Good morning, and welcome to the UnitedHealth Group first quarter 2019 earnings conference call. A question-and-answer session will follow UnitedHealth Group's prepared remarks. As a reminder, this call is being recorded. Here is some important introductory information. This call contains forward-looking statements under the U.S. Federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call has also referenced non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the financial reports and SEC filings section of the company's investor page at www.unitedhealthgroup.com.
Information presented on this call is contained in the earnings release we issued this morning and in our Form 8-K, dated April 16, 2019, which may be accessed from the investors page on the company's website. I'll now turn the conference over to the Chief Executive Officer of UnitedHealth Group, David Wichmann.
Good morning, and thank you for joining us. Today, we reported a strong start to 2019, with revenues up 9%, adjusted earnings per share growing 23%, and return on equity of nearly 27%. Optum and UnitedHealthcare each contributed fully to this performance. With confidence in continued momentum, we are raising our earnings expectations for 2019. The continued growth and earnings performance of our business is a byproduct of our focus on providing exceptional returns to society by improving healthcare affordability, outcomes, and the patient experience, what some refer to as the Triple Aim. This orientation frames our growth strategy, informs capital allocation decisions, and shapes the operating plans for UnitedHealth Group's businesses, all directed towards attaining the promise of our mission.
It's that same mission, strategy, and approach we have pursued since 1998, when UnitedHealth Group was well less than a tenth its current size, and when our strength and aligned capabilities and capacities did not nearly match our ambitions for the health system as they do today. Over that 20-year time period, UnitedHealth Group has applied competencies in data, technology, clinical insights, and well-formed innovation and adaptive traits to drive change and grow strong market positions in the large and fast-growing healthcare end market. Our outlook for growth continues today as the pace of innovation and our capacities for change advance in a market restless for achieving improved value, access, and coverage in a sensible and durable way. The first quarter saw several developments illustrating some of the strongest progress yet on this journey, which we expect will build considerable shareholder value.
In pharmacy care services, OptumRx announced that point-of-sale consumer discounts on branded pharmaceuticals will be its fundamental approach to business. UnitedHealthcare is well underway implementing point-of-sale discounts at scale for the more than 8 million consumers covered through its commercial risk business. At the counter, people are already saving about $130 per eligible script, and we are prepared to participate in the CMS demo project for Part D effective January 1, 2020, to drive even greater pharmacy value for more people. In digital health, our initiatives are accelerating. We completed beta testing of the Individual Health Record physician platform and have built over 5 million active consumer health records. Simultaneously, our enhanced Rally consumer digital health platform now integrates digital engagement, coaching, telemedicine, and incentives with quality and advanced cost transparency and estimating capabilities.
We provide access to both proprietary and third-party services in areas such as exercise, weight, sleep, employee assistance, nutrition, and other value-based programs. In its initial 1 million member deployment this year, the enhanced Rally experienced a 13% increase in consumer engagement. We expect those numbers to further advance as the IHR and other functionality are added. As part of our strategy to reinvent healthcare delivery, we apply Rally and the IHR together with Optum Care's practice capacities to advance efficacy and value. We are progressing toward the close of the DaVita Medical Group transaction, and we look forward to adding more markets, more doctors, and clinical staff serving more patients. We continue to modernize the financing of delivery systems, whether they are owned by Optum or accessed through more modern UnitedHealthcare benefit designs across all market segments.
These benefit designs will be more consumer responsive and address social determinants of care, especially for those who are most affected and who have the greatest and most complex needs. Nearly 80% of what influences a person's health relates to non-traditional medical and behavioral issues, such as food, housing, transportation, and healthcare finances. Improving care for society is behind our partnership initiative with the American Medical Association to standardize how data regarding critical social and environmental factors is collected, processed, and integrated. Nearly two dozen new ICD-10 codes will be used to trigger referrals to social and government services to better address people's unique needs, connecting them directly to local and national resources in their communities.
Finally, our Net Promoter Scores continue to advance meaningfully in the first quarter 2019 as we march towards an aggressive target of 70 by 2025. The people we serve will benefit as we advance quality and value, and in turn provide growth and returns for shareholders. Before I ask Andrew Witty to update you on Optum, I know there's been public discussion about Medicare for All proposals. We view the discussion first through the prism of our mission and how individuals can be better served and the health system can work better for all. From that perspective, we welcome the contrast between these proposals and the kind of real progress we're talking about on this call and discussed with you at our November conference, founded on durable and modern information, technology, and clinical capabilities.
