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Top Insurance Company UnitedHealth Doing Better Than Expected Under Obamacare

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UnitedHealth Group, one of the country’s largest insurance companies, announced better-than-expected profits as a result of the health-care law Thursday.

Overall, the company took a two percent hit in net earnings in the second quarter due to increased taxes from Obamacare and various growing expenses, but still beat expectations. The insurer’s first-quarter profits decreased by eight percent this year, which it attributed to the health-care law. UnitedHealth’s shares rose more than two percent Thursday morning, according to the AP.

Large insurance companies stand to benefit the most from the health-care law and UnitedHealth’s growing profits come as no surprise. The simple mandate that all Americans must carry health insurance widens the customer base of large insurance companies drastically — as do federal subsidies that prevent customers from feeling the brunt of premium costs.

UnitedHealth expanded coverage significantly through Obamacare exchanges and Medicaid programs. Another 270,000 members gained private insurance in addition to a 19 percent bump, or 730,000 new patients, in Medicaid coverage.

The company earned $1.41 billion overall in the second quarter, down slightly from $1.44 billion from the second quarter in 2013. Revenue rose by seven percent to $32.57 billion.

But a driving factor of UnitedHealth’s earnings came not from its health insurance sales but from its growing IT technology division, Optum/QSSI. Optum’s earnings jumped by 23 percent to $728 million over the past three months, the most growth this quarter of any of UnitedHealth’s divisions. Optum/QSSI recently won a lucrative government contract for the federal Obamacare website HealthCare.gov.

Insurance companies lobbied heavily in favor of the health-care law (and also against some provisions which limit profits) and they stand to profit long-term. But several Republican senators are worried about the level of entanglement between the Obama administration and UnitedHealth’s Optum. (RELATED: GOP Senators Wary Of Insurer, Admin Ties In Obamacare Implementation)

Sens. Chuck Grassley and Orrin Hatch sent a letter to Obamacare chief Marilyn Tavenner requesting an explanation and documents related to potential conflicts of interest between Optum and the Obama administration. They fear the intricate connections between UnitedHealth, a top insurance company, and the agencies implementing Obamacare, which directly regulates UnitedHealth, could give the insurer a leg up over the rest of the field.

UnitedHealth also announced Thursday that it would expand its activity in Obamacare exchanges significantly in 2015 — presenting even further opportunity for any conflicts of interest to become a problem. While UnitedHealth only participated in around a dozen exchanges this year, it will begin offering products in “as many as two dozen” state exchanges next year.

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Tags : obamacare
Sarah Hurtubise