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 limited doctor appointment windows. When people don’t seek medical attention, claims aren’t filed with the health plan, allowing the insurance company to make more money.

Additionally, the U.S. public health emergency kept a record number of people covered by maintaining Medicaid coverage and offering enhanced subsidies for more Americans to afford individual Obamacare coverage under the Affordable Care Act.

These trends led most health insurers to achieve record profits. UnitedHealth Group reported a net income of $22.3 billion last year, $20.6 billion in 2022, $17.3 billion in 2021, and $15.4 billion in 2020. Before the pandemic, UnitedHealth earned $13.8 billion in 2019.

Despite the increasing profits, financial reports indicate that the company is spending more on medical care as the pandemic subsides. UnitedHealthcare’s parent company, UnitedHealth, has discussed the company’s annual medical care ratio, or MCR, which represents the percentage of premium revenue allocated to 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,” according to UnitedHealth Group’s full-year earnings report in 2020.

This percentage gradually increased as the COVID-19 pandemic persisted and more individuals sought medical care. Particularly, seniors insured by Medicare Advantage plans operated by UnitedHealthcare and other health plans contributed to the rise in medical expenses. Insurers are now covering seniors’ accumulated demand for medical care.

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

The increase in medical expenses has also impacted UnitedHealth’s competitors, including Humana and CVS Health’s Aetna, which experienced significant cost increases, particularly in their Medicare Advantage plans due to seniors seeking more medical care than before. “The sector is navigating significant regulatory changes while also absorbing unprecedented increases in medical cost trends,” as stated by Humana said in January of this year.

UnitedHealth’s annual medical costs were $210.8 billion in 2022, increasing to $241.9 billion in 2023 after President Biden ended the U.S. Public Health Emergency in May that year. In the first nine months of this year, UnitedHealth’s medical costs were $197 billion and are projected to exceed last year’s costs.