The wholesale disruption of American healthcare being discussed in some of these proposals would surely jeopardize the relationship people have with their doctors, destabilize the nation's health system, and limit the ability of clinicians to practice medicine at their best. The inherent cost burden would surely have a severe impact on the economy and jobs, all without fundamentally increasing access to care. The path forward is to achieve universal coverage. It can be substantially reached through existing public and private platforms. Meaningful progress in healthcare lies in national and state leaders continuing to work collaboratively with the innovative and proven private sector solutions to achieve the goals we all want. A modern, reliable, informed, and aligned healthcare system that offers the access, choice, and coverage protections people seek at a fair cost to the individuals and society as a whole.
Together, we need to operationalize real changes that promote an interoperable, secure digital infrastructure, allowing information to be shared securely and widely so proper clinical decisions can be made and acted upon by qualified physicians with aligned incentives for achieving better outcomes. Changes that eliminate unnecessary and costly regulatory frameworks and taxes, that address underinvestment in social determinants of health, and changes that encourage people to take accountability to modify lifestyle behaviors that drive a significant percentage of their lifetime healthcare needs. The best system is one which is informed, engaged, and aligned. Where people, their doctors in the private and public sectors work together to improve or sustain individual health while improving the performance of the health system for everyone. We are encouraged to see the U.S. is on an improving path. For 16 straight months, healthcare's relative economic burden on society has lessened.
While recent year-over-year spending growth at just over 4% is still too high, it has lessened considerably due to the better management of price inflation and the earlier and more effective management of care in lower cost settings. The progress and ideas we have and will discuss further today will take healthcare to an entirely new level of quality, cost, choice, and coverage in a proven and lasting way, ensuring the U.S. health system better serves and supports all Americans. Now let me turn it to Andrew Witty, CEO of Optum, to discuss Optum's focus, strong operating and financial results, and growing forward momentum. Andrew.
Thank you, Dave. Our next chapter involves accelerating digital, transforming pharmacy care through OptumRx, and reinventing healthcare services through Optum Care, while aligning all of Optum's resources to better serve patients directly and supporting the work of physicians, hospitals, and health plans who also serve them. Primary care represents well under 10% of medical costs, but has a profound influence on the other 90% of the cost and quality of care. Within OptumHealth, we offer densely arrayed local care options built on a foundation of owned and operated primary care alongside aligned networks, together improving how the health system is accessed and used downstream. Today, we serve millions of patients across approximately 80 health plans and payers. This year, virtually every local Optum Care practice will participate in advanced value-based care arrangements.
Our clinical team continues to advance performance with our physicians delivering better quality outcomes, with 99% of seniors served through advanced value-based arrangements receiving a star rating of 4 stars or higher, delivering lower costs, with practices serving Medicare Advantage participants at as much as 30% lower cost than original Medicare and 10%-15% lower than typical Medicare Advantage, and with higher satisfaction, with an NPS of just under 80. In addition to primary care in local communities, we own and operate surgical care centers, neighborhood urgent care centers, community pharmacy dispensaries, and in some markets, hospitalists and specialty and ancillary care capabilities, such as office-based infusion of specialty pharmaceuticals and oncology services. For example, our new Optum Care Cancer Center in Nevada takes an integrated, multidisciplinary approach to providing patient-centered care in a professional and compassionate setting.
This outpatient program delivers integrated medical, surgical, and radiation oncology, chemotherapy and immunotherapy, imaging, palliative care, and 24-hour oncology urgent care. This is one of the ways we are exploring value-based specialty models that uniquely align to our primary care and ambulatory capabilities, grounded in a physician-led culture of evidence-based medicine and enhanced by academic and community partnerships. All of these services produce better outcomes than outdated and costly facility-based alternatives and generate high NPS, because the patient experience is distinctively better. We are accelerating the process of connecting these elements to create informed, comprehensive open market care systems. Seamlessly supporting the patients we serve, all on a fiercely multi-payer basis while supporting physicians seeking to operate practices at their fullest clinical capabilities. Our journey of adding and enabling new locations to extend reach while deepening our clinical offerings will continue to improve our impact for years to come.
