UnitedHealth reports $29B revenue bump in 2024; CEO rips costly system

Amid withering public criticism over its handling of medical claims, UnitedHealth Group reported a $29 billion increase in 2024 revenues today, up 8% to $400.3 billion.

UnitedHealth executives held a conference call with Wall Street analysts six weeks after UnitedHealthcare CEO Brian Thompson was gunned down on his way to a New York City investor conference. The shocking ambush killing, allegedly by Luigi Mangione, was followed by an outpouring of vitriol from critics claiming UnitedHealth places profit over healthcare.

Several surveys show UnitedHealth among the leaders in denial of claims. Meanwhile, Kaiser Family Foundation found that the average family paid $25,572 for health insurance premium in 2024, while single workers paid an average of $8,951, representing a 6% and 7% increase over 2023.

UnitedHealth Group CEO Andrew Witty spoke at length from prepared remarks addressing the cost of healthcare. He fingered hospitals, doctors and pharmaceutical companies.

“Healthcare costs more in the U.S. because the price of a single procedure, visit or prescription, is higher here than it is in other countries,” Witty said. “There are participants in the system who benefit from these high prices. Lower-cost, equivalent quality sites of service, for example, can be good for consumers and patients, but threaten revenue streams for organizations that depend on charging more for care.”

Witty began the call with a tribute to Thompson, later crediting his work to improve the claims handling process in order to reduce frustrations from consumers.

“He would dive in with passion and caring to find solutions to improve experiences, whether for an individual consumer, an employer or a public health agency,” Witty said.

Increased medical care ratio

UnitedHealth’s medical care ratio — the percentage of premiums spent on health care — actually increased from 83.2% in 2023 to 85.5% in 2024. Chief Financial Officer John Rex blamed increased costs, including a February 2024 cyberattack, for the higher number.

UnitedHealth's subsidiary Change Healthcare was hit by the ransomware attack that affected millions of Americans and was the most significant cyberattack in U.S. health care history. The total cost of the response is now predicted to be between $2.3 billion and $2.45 billion, The HIPPA Journal reported today.

Annual net earnings totaled $14.4 billion, down 35.6% from 2023, as UnitedHealth dealt with the fallout from the Change attack. Fourth-quarter revenues increased 6.8% from a year earlier to $100.8 billion, while net earnings rose 1.6% from a year earlier to $5.5 billion.

Long-term, Witty said UnitedHealth remains “solidly committed” to its 13% to 16% growth objective, “a goal that reflects both the opportunities and the capabilities that we have.”

On claims, the CEO deflected criticism with statistics and a hopeful faith in looming technology. Less than one-half of 1% of all claims are rejected for a clinical reason, he noted.

“But we all know there are other claims which get held up in the process before you get to that stage,” Witty acknowledged. “The overwhelming majority of those claims … are held up because they were either sent to the wrong company, they didn't have the right information on them, the patient didn’t have the right benefits. All of those things … could all be dealt through technology and a more standardized approach across the industry.”

Witty later touted UnitedHealth’s commitment to technology and meeting consumers where they want to communicate. Visits to the UHC mobile app were up 66% year over year, he said, and app registrations are up “nearly 100%.”

“This is us moving to where American consumers want to be,” Witty said. “They want to talk to us digitally. They want to use their phone to be able to access us. They don't want to make a phone call. It's been an extraordinary shift.”

PBMs ‘only effective mechanism'

Witty adamantly defended pharmacy benefit managers as a crucial defense against high drug prices.

In December, Sens. Elizabeth Warren, D-Mass., and Josh Hawley, R-Mo., introduced a bill in the Senate that would require healthcare companies that own health insurers or PBMs to sell pharmacy assets within three years. A companion bill was also introduced in the House.

The legislation, if passed, would be a massive shakeup for the U.S. pharmacy supply chain, cutting off revenue and market power for PBM giants and the conglomerates that own them.

UnitedHealth Group owns Optum RX, one of the “big three” PBMs that control about 80% of the market with CVS Caremark and Express Scripts.

In recent years, PBMs have been hit with a barrage of criticism from antitrust regulators, state and federal lawmakers, independent pharmacies and patient advocates for business practices that detractors say drive up drug costs for Americans.

Among other concerning practices, critics have accused those “Big Three” PBMs of paying independent pharmacies lower rates than in-house pharmacies, directing business to their owned subsidiaries and pressuring independent pharmacies to accept coercive and damaging fees.

UnitedHealth is abandoning any revenues from rebates it negotiates going forward, Witty announced today. Previously, the insurer passed 98% of rebates on to consumers. That number increases to 100% going forward, he said.

Witty left no doubt where UnitedHealth stands on the proposed PBM legislation.

“PBMs are really the only effective mechanism across the system which really holds the pharmaceutical company to account once it chooses to set its price,” Witty said. “The PBM is there to try and hold that to account and negotiate on behalf of employers, unions, states and others, to try and bring down those prices.”

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.