UnitedHealth Group, the country’s largest health insurer, expects to make $1.7 billion more than previously forecast in 2018 thanks to the passage of the tax bill late last year.
The company now expects 2018 adjusted earnings of $12.30 to $12.60 per share, up from its initial forecast of $10.55 to $10.85.
In its first-quarter earnings call Tuesday, UnitedHealth said it would shift the windfall it received from the law to investments in technology, data analytics, and health-related initiatives in local communities.
“Corporate tax reform is expected to improve earnings and cash flows by $1.7 billion in 2018,” company CEO David Wichmann said in the earnings call. “That’s after an estimated $400 to $500 million reduction in premium revenues due to minimum loss ratio and lower net health insurers fee recapture effects and a $200 to $300 million additional investment in operating costs.”
Companies have been releasing updates on their business plans after the passage of the tax bill; some are choosing to invest in other areas while others are providing employee bonuses or expanding benefits. The tax bill — led by Republicans in Congress and passed along party lines before receiving President Trump’s signature — allowed for $1.5 trillion in corporate tax cuts.
UnitedHealth already was performing well ahead of the tax bill’s passage. Revenue for the year grew 9 percent, to $201 billion, led mostly by its Optum offerings, which provides health services like a pharmacy benefits manager.
Its government partnerships also saw growth. These include Medicaid, which covers low-income people, as well as Medicare Advantage, which covers adults 65 and older.
For the fourth quarter, UnitedHealth had a net income increase 115 percent over the year-ago period to $3.6 billion on $52 billion in revenue.
Company executives said they were supportive of Trump’s executive order on Obamacare, which will allow for more people to band together to buy insurance, and would contain other proposals not yet detailed that allow people to purchase short-term plans. Executives said it would allow for lower-cost plans and give customers more choice.
The company ceased participating in the Obamacare exchange beginning in 2017.