We are architecting a more broadly informed, engaged, and aligned healthcare system, one that responds better to consumer preferences while easing the burden of healthcare on society. This quarter's growth in revenue per consumer served, 14% over last year, indicates we're taking responsibility for more of a consumer's health and serving them more deeply and comprehensively. On March 12th, OptumRx extended our leadership on negotiated drug discounts by announcing that we will only serve new employer-sponsored pharmacy benefits businesses after January 1st, 2020, that provides consumer discounts at the point of sale. This replaces the current system in which employers typically elect to flow rebates back to all plan participants to lower their premiums. Benefits of this new approach are clear.
Our data shows patients' prescription adherence improves up to 16% depending on plan design, and we know patients' health ultimately improves when they follow physicians' orders for drug regimens. This approach has been proven to achieve medical cost savings of up to $300 per member per year, and we have received strongly positive feedback from employers, employer coalitions, industry observers, regulators, and policy leaders. We're also seeing strong response to PreCheck MyScript, which offers care providers instant information on efficacy, cost, and alternative drug choices directly within the physician's workflow. Nearly 150,000 physicians are using this technology now, up 77% since December. Our near-term plans for pharmacy care services remain focused on achieving the highest quality outcomes, the lowest net cost of drugs for patients, and the best patient experience. Market response continues to be outstanding.
2019 was a good sales year for us, and with robust RFP activity and a couple of significant wins already, 2020 should be even better. OptumInsight, the technology and analytics engine of our enterprise, continues to provide our customers strategic insights to improve health system performance. We're in the process of launching newly developed services and technology offerings with our state customers. These end-to-end approaches use advanced technologies to modernize traditional Medicaid administrative offerings, including the comprehensive integration of cutting-edge Optum analytics services and capabilities, deeply enhancing the breadth, depth, and effectiveness of these state-administered offerings. As Dave mentioned, in consumer digital health, we've started beta testing the consumer version of the IHR and envision a staged deployment starting around mid-year. We also studied the impact of deploying the IHR for people in the Medicare, Medicaid, and commercial markets and found better outcomes, lower cost, and improved patient experience.
When placed in the hands of a qualified, high-performing doctor in a value-based system, the IHR meaningfully reduces healthcare costs. In a similar vein, on March 28th, we launched the consumer version of the PreCheck MyScript technology called MyScript Finder. Rally now has over 24 million registered users, having grown adoption by over 2 million people in this quarter alone. Consumers earned a record $200 million in rewards in the first quarter, demonstrating their high engagement. Forward-thinking employers have made more than $1 billion in annual rewards available to people for taking actions to improve their own health. Our software engineers are now building digital payment and physician office visit scheduling capabilities and applying artificial intelligence and biometric data to improve post-acute patient recovery and reduce hospital readmissions. Rally and platforms like the IHR are just two critical elements of a more modern information and digitally enabled health system.
Particularly when coupled with rewards and support tools, they enable physicians to more effectively manage their patients at scale. Turning to Optum's financial results, first quarter revenues of $26.4 billion grew 12%, led by OptumHealth, growth of 17%. We added seven million adjusted scripts, achieved 14% growth in backlog, and now serve two million more people at OptumHealth. Optum's operating margin of 7.1% expanded 10 basis points over last year's first quarter, contributing to 14% growth in operating earnings to nearly $1.9 billion in the quarter. These results illustrate our steady momentum as customers respond to the innovation, insight, and the value that Optum provides. Now I'll turn the call over to Steve Nelson, UnitedHealthcare CEO.
Thank you, Andrew. The market is responding to UnitedHealthcare's practical innovations, personalization, and service performance on behalf of those we serve. Within just the past quarter, we've been awarded contracts to serve Medicaid beneficiaries in North Carolina and Arizona, and again drove strong growth in serving people in Medicare Advantage and Dual Special Needs Plans. Our innovative Navigate4Me service addresses the personalized holistic care needs of our senior population Medicare Advantage seniors with complex health issues like diabetes, congestive heart failure, or multiple chronic conditions receive concierge service from nearly 1,000 dedicated experts. Each serves as a single point of contact for their seniors. Our navigators provide support for clinical and administrative needs, help patients follow their personalized care plans, coordinate care, and address social determinants of health.
