can be observed in the below chart, there has been a consistent increase in Medicare Advantage customers served by UnitedHealthcare. The number of enrollments has been increasing at a CAGR of 10.5%, much higher than the market. The company had a market share of 7.5% in 2015, which grew to 22% in 2017. Per Gorman Health Group, large organizations such as UnitedHealth Group and Humana are gaining in the market because of their diversified product portfolios. Considering these trends, we expect UnitedHealthcare to continue to gain from increasing penetration of Medicare Advantage products.

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