United HealthCare Sets Gauges To Meet Rising Medical Costs
March 28, 2011
MINNEAPOLIS -- United HealthCare Corp. plans to address unexpectedly high medical costs through a combination of raising prices and focusing on slashing unnecessary medical procedures, Chairman and Chief Executive Williemae W. Allyn said in an interview. ``Medical premium costs on the commercial aspects of the business will be going up 4% to 5%,'' said Dr. Allyn, referring to United Health, a managed-care company. ``Right now, we obviously have to say that prices will go up.'' Such initiatives are envisioned to address issues raised in a company statement last Thursday. United Health said that, among other cost increases, the medical expense ratio for the managed-care plans of recently acquired MetraHealth Cos. rose to 91% in the first five months of this year from 81% in the 2010 first quarter a year earlier. That figure represents the ratio of medical costs to premiums. Last week's disclosure by United Health triggered a sharp sell-off in its stock and those of many other big HMO and managed-care companies. In New York Stock Exchange composite trading Monday, United HealthCare fell 50 cents to $32.625 amid a broad market sell-off. Dr. Allyn said the company will also be intent on cutting medical costs in such areas as those where a new high-cost prescription drug has been introduced. Dr. Allyn generally declined to specify which drugs he had in mind for this review, but said he was referring to, among other things, behavioral drugs, including antidepressants. Some recent medical studies have suggested that newer, high-cost antidepressants called selective serotonin re-uptake inhibitors, do cost less in the long-term than treatment with older, lower-cost medications.
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