Key to delivering this flexible personal service is a proprietary technology platform that supports navigators with integrated data, analytics, and information specific to each patient, and the results have been impressive. We've seen a 14% reduction in hospitalizations for people with congestive heart failure, and overall, a 19-point increase in NPS from patients who receive our direct support. We are also better coordinating medical services through locally organized systems of care, highly capable of physical, digital, and virtual care delivery. Our data shows that seniors in our Medicare Advantage plans see, on average, about one-half the number of doctors as similar seniors using original Medicare. This means a simpler, less confusing experience and better outcomes for patients and better use of scarce health system resources overall.
It is not a coincidence that seniors are enrolling in private Medicare plans at a record pace, with one-third of the nation's seniors served today by the private market. Collectively, Medicare Advantage plans provide significant savings and invest those savings in superior benefits not available under original Medicare. Medicare Advantage fills in the significant gaps left by original Medicare, including coverage for pharmacy, dental, vision, hearing, and personal wellness and fitness needs. Again, none of them are covered by original Medicare. This strong trend toward greater use of private services includes the state Medicaid programs, where states are increasingly asking the private sector to take responsibility for the care of their most complex and chronically ill beneficiaries. Managed care has a track record of reducing costs by better coordinating care for these people while helping them become healthier.
Looking at our first quarter financial performance, UnitedHealthcare's revenues grew 8% to $48.9 billion, serving three quarters of a million more people domestically with medical benefits in the quarter, led by growth in Medicare Advantage and in serving self-funded employers. UnitedHealthcare's operating earnings grew 23% over last year to nearly $3 billion in the quarter, with operating margins expanding 70 basis points to 6%. We are hard at work on enabling our business for future growth. In Medicare Advantage, we believe we are well positioned to advance our market share. Further implementation work for recent Medicaid awards is in progress. Coupled with our strong activity in the commercial group, Medicare and global markets, we expect to continue to drive sustained and diversified growth. Now I'll turn the call over to UnitedHealth Group's Chief Financial Officer, John Rex.
Thank you, Steve. Our initial quarter for 2019 positions us well to deliver on our full year financial commitments. To recap, revenues grew 9.3% to $60.3 billion, even after considering the negative 1.4% impact related to the Health Insurance Tax deferral for 2019. In the first quarter alone, this deferral helped improve affordability for the people we serve by more than $700 million. This tax adds billions in cost to the system and constrains access and benefits for Americans. We continue to advocate and are hopeful for its permanent repeal. In the quarter, the more than $5 billion revenue increase was led by same-store growth, well-balanced across our benefits and services platforms. Medical cost trends continue to be well managed and consistent.
Our view of forward trends and our first quarter medical care ratio of 82% continue to support our full year outlook for an MCR of 82.5%, ±50 basis points. Favorable reserve development of $300 million was consistent with the year-ago level, and medical payables at 49 days were also stable with the year-ago level. Earnings growth in the quarter was also driven by improvements in our operating cost position. While the Health Insurance Tax deferral lowers the operating cost ratio, beyond this factor, strong improvements in productivity more than offset our ongoing investments to drive growth for the future. We will continue to pursue such investments as our focus remains firmly on the decade ahead. Overall, operating margins expanded 70 basis points over last year to 8%, and first quarter adjusted earnings per share of $3.73 grew 23% over last year.
First quarter cash flows of $3.2 billion were consistent with our expectations, recognizing that comparison with last year is affected by the Health Insurance Tax deferral. Recall that reported cash flows were elevated in the first three quarters of 2018 by collecting the Health Insurance Tax from customers over the course of the year. Then impacted in the fourth quarter by the $2.6 billion payment to the U.S. Treasury. Additionally, we would note certain government payments received in the second quarter of 2018 are not scheduled to be received until the third quarter of this year, simply due to calendar timing. All in, we expect second half 2019 cash flows will be meaningfully above last year's, most notably in the third quarter, with second quarter commensurately lower.
