Seniors are finally catching up on surgery for problems with their knees and hips they delayed during the pandemic — and that means higher costs for health insurers.
The trend was revealed by executives at UnitedHealth UNH, -0.26% at a Goldman Sachs investor conference held on Tuesday. The revelation dented UnitedHealth shares by 4% in premarket trade, and other rivals including Humana HUM, -0.12% as well. Cigna CI, +1.97% shares fell 2%.
“We’re seeing as behaviors kind of normalize across the country in a lot of different ways and mask mandates are dropped, especially in physician offices, we’re seeing that more seniors are just more comfortable accessing services for things that they might have pushed off a bit like knees and hips,” said Tim Noel, UnitedHealth’s chief executive for Medicare and retirement, according to a FactSet transcript of his remarks.
There’s also more capacity in the healthcare system to handle these operations. “We’re just seeing more services which, again, we’re really happy to see that our seniors are accessing the care that they need,” he said.
CFO John Rex put that trend into numerical terms. He said the medical care cost ratio — medical costs divided by premium revenue — for the second quarter will be at the upper bound, or moderatively above the upper bound, of its full-year outlook.
According to FactSet, analysts were expecting a medical cost ratio of 82.6% for the second quarter, after a ratio of 82.2% in the first quarter.
The Goldman analyst, Nathan Rich, tried to put a shiny spin on the trend, pointing out the outpatient costs are “obviously the lower cost side of care.”
“The bulk of it’s outpatient, but enough to be meaningful,” Rex replied.