(Reuters) -UnitedHealth Group reported a surge in third-quarter medical costs on Tuesday, as the company struggled with lower government payments in its insurance business and persistently high demand for medical care, sending its shares 3% lower.
For the quarter, the company’s medical loss ratio – the percentage of premiums spent on medical care – was 85.2%, higher than the 82.3% reported a year earlier, as well as analysts’ estimate of 84.2%, according to data compiled by LSEG.
Demand for healthcare services under Medicare plans – for people aged 65 years and older or those with disabilities – has also exceeded industry expectations since late last year as older adults underwent procedures they had postponed during the pandemic.
The company also faced elevated medical costs as a turnover in people enrolled in Medicaid left most health insurers with more sick patients.
States have been reassessing enrollment for Medicaid plans for low-income people since April last year, when a COVID-19 pandemic requirement that states keep consistent coverage of participants lapsed.
UnitedHealth (NYSE:UNH)’s adjusted profit of $7.15 per share, however, beat Wall Street estimates by 15 cents as the health conglomerate, which also runs a healthcare services business, saw increased membership across its businesses.
The company reported revenue of $100.8 billion, compared with estimates of $99.28 billion.