We continue to expect double-digit percentage growth in cash flows from operations in 2019 to a range of $17.3 billion-$17.8 billion. We continue to put capital to work to build the business for the benefit of both society and our shareholders with a robust organic and inorganic growth agenda. We are currently active in each of the five growth pillars we previously detailed as we look ahead 10 years and expect to grow and diversify our earnings streams inside this focused, dedicated healthcare company. We also returned $3.9 billion to shareholders this quarter through dividend and share repurchase activity. Return on equity was strong at 26.8%, rising 300 basis points from one year ago.
Looking forward, we entered the second quarter with strength, flexibility, and rising confidence in the positive impact we can have this year and far into the future. We continue to expect strong growth in adjusted net earnings in 2019 and have increased our outlook to a range of $14.50-$14.75 per share. That would bring our one-year earnings growth rate to 13%-15% and our five and 20-year compound earnings growth rates to approximately 20% per year. Dave?
Thank you, John. Over the past 45 years, UnitedHealth Group has grown consistently through the full range of macroeconomic, healthcare, legislative, and policy conditions, adapting and adjusting to deliver value for all those we serve in every changing environment. That value is rising at an accelerated pace as we execute against our multidimensional growth agenda in healthcare delivery, pharmacy, digital, consumer responsive benefits, and global. These efforts, pursued at scale, position us uniquely as a technology-enabled healthcare company, delivering distinctive results to our customers and to society. Taken together with our commitments to service, quality, and NPS, our investments in the coming wave of healthcare innovation, a movement we intend to lead, and our multiyear, multibillion-dollar effort to improve our medical and operating cost basis for the benefit of our customers, we expect sustained growth and performance for UnitedHealth Group this year, in 2020, and for many years beyond.
Thank you. We will now take one question per caller, please.
The floor is now open for questions. At this time, if you have a question or a comment, please press star and one on your touchtone phone. You may remove yourself from the queue by pressing the pound key. We ask that you limit yourself to one question. If you ask multiple questions, we will only be answering the first question so that we can respond to everyone in the queue this morning. Our first question is coming from Peter Costa with Wells Fargo Securities. Please go ahead. Your line is open.
Good morning, and thank you for the Medicare-for-all discussion. Now it's your job to get your members and healthcare workers and employees to understand the same message that you gave to us. Moving on to the rebate structure. As drug rebates go away, can you tell us what that will do to margins in your PBM and to premiums in your healthcare plans?
Sure. First, Peter, thank you for the acknowledgment of the Medicare for All commentary. We will definitely follow through and make sure that this is well understood because we think the options are clear between a government-sponsored or government-run system and the one we have to offer. We'll make sure we keep moving in that direction. Andrew, do you want to take the pharmacy question?
Sure. Thanks, Dave. Peter, thanks for the question. I'd like to make just a couple of introductory comments and then ask John Prince to comment specifically on the margin element. I think in terms of this whole rebate conversation that's been going on, there are really two elements to this that we need to keep a very close eye on. The first and most important of all of this is what is going to be the ongoing mechanism to ensure pricing discipline for pharmaceutical products. As you well know, the only mechanism that exists today is essentially volume that's aggregated by companies like OptumRx to be able to then negotiate effectively with pharmaceutical companies who otherwise would have complete independence on what they do with their list prices. That's something which must not be lost in this set of conversations and discussions which are going on at this time.
There is a real risk that if there is a situation where rebates or a mechanism to replace rebates was not in place, we could see significant drug price inflation over the next years. That would set back a huge amount of the effort that's been achieved over the last 10 or 15 years to try and bring more control to this area. The second part is, I'll ask John to really give you a little bit more detail. Is obviously the migration for a company like OptumRx. John has led a very successful strategy in, first of all, diversifying the pharmacy services offering from OptumRx, and secondly, moving into a modern position of passing forward discounts to the point-of-sale to consumers. You've seen a lot of progress there this quarter.
Also developing the way in which we work with our customers to ensure that our mechanism of compensation for the service we delivered, is less and less dependent on rebates, the vast majority of which we pass through to our customers. John, would you like to add any specific detail?
Sure. Great, Andrew. Thank you. Peter, thanks for the question. It's John Prince, leading OptumRx. We've been working for years around transforming our pharmacy care services in two ways. One is expanding how we deliver value to our clients through our integrated medical behavioral pharmacy experience, which focused on total cost of care and health outcomes. We've also been very focused on driving a transparent business model where more and more of our revenue is coming from administrative fees, value sharing mechanisms that align us with the consumer, the client's needs. With that context, we see over time, minimal impact from our margins because if you look at the rebate and discounts that we manage, overall, rebates only exist on 7% of prescriptions. 90% of what we manage is generic, with no rebates, 10% is brand, and a subset of that is a rebatable drug.
