UnitedHealth Group (UNH, Financial) contributed to performance during the quarter as the Company’s long-term, mid-teens earnings growth algorithm remained intact. Further, as political wrangling in the U.S. continues unabated, we suspect investors have become more confident that little will be done on the legislative front to derail the status quo between private health insurance and Medicare/Medicaid. COVID trends continue to ebb throughout the healthcare system; however, there is a sustainable benefit to the cost structure of U.S. healthcare – particularly related to virtual care. Virtual care is not only becoming more acceptable but is now preferred by many patients and care providers which should lead to less overhead (e.g., office space) that can be reinvested in better patient outcomes. Last, the Centers for Medicare and Medicaid Services proposed a nearly 8% hike in revenue for Medicare Advantage 2023, which should allow for ample flexibility in benefit enhancement and continued incentive to grow this franchise.
From David Rolfe (Trades, Portfolio)'s Wedgewood Partners first-quarter 2022 letter.
