(Reuters) – UnitedHealth Group reported a rise in third-quarter medical costs on Tuesday, as the company struggled with lower government payments in its insurance business and continued demand for medical care, sending its shares down 3%.
For the quarter, the company’s medical loss ratio — the percentage of premiums spent on medical care — was 85.2%, higher than the 82.3% recorded a year earlier, as well as analyst estimates of 84.2%, according to data compiled by LSEG.
Demand for health care services under Medicare plans — for people ages 65 and older or with disabilities — has also exceeded industry expectations since late last year as seniors undergo procedures that were postponed during the pandemic.
The company also faced rising medical costs as the turnover of people enrolled in Medicaid left most health insurers with more patients.
States have been reevaluating enrollment in Medicaid plans for low-income people since April of last year, when the coronavirus (COVID-19) pandemic requirement that states maintain flat coverage for participants lapsed.
However, UnitedHealth’s adjusted earnings of $7.15 per share beat Wall Street estimates by 15 cents, as the health group, which also operates a health care services business, saw membership increase across its business.
The company reported revenues of $100.8 billion, compared to estimates of $99.28 billion.
(Reporting by Bhuyan Singh and Leroy Liu in Bengaluru; Editing by Chingini Ganguly)