Cost Trend Environment
Matthew Borsch – Goldman Sachs: I just wanted to ask you about the commercial pricing and cost trend environment I mean particular of course to notice the lower outlook on trend now at 5.5% down from your prior outlook. Can you just talk through the components of your view that changed during the quarter and also maybe just dovetail that with whether you’ve seen any change on the pricing side as well?
Stephen J. Hemsley – President and CEO, UnitedHealth Group: Dan might be the best to begin that.
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Daniel J. Schumacher – CFO, UnitedHealthcare: This is Dan Schumacher. On the cost trend side stepping into 2012 we did have an expectation of higher utilization as compared to 2011 we are actually seeing that although I will tell you it is more moderate than we thought. We saw a surge in the first quarter utilization and then that moderated from the second quarter forward and I think beyond the consumer behavior underneath that I think what we are seeing is some really strong contributions from our medical affordability agenda. We work across the healthcare landscape, whether it be inpatient management focused on the most appropriate side of service, most appropriate course of treatment, all the way through to payment integrity, fraud, waste and abuse, and strong delivery, frankly from our contracting, aligning more around value and quality outcomes. So, all of those things are making a difference for us. As you look at the components of it. I guess I would take you back to the Investor Conference guidance and update the components from there. First on inpatient, we are seeing a little better inpatient. Again, that’s really our strong managements on one day length of stay, observation conversions and things like that. We are seeing a little bit more moderate pharmacy utilization, particularly in the space of Hep C. We’re seeing relatively stable physician and outpatient is actually a little bit higher than our expectation, and we continue to have strong programs really focused on the side of service behind the outpatient setting. So, all of that informs our revised view of 5.5% plus or minus 50 basis points. I think I’ll turn to Jeff to talk a little bit about the pricing environment.
Jeff Alter – CEO, UnitedHealthcare: On a general basis, we have said this before. We had expected and have been seeing a more competitive market environment around commercial pricing. I don’t think it’s changed. It’s about the same as it has been through the first few quarters of this year, so not really a market change in the third quarter. As you know, our approach hasn’t changed for a very long time. Our approach and discipline remain intact. As Steve mentioned, we believe the result of that will be some loss of commercial risk-based membership over the next, call it, six months. In relation to the discussion or the answer that Dan gave, we have a very disciplined process that takes a forward view of cost and as medical trend changes and expectation changes and those results change, we look across those 350 intersections of MLR, and then look at a couple of other factors and try to come up with the answer that will optimize our results in each one of those given markets. So, that has remained unchanged. What has changed I think internally is, we are able to get some of these changes into our pricing much quicker than we had in the past.
Joshua Raskin – Barclays: I just want to talk a little bit about the commentary you made on 2013 consensus Steve. You mentioned that that would be a challenge. I think the consensus first is the midpoint of your current – of you updated 2012’s about 7% growth. So, I guess a couple of things on that. We’ve heard from the Company before that it’s a double-digit earnings grower, are we just – in the last couple of years we are just not seeing necessarily all of that if you take out some of these one-timers. So, are we thinking about the growth trajectory wrong? You guys seem comfortable that Optum is still on pace to double by ’15, and then I guess you mentioned pricing for the industry fees, is that having a bigger effect, is there a net income impact next year and maybe specifically how you plan on accounting for that?
Stephen J. Hemsley – President and CEO, UnitedHealth Group: Josh, I think that is like six questions rolled into one. So, I really commend you for that. Our view in terms of the outlook of our business is unchanged. We have seen these kinds of challenges in the marketplace and I think we have been successful in navigating through them over the last couple of years. That doesn’t deter us from recognizing that we need to continue to operate and focus on that basis, that the economic environment has not changed, the employment outlook really has not changed and doesn’t appear to us to be the reimbursement environment relative to the federal and state budgets arguably has gotten even more intense. The impact of the reform act, including the insurance fee really begins to get come into play as we set begin the rate development process for 2013. So we are respectful of those elements and intent to engage them and to perform to our maximum potential through those and are perhaps more cautious than those who set consensus of those factors at this instance. As we look into 2013, we actually take a look on our actual performance I think it has been pretty strong over the last couple of years and we are certainly focused and actually think we are more capable and stronger than we have been n those past years. But we have to strike an appropriate balance there and that’s really all what we are saying. We expect to grow revenue and earnings in 2013. We are really not intending to give you more specifics or color on 2013 guidance other than to maintain a sober balance in terms of some of the headwinds that we see. From a growth perspective we consider these to be kind of the headwinds over perhaps the next couple of years, but if you really take a look at the growth potential of this enterprise, the market expansions that are in front of it over the long-term, Optum is performing well, it is maturing, it is gaining momentum and we fully expect to be in line with our guidance, the longer term guidance we set at last year’s Investor Conference. So, no discouragements along those lines and I don’t know what else to offer.
Joshua Raskin – Barclays: I understand Steve, you’re not going to give sort of specific guidance, but you talked about the industry fee. So, I’m just curious what the impact there is? Is there a specific percentage you’re assuming that the fee will come in at as a percentage of premiums, and are you accruing for that in ’13, is that the idea?
Stephen J. Hemsley – President and CEO, UnitedHealth Group: So, it’s coming into play in 2013, because it applies in that fashion. Maybe Dan Schumacher can address the insurance fee.
Daniel J. Schumacher – CFO, UnitedHealthcare: Sure. So, with respect to the accounting, the insurance fee is assessed in 2014 based on 2013 premiums. So, we will begin accruing for it in 2014 as premiums are earned and we will actually make the payment in January of 2014. So, that’s kind of mechanically how it works.
Joshua Raskin – Barclays: You’re accruing in ’14?
Daniel J. Schumacher – CFO, UnitedHealthcare: No. We’re accruing in ’14 for the fee. With respect to pricing, in the commercial business we have annual policies, so those policies that begin February forward in 2013 they have months that carry then into 2014. So, we are increasingly reflecting the health insurance tax in those renewals so that we capture the cost of that tax in ’14 in our premiums in ’13.
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