UnitedHealth CEO Denounces ‘Medicare for All’ Proposal

UnitedHealth CEO David Wichmann said in an earnings call on April 16, that “Medicare for All” proposals would “destabilize the nation’s health system” and result in the “wholesale disruption of American health care.”

In its first quarter 2019 earnings conference call, Wichmann denounced the “Medicare for All” plan pushed by Democratic lawmakers and presidential candidates such as Sen. Bernie Sanders (I-Vt.).

“The wholesale disruption of American health care being discussed in some of these proposals would surely jeopardize the relationship people have with their doctors, destabilize the nation’s health system, and limit the ability of clinicians to practice medicine at their best,” said Wichmann.

Wichmann added that the inherent cost burden would have a severe impact on the economy and jobs without improving patient access.

Bernie Sanders
2020 Democratic presidential candidate Sen. Bernie Sanders pauses while speaking at the National Action Network’s annual convention in New York City on April 5, 2019. (Drew Angerer/Getty Images)

“The best system is one which is informed, engaged and aligned, where people, their doctors, and the private and public sectors work together to improve or sustain individual health, while improving the performance of the health system for everyone,” said Wichmann.

Wichmann also pointed out that for 16 straight months, health care’s relative economic burden on society has lessened due to better management of price inflation and lower cost settings.

“The path forward is to achieve universal coverage and it can be substantially reached through existing public and private platforms,” said Wichmann. “Meaningful progress in health care lies in national and state leaders continuing to work collaboratively with the innovative and proven private sector solutions to achieve the goals we all want—a modern, reliable, informed and aligned health care system that offers the access, choice, and coverage protections people seek at a fair cost to individuals and society as a whole.”

Exceeding Expectations

UnitedHealth Group exceeded its first-quarter predictions and raised its annual forecast for 2019.

“Revenues grew 9.3 percent to $60.3 billion, even after considering the negative 1.4 percent impact related to the health insurance tax deferral for 2019,” said John Rex, UnitedHealth Group’s chief financial officer.

United Healthcare correspondence
United Healthcare correspondence is seen in North Andover, Mass. on June 15, 2018. (Elise Amendola/AP)

“In the first quarter alone, this deferral helped improve affordability for the people we serve by more than $700 million dollars,” he said. “This tax adds billions in costs to the system and constrains access and benefits for Americans. We continue to advocate and are hopeful for its permanent repeal.”

Rex said that overall, first quarter adjusted earnings per share of $3.73 grew 23 percent over the last year.

“First quarter cash flows of $3.2 billion were consistent with our expectations, recognizing that comparison with last year is affected by the health insurance tax deferral,” said Rex.

Return on Investment

According to Rex, the company returned $3.9 billion dollars to shareholders in the first quarter through dividend and share repurchase activity. Rex said that return on equity was 26.8 percent, up 300 basis points from a year ago.

Rex said that the company expects to see strong growth in adjusted net earnings through 2019, and have increased their outlook to a range of $14.50 to $14.75 per share, bringing earnings growth rates from 13 to 15 percent.

“We continue to put capital to work to build the business for the benefit of both society and our shareholders with a robust organic and inorganic growth agenda,” said Rex.

Traders work at NYSE
Traders work at the post where UnitedHealth Group is traded on the floor of the New York Stock Exchange in New York City on Jan. 31, 2018. (Brendan McDermid/Reuters)

Overhauling Rebates

In January, the United States government proposed an overhaul regarding rebates for drug companies in government healthcare plans.

UnitedHealth said it expects minimal impact to its margins if the rebate system is overhauled since 98 percent of the discounts it currently receives are passed on to its clients.

However, investors have shown concern, with shares of UnitedHealth dropping 7 percent so far this year after reaching a new all-time high of almost $288 a share in late 2018.

At market close on April 16, shares of UnitedHealth finished at $220.96.