When you look at in the Medicare market today, none of that value we manage from a discount rebate is held by us. It's 100% is passed on to our clients and fully disclosed with CMS. 100% is passed on the Medicaid market. Within our total client base, 98% of our discounts are passed on to our clients. When you look at an overall standpoint, we're driving that value and passing it on to our client over time. That remaining 2% is a client choice in how they want to pay for our services. Our belief is that over time, that remaining 2%, we would work with our clients to look for other alternatives for them to pay for our services, which we're actively encouraging, to manage how we get our pay for our services.
Great. Thank you, Peter. Next question, please.
We'll take our next question from David Windley with Jefferies. Please go ahead. Your line is open.
Thank you. Good morning. On Medicaid, wondered if you could comment on the progress in fixing or improving the performance of the handful of markets that you've called out in prior calls, and in that context, maybe comment on your decision to exit Iowa. Thanks.
Sure. Will do, Dave. We're seeing nice progress in Medicaid, year-over-year. We saw nice progress in the quarter. I think I'll have Heather Cianfranco, our CEO of that business, overview those for you.
Sure. Thank you. Thanks for the question, Dave. Heather Cianfranco, leading Community and State. As you mentioned, yes, we highlighted that we had pressure in a handful of markets last year. We continue to make progress as Dave Wichmann noted. We saw this quarter some nice growth in our operating earnings year-over-year, and we also saw a couple of good wins. You heard us talk about North Carolina as well as our Arizona intellectual and developmental disabilities contract. We also saw strong DSNP growth. I'll tell you that with respect to that handful of markets, we've made progress in most of them, and we're working to improve our performance. Our performance still is not exactly where we expect it to be, and we'll continue to work on that through the year, and you can expect to see improvement there.
Iowa was one of those markets, and unfortunately, even though we put the same work into Iowa, there was a funding increase last year by the administration due to the systemic underfunding of that program over the years, the inability to catch up with what continued to be medical cost pressure and some really unique system design elements of that program recognized across the industry. We were unable to make that a sustainable market for us and continue to deliver the high-quality services that we believe Iowans deserve from UnitedHealthcare. We did make the decision to exit that market. You'll see us exit Iowa, unfortunately, by June 30th. We're proud of the services that our employees predominantly have delivered in that market and the impact we think we've made on hundreds of thousands of Medicaid members.
With respect to the rest of the markets, we're continuing to make progress. We think we'll see improvement in some funding cycles that are upcoming over the next few months, and we're on track with our performance optimization.
That's great. Thank you.
Dave, in summary, nice improvement quarter-over-quarter, first quarter, a solid operating earnings growth, despite negative impact of the HIF. I think it also should be said that we are still underperforming in this business. It'll probably take us until 2020 to get to our full performance expectation, which would be performing at a margin somewhere in the 3%-5% zone.
Got it. Thank you.
David, next question, please.
Our next question comes from Justin Lake with Wolfe Research. Please go ahead. Your line is open.
Thanks. Good morning. Can you give us an update on progress with the government around the DMG acquisition? Would also appreciate any commentary around management's decision to do about two-thirds of the full year share repo in the first quarter. Thanks.
Sure. I'll take DMG, then John Rex can take share repo. We remain very excited about this opportunity to expand geographic reach.
To serve more people. That is a critical part of the strategy that we have around reinventing healthcare delivery to access more markets, at the same time, go much deeper into those markets to make them work much more effectively. At this stage, we have a clear path to approval and closing of the transaction, unfortunately, we cannot comment on further details or timing at this stage. We're working through a couple of matters that remain. John, you want to touch on repo?
Sure. The $3 billion of share repo that we did in the quarter is against our $4 billion-$5 billion full-year outlook. It is about the same percentage that we did in the year-ago quarter. Also, we did $2.65 billion in the year-ago 1Q. We also did a significant portion of our full year in that 1Q. Certainly, I would say that market conditions warranted that we accelerate our timing on share repurchase. We try to maintain good flexibility in terms of how we approach that program, also maintain good flexibility in our balance sheet overall. That was really what the decision was premised on.
