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Employers prepare for disruptive and transformative health plan changes, WTW survey finds
Globenewswire· 2025-09-22 17:54
Core Insights - Companies are planning to evaluate disruptive changes to their healthcare plans as U.S. healthcare costs rise to the highest level in over two decades, with projected increases of 9.1% in 2026 compared to 8.1% in 2025 and 7.0% in 2024 [1] Cost Drivers and Employer Actions - One in three employers are considering significant changes to their healthcare programs within the next three years, with top cost drivers identified as pharmacy costs, high-cost claimants, and chronic conditions [2] - Employers' top priorities over the next three years include managing medical costs, pharmacy costs, and ensuring affordability for employees, followed by employee wellbeing and healthcare delivery [3] Cost Management Strategies - Nearly 59% of employers plan to implement broader cost-saving actions in the next three years, up from 46% in the past three years, focusing on program subsidies, alternative plan designs, and improving operational efficiency [4] - Employers are reducing unnecessary medical expenses through vendor contract management, audits, and preventing overutilization, with 46% evaluating vendor performance and 36% taking medical plans out to bid [6] Alternative Plan Designs and Innovations - Alternative plan designs are currently used by 41% of companies, with nearly half planning to implement attributes such as cost transparency and enhanced navigation in the next two years [7] - Employers are frustrated with their pharmacy benefits managers (PBMs), with 75% planning to take their PBM out to bid and 58% having recently audited their pharmacy benefits [8] GLP-1 Medications and AI in Healthcare - While 57% of employers cover GLP-1 medications for obesity, 15% are considering removing coverage, with various management tactics being evaluated [9] - Only 21% of employers currently use AI in their healthcare programs, but 80% believe it will fundamentally change healthcare benefits management in the next three years [10] Long-term Strategies - Employers are encouraged to adopt a revolutionary approach to address immediate cost pressures and long-term trends, focusing on innovations in clinical programs and effective uses of AI to manage chronic diseases [11] Survey Details - The survey involved 417 employers and was conducted in June and July 2025, representing a workforce of five million employees [12]
UnitedHealthcare Pressure Builds: Trouble Ahead for UNH's Q2 Earnings?
ZACKS· 2025-07-25 16:56
Core Insights - UnitedHealth Group Incorporated (UNH) is expected to report its second-quarter 2025 results on July 29, 2025, with significant implications for the healthcare sector amid rising medical costs and regulatory scrutiny [1] - The company has faced challenges including the withdrawal of its 2025 earnings outlook, a surprise CEO transition, and federal investigations, leading to a decline in investor confidence [2] Financial Performance - UNH's second-quarter earnings are projected to decline by 28.8% year-over-year, despite a 12.8% expected revenue growth [6][16] - The Zacks Consensus Estimate for second-quarter earnings is $4.84 per share, down from $6.80 a year ago [16] - The company trades at a forward P/E of 11.98X, slightly above the industry average of 11.58X, but significantly below its five-year median of 19.20X [4] Segment Analysis - The UnitedHealthcare segment, UNH's largest by revenue, reported a 12.3% year-over-year revenue increase to $84.6 billion, with operating income rising 18.9% to $5.2 billion [10] - Revenue from the Employer & Individual Domestic, Medicare & Retirement, and Community & State businesses increased by 6.9%, 17.5%, and 12.5% year-over-year, respectively [10] - The consensus estimate for UnitedHealthcare's revenues indicates a 14.7% year-over-year increase, while operating income is expected to decline by over 30% [11] Market Context - UNH shares have dropped 45% year-to-date, mirroring declines in peers like Molina Healthcare and Humana, while the broader managed care industry has fallen 34.3% [2] - The medical care ratio for the second quarter is expected to rise to 88.6%, up from 85.1% a year ago, indicating increased medical costs [12] Regulatory Environment - The Department of Justice is investigating aspects of UNH's Medicare business, which has heightened concerns over regulatory risks [2][6] - The company has proactively engaged with the DOJ in response to media reports and is complying with requests [2]