UnitedHealth sees 2012 Medicare, Medicaid gains (Reuters)

(Reuters) ? UnitedHealth Group Inc, the largest U.S. health insurer, forecast an increase in membership next year as gains in its Medicare and Medicaid plans more than offset declines in some plans serving employers and individuals.

UnitedHealth, already one of the largest providers of Medicare plans for the elderly, on Tuesday projected that it would add up to 300,000 Medicare Advantage members next year.

In sum, it projected it would add 790,000 to 1.15 million members in 2012, pushing its total well above 35 million.

The company, whose shares were up 2.4 percent in midday trading, issued the projections at its annual investor day in New York. It talked up prospects of both its UnitedHealthcare benefit plans and its Optum healthcare services businesses.

UnitedHealth also stood by its long-term goal of 13 percent to 16 percent annual growth in earnings per share.

A health insurance industry bellwether due to its size and the diversity of its plans, UnitedHealth on Monday forecast 2012 profit that only barely met Wall Street's target. But its shares rose as analysts called the forecast conservative and said it allayed fears of a lower outlook.

Medicare is one of the most enticing areas for health insurance companies as the postwar baby boom generation moves into retirement, swelling the ranks of privately run Medicare Advantage plans.

Just last week, UnitedHealth struck a deal to buy privately held Medicare specialist XLHealth Corp, which will further boost the company's Medicare Advantage membership beyond the projections issued on Tuesday. UnitedHealth projects 2.5 million Medicare Advantage members next year.

The company also projected it would add 250,000 to 325,000 members to its Medicaid plans for low-income Americans in 2012, swelling its total to about 3.8 million.

UnitedHealth forecast declines of up to 200,000 members for its commercial plans for employers and individuals that assume full insurance risk.

For employer-based plans in which UnitedHealth provides only administrative services, which are less lucrative, the company projected enrollment gains of as much as 500,000.

For the Optum businesses, which include a wide array of services such as electronic health records and pharmacy benefits, UnitedHealth projected profit of $1.3 billion to $1.4 billion next year, or an increase of 4 percent to 12 percent.

UnitedHealth is in the process of significantly expanding its OptumRx prescription benefit business by bringing in house business it previously outsourced to Medco Health Solutions Inc.

Optum Chief Executive Larry Renfro said the division's earnings will be dragged down by $115 million in investments in the pharmacy business next year. But he said the division is gearing up to be a competitor to pharmacy benefit managers Medco, Express Scripts Inc and CVS Caremark Corp.

"We have already begun to hear about our increasing competitiveness to the big three," Renfro said.

Health insurers have posted better-than-expected results throughout 2011, due largely to low medical claim costs as Americans delay doctor visits and medical procedures in the weak economy. But many companies have said they expect use of healthcare services to pick up.

UnitedHealth shares were up $1.08 to $46.11 in midday trading on the New York Stock Exchange.

(Reporting by Lewis Krauskopf in New York, editing by Gerald E. McCormick and John Wallace)

Source: http://us.rd.yahoo.com/dailynews/rss/seniors/*http%3A//news.yahoo.com/s/nm/20111129/hl_nm/us_unitedhealth

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