Thank you. Thanks, Justin. Next question, please.
Thanks.
Our next question comes from Steven Valiquette with Barclays. Please go ahead. Your line is open.
Great. Thanks. Good morning, everyone. I have a high-level question on Medicare Part D related to the rebate proposal. I think when we spoke at our conference last month, the view was that UNH and other Part D players could prepare multiple bids to cover all the different scenarios for 2020. Now with the CMS guidance stating that a plan sponsor should bid on the current status quo, we'll provide protection with this demo program. The question is, I'm curious if you think this demo program is a fair compromise for Part D plan sponsors, or does this make you have to perhaps rethink your Part D bidding strategy for next year? Thanks.
Yeah, it certainly can be. Brian, you want to touch on that? Brian Thompson.
Sure thing. Hey, Steven. Brian Thompson here. We certainly support the administration's efforts to lower drug costs for seniors. I do think that over the long term, this could provide lower pricing via better transparency. We want to balance that, as you suggested, against premium increases here in the short term. For context, if we exclude members today without any cost-sharing, we suggest that perhaps a third will benefit in the near term, leaving two-thirds perhaps worse off. As you had mentioned, timing right now remains uncertain, CMS clarified the bids should assume the current rules as they apply. As you mentioned, CMS is providing some protections in the form of a risk corridor, that plans that had lower premiums with rebates will be able to apply, and we're certainly appreciative of that guidance.
I will suggest that it won't fully mute an increase in member premiums, will be helpful. We certainly intend to participate in that demonstration to the extent the new rule does impact our plans. I will say that I don't think the corridor protections are going to meaningfully change bid strategies or competitive behaviors. It's important to remember these are partial protections, and they only apply if the rule passes. Plans need to be disciplined in their pricing regardless. I will just leave with a comment around its context. Important to remember, we're only talking about rebates and where they apply. They've never been retained by plans, whether that's point-of-sale or in premium and when. While there's certainly some uncertainty, we appreciate the additional clarity that we've received from CMS, and we'll be ready to bid here in early June, like we always are.
Okay, great.
It was a constructive step forward, one that is born in the collaboration between CMS and the Part D carriers. We look forward to participating in the Part D program. Next question, please.
Okay, great. Thanks.
We'll take our next question from Frank Morgan with RBC Capital Markets. Your line is open. Please go ahead.
Good morning. We'll stay on rebates. I'm just curious, with regard to the recent announcement you made, any interest so far or any color around what your current self-insured customer base, how that's being received, and do you think that will in any way affect new business when you go into 2020? Thanks.
I think there's growing interest broadly, John Prince, do you want to start with OptumRx?
Sure. Thanks, Frank. It's John Prince with OptumRx. I'd say, first of all, we are pleased with why we did it, because there's significant value from a consumer affordability standpoint. I think when you have conversations with customers and with other stakeholders, they're very interested in what is the impact of the discounts that we have negotiated on behalf of our clients, and it's material. It's $130 of value per eligible script, which is material. The value in terms of driving higher adherence is also important from a health outcome. When we have conversations with our clients, they're very interested in our data and understand how it's impacted consumers. We've had very positive interactions and feedback on it.
I'd say when you look at the health plan market, in addition to UnitedHealthcare, we've had strong interest with our other affiliated health plans, where a lot of them are actually looking at how they would incorporate that, I think there is strong interest in other clients that are in the health plan space to adopt it. When you look at the employer market, there's strong interest in new clients as well as existing clients interested in how to phase that in over time. Remember, in terms of what we announced, this does not affect our 1/1/2020 selling season. This is required for everybody after 1/1/2020, starting January 2nd, 2020.
A bottom line on that, Frank, was there's growing interest in the market. It's a little bit slower to adopt. We'd like to see faster adoption. We are clearly taking a position to at least for certain plan designs, to make sure that consumers are getting those discounts applied at the point-of-sale, which we know improves adherence and hopefully will improve their long-term health. Thank you for the question, Frank. Next question, please.
Our next question comes from Kevin Fischbeck with Bank of America. Please go ahead. Your line is open.
