UnitedHealth Group Incorporated earnings call

… important element in building sustainable growth. We close the year with medical care patterns in each business in line with our updated outlook and ultimately supportive of our pricing decisions for 2026. With that, I will briefly walk through each business. Starting with Medicare, the 2025 medical cost trend was in line with our expectation of approximately 7.5 percent and supports our 2026 trend expectation of 10 percent. This reflects consistently elevated utilization in addition to increases in physician fee schedules and the continuation of higher service intensity per care encounter. As part of our efforts to address elevated trends and funding cuts, We plan for some Medicare Advantage membership contraction in 2026. We now expect UHC Medicare Advantage contraction will be in the range of 1.3 million to 1.4 million members for the full year, including group, individual, and dual special needs plans. These are greater losses than originally anticipated as competitive market dynamics drove higher than expected planned shopping during the intensely competitive annual enrollment period. Our 2026 approach favored margin recovery, and these membership trends are a result of …

… product repositioning and repricing efforts enables us to estimate approximately 13% adjusted operating earnings growth across all of UHC, principally from the improvement in serving commercial and Medicare market needs. These actions should expand operating earning margins for United Healthcare by 40 basis points and are expected to result in membership contraction of 2.3 to 2.8 million. The expected contraction in commercial membership is in line with our plans. While this will drive margin expansion in 2026, we still anticipate operating. Operating just slightly below our historical margin range until 2027. Our UHC recovery effort is being supported by steady efficiency gains as we advance AI and machine learning capabilities across our businesses. We anticipate operating cost reductions of nearly $1 billion in 2026, many AI enabled, and importantly, resulting in higher customer experience and satisfaction at a lower cost. Over 80% of calls from members leverage AI tools to help answer members' questions faster and more accurately. This enables our advocates to focus more time on a better service experience for individuals. Now I'll turn it over to Patrick Conway, CEO of Optum.

… was in line with our expectation of approximately 7.5 percent and supports our 2026 trend expectation of 10 percent. This reflects consistently elevated utilization in addition to increases in physician fee schedules and the continuation of higher service intensity per care encounter. As part of our efforts to address elevated trends and funding cuts, We plan for some Medicare Advantage membership contraction in 2026. We now expect UHC Medicare Advantage contraction will be in the range of 1.3 million to 1.4 million members for the full year, including group, individual, and dual special needs plans. These are greater losses than originally anticipated as competitive market dynamics drove higher than expected planned shopping during the intensely competitive annual enrollment period. Our 2026 approach favored margin recovery, and these membership trends are a result of these actions. We similarly positioned our Medicare supplement and standalone Part D segments, and as a result of the totality of actions taken across UHC Medicare, we expect an improvement in Medicare margins of approximately 50 basis points from 2025. Looking briefly to 2027, the advance notice published …