So typical in that. That’s amplified, of course, very much by the deductible wear off features that you see in a fourth quarter, influenza, RSV, all those patterns that come in. So we’d expect that to move the other direction here as we go into the 4Q.
Andrew Witty: Great. Thanks, John. And Brian?
Brian Thompson: Yes, John, I think you did a good job of explaining, sort of, the sequencing of the medical cost ratio. What I don’t want to lose sight of is I think the key point is all of our businesses in UnitedHealthcare right now are really demonstrating innovation and market success at the same time. And you’re seeing that come through in these margins, whether that’s our complex care and health equity strategy in Medicaid, how we’re showing up with broader service offerings and conveniences like UCard and URide, NMA to complement strong, stable core benefits or some of the innovations you heard around the commercial benefits in Dirk’s opening remarks. This is really translating the type of growth and performance that I think you’ve come to expect from UnitedHealthCare, and I think it sets up a really nice baseline that I remain optimistic about as we look forward to 2024.
Andrew Witty: Thanks so much, Brian and John. Next question, please?
Operator: We’ll go next to Stephen Baxter with Wells Fargo.
Stephen Baxter: Yes, hi, thanks. I wanted to ask about the PBM business, obviously interest in alternative or maybe even experimental models has been a big area to-date, you know, the past quarter or so. I guess what are you hearing from your health plan employer clients on their degree of interest in doing something totally transformational in terms of how they manage those benefits? Thanks.
Andrew Witty: Hi, Stephen, thanks so much. Let me ask Patrick Conway to respond to that.
Patrick Conway: Yes, so as we interact with our clients, employers, payers, and others, on this, first I’ll note, a recent survey came out, approximately 90% of those clients are satisfied with their PBM. They’re also satisfied with the level of transparency. Specifically for OptumRx, we will continue to innovate and provide additional solutions to our clients that are comprehensive, integrated and transparent. I’ll call out one other area, transparency to the consumer. This has been a journey for us that we continue to drive transparency to the consumer. To call out one example with Price Edge, a product recently launched, that’s providing consumers the most affordable medicine at the point of care. We are seeing millions of consumers access, use this tool as we provide it to them. And so you’ll continue to see us to drive consumer transparency and innovative solutions to our clients.
Andrew Witty: Right, Patrick, thanks so much. Next question?
Operator: We’ll go next to Nathan Rich with Goldman Sachs.
Nathan Rich: Great, good morning. Thanks for the question. I wanted to go back to the GLP-1 Class and I guess, you know, as we’re starting to see more outcomes data for these drugs, do you see that changing, you know, employers willingness to cover this class given the potential long-term benefits and, you know, how you helping them think about potential ways to design the benefit to be able to manage that cost, which you guys talked about earlier being so much in focus for employers?
Andrew Witty: Yes, Nathan, thanks so much for the question. I mean, there’s an old adage, which I quite like in this context, which is the innovation that is not affordable is not innovative. And that’s really the key to all of this. Though I have no argument, I don’t think anybody at UnitedHealth Group has any argument with the prospects and possibility for the future of this drug class. We recognize the need and nothing would make us happier, honestly, to be able to lean forward and see more and more folks take advantage of these sorts of opportunities. But ultimately it has to be affordable. And what we’re hearing from our clients is they just — they are really struggling to see how they embark on that journey of what they regard as a kind of open-ended financial risk.
Now that’s exactly why Brian earlier made the comments he did about we’re trying to put forward to various manufacturers a variety of different options, but we need the manufacturers to move. It’s as simple as that. And we remain extremely open-minded to any model that works. We’re working with our clients to ensure that they understand the various options. But they are giving us very, very clear signals. They need our help to make this a more affordable proposition for their employees and their members. And we’ll continue to lean into that. Thanks for the question, Nathan. Next question?
Operator: We’ll go next to Scott Fidel with Stephens.
Scott Fidel: Hi, thanks. Good morning. [Indiscernible] if you can give us your updated thoughts on from this vantage point, what you’re thinking about the trajectory of just overall wage inflation in healthcare? And how you’re sort of planning for that? We have been seeing sort of moderation from the COVID peaks, but there certainly seems to be some pro-inflationary risks out there when thinking about some of the federal policy proposals, state proposals, and then obviously some of these Union actions too. So just curious on how you’re thinking about wage inflation and health care moving forward and risks to that inflecting back upwards? Thanks.
Andrew Witty: Yes, absolutely. Thanks so much for the question. Let me ask Dirk to give you a few comments on that.
Dirk McMahon: Yes, well, to start, what I would say is as we go out and we negotiate with various health systems for prices as we move forward, you know, one of the key things involved in those discussions is, you know, what wage inflation is and how it’s impacting their costs. You know, as we sit here today, it’s lucky that we sort of have three-year contracts, so it’s muted a little bit. But what I would also say is, you know, we see a little bit of upward pressure on unit costs related to wages, but as I sit here today, it’s not something that we haven’t planning for and priced about. As I think about our own business, we haven’t had trouble recruiting people such as nurses, clinicians. We’ve actually, you know, people really want to work for us and from a capacity perspective, one of the things as we’ve talked about our growth so far, we have to make sure we have the appropriate labor capacity to manage all the risks that we take.
And as a consequence, we do spend a lot of time looking at the market. And as I said, people want to come to work for us. They like the mission. They like the ability to transform healthcare. And we’re pretty pleased with our ability to hire and manage our operations going forward.
Andrew Witty: Thanks, Dirk. Thank you very much for the question. Next question please?
Operator: We’ll go next to Kevin Fischbeck with Bank of America.
Kevin Fischbeck: Great, thanks. I wanted to ask about OptumHealth, I understand the commentary about membership coming in better, which creates a margin drag, but it feels like a couple of hundred thousand people, maybe low to mid-single-digit, more membership than you expected, causing margins to drop from 8% to 7% or 12%, essentially. Seems like a pretty big delta. So I assume there’s other things going on in there beyond just digesting new membership growth. If not, then I guess we would know what the margin is on those new members. But is there anything else you would spike out there and how do we think about building back from where we are today to that 8% to 10% margin target? Is it simply about getting today’s membership to target margins or is there a cost side? It seems like you’re adjusting the labor force to some degree. Is there an MLR side? Is there a rate side? Any other color to kind of help us give visibility into the 8% to 10% over time? Thanks.
