UnitedHealth`s Early View of 2015: US Medical Demand Still Low

By Reuters Staff

(Reuters) - U.S. demand for healthcare services appears low heading into 2015, UnitedHealth Group Inc said on Wednesday, lending weight to the investment thesis that an improving economy will not lead healthcare spending to skyrocket.

The view from the largest U.S. insurer is positive for both payers and providers, as it implies that hospitals and insurers can grow their businesses at the same time. Shares in both groups rose on Wednesday.

Medical use has been under a microscope for the last six months as hospitals and insurers began reporting increased volumes and investors tried to parse whether insurers would need to pay more claims for each patient.

"With December and January behind us, we are not seeing any indication or evidence of an increase in utilization," UnitedHealthcare Chief Financial Officer Dan Shumacher told analysts during a conference call to discuss the wider group's quarterly results.

UnitedHealth on Wednesday reported lower-than-expected medical costs during the fourth quarter as measured by medical loss ratio, or MLR, which compares medical claims paid to premiums received from customers.

If rivals Aetna Inc and Anthem Inc report similarly positive results about medical use, that may ease investor fears that the strong economy will cause spending to rise, one analyst explained.

If all three insurers report financial results that show lower medical loss ratios and also say that there is lower per person utilization in hospitals, that should put some or most of the spending fears to bed, Leerink Partners analyst Ana Gupte said.

Anthem reports next week and Aetna the week after.

U.S. patients are receiving more care outside of hospitals. Hospitals also are signing insurer contracts in which they are paid based on delivering better care, not just more procedures. Both shifts may be helping to keep costs down, Gupte said.

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