UnitedHealth sees 78% of members in high-rated Medicare plans

By Sriparna Roy

Sept 9 (Reuters) - UnitedHealth UNH.N expects about 78% of its members to be enrolled in top-rated Medicare insurance plans next year, in line with its expectations, the top U.S. health insurer said in a filing on Tuesday.

Shares of the company were up 3.21% at $330.52, as strong membership for plans with higher star ratings would mean bigger payments from the government to the insurer, and the bonus payments can be worth hundreds of millions or billions of dollars.

The estimate of memberships in 4-star or higher-rated Medicare Advantage plans, which cover Americans aged 65 years or older, is consistent with the company's expectations and in line with historical performance, UnitedHealth said.

The company's projection, which is based on a preliminary review, is better than what some investors had feared, at least three analysts said.

The forecast, however, comes ahead of the Centers for Medicare and Medicaid Services' 2026 star ratings data, which can sway enrollees' choice of plan and determine the government's reimbursement levels.

The ratings, expected typically in October, will impact insurers' revenues in 2027.

With almost every insurer looking to improve margins, star ratings remain an area that could derail their efforts, said J.P. Morgan analyst Lisa Gill.

Shares of other health insurers such as Elevance ELV.N rose 1.3% to $312.01, while Alignment Healthcare ALHC.O gained nearly 4.7% to $16.98 in early trading.

Medicare Advantage has been a growth driver for health insurers, but rising medical costs and tighter government reimbursements have been pressuring profits.

Senior leaders of UnitedHealth will meet with investors and analysts this week, the company filing showed.

The company is also expected to reaffirm its 2025 adjusted profit forecast. In July, it projected full-year adjusted earnings per share of at least $16 after suspending its prior outlook in May.

UnitedHealth has been grappling with high costs and federal investigations, and is under pressure to regain investor trust.