My expectation (see Outlook for Managed Care) was that in 2010 health plan profits would exceed expectations — in some cases by a wide margin. So far, we’re off to a good start. UnitedHealth Group reported a 21% increase in first-quarter 2010 net income (earnings per share rose 27%). The company also increased its 2010 profit forecast. Same for Humana, which reported a 26% increase in first-quarter net income and raised its full-year 2010 profit forecast. Several factors drove the strong results — but an upswing in the underwriting cycle (i.e., pricing is comfortably ahead of cost trends) was a big factor. This isn’t surprising and should result in other plans posting blowout 2010 results as well. The politics of this improved performance won’t be pretty — even though the results aren’t sustainable given the long-term strictures healthcare reform puts on industry economics.
Correction (April 27, 2010): Last line incorrectly read “aren’t unsustainable.” Corrected to read, “aren’t sustainable.”
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