Great. Thanks. The market seems to be concerned to some degree about margins and I guess both maybe on the managed care side and the PBM side after either go to point-of-sale rebates or move away from rebates entirely. I just want to get maybe a little bit more color from you about your experience so far in 2019 on the commercial risk side on the business that you moved over. I assume that the margin profile there is similar to what it was previously, but maybe just comment on that, and then as far as the PBM side with these new contracts that you're talking about post 2020, I assume that the economics in that business is also similar to your core business, but maybe just confirm those two points.
Kevin, I think the most compelling part of the point-of-sale rebate application in the commercial markets for UnitedHealthcare, and I'll have Dan comment on this in a moment as well, but is the fact that per eligible script, we're saving consumers $130 per script, and we're seeing adherence rates as high as improvements as much as 16%. The impact on society and the people we serve is probably the most compelling part that I want to remain unnoticed. I think as it relates to the financial effects of it is pretty much in line with what our expectations were overall. Dan, do you have any additional comments?
That's right, Dave. Our expectations on the outcomes for very much in keeping with what we thought going in. The reality is, it's a very meaningful impact for the individuals that are taking high cost specialty medications, as Dave mentioned, there are very compelling savings for them. When you look at it in the overall medical and pharmacy offering, it's a more modest impact.
Overall, it was a modest impact, in part because I think there's this perception that people are deeply exposed to price inflation and pharmacy. The reality is that most of the plan designs that exist in the market today still have significant price protections in place, like a pharmacy copay, as an example. John, you want to broaden that out for OptumRx?
Yeah, sure. Maybe just hit the overall point, which is the driving the point-of-sale rebates does not impact our bottom line or our economics. This is around driving solutions that drive affordability to the consumers we serve, and that's why we're doing it. This is making sure that the value that we extract from the market actually goes to the consumers. I think that's the core element on it. We do believe that it's important to have mechanisms like a discount that we negotiate with pharma manufacturers in order to control cost in outer years. I think that's also a lesson this discussion is that there needs to be mechanisms that check against price increases in future years.
Thanks for the question, Kevin. Next question, please.
Next question comes from Sarah James with Piper Jaffray. Please go ahead. Your line is open.
Thank you. I was hoping that you could update us on some of the growth initiatives for Optum Care. Thinking about recent comments that you've made about maybe that business growing to multiples of the size that it is and growing from 30 markets to 75. How should we think about the mix of products that you want to target during that growth and the pacing, if it would be ratable growth over time, or if it's going to come in larger chunks due to a focus on M&A? Thanks.
Andrew Witty?
Yeah, Sarah, thanks very much, Andrew Witty. In a second, I'm just going to hand over to Dr. Wyatt Decker, who's a good opportunity for me to introduce to you. He's just joined us from the senior leadership at Mayo Clinic network in Arizona, and he's taken over as the leader of our OptumHealth business. Andrew Hayek is also here today, who's now working alongside me directly in identifying and building some of the new growth platforms we anticipate within the OptumHealth portfolio. That really speaks to, let me just make a very specific set of comments to your question, Sarah. We see a wide range of growth opportunities within the OptumHealth portfolio and with the Optum Care portfolio specifically.
That really ranges from building out the depth in the major cities and conurbations where we already have presence, you'll see in continued efforts to fill in those networks and to develop essentially a coordinated network of care delivery in those cities. That's something which you should expect to see on a kind of relentless, ongoing basis. Of course, we will also be looking at further extension of that network across the country through acquisition and elsewhere. Obviously, when the DMG deal closes, that will be a significant expansion of that in that very direct way. As literally quarter by quarter, I think we see more and more potential for the ambulatory network that we're building across the Optum Care portfolio.
As I mentioned in my prepared remarks, the opening of our first Cancer Center in Las Vegas this quarter, I think is just signaling of a direction of travel we want to follow. Let me ask Wyatt, Dr. Wyatt Decker, though, just to maybe add some specific thoughts from his position. Wyatt?
Thank you, Andrew. Sarah, thank you for the question. It's a pleasure to be here with you this morning, and I can't tell you how pleased I am to have joined UnitedHealth Group. I'm confident that there is no organization that is better positioned to create the future of healthcare than this one. I would just add that Optum Care's vision for care is to create the leading value-based, patient-centric, physician-led healthcare system in the U.S. We will do this through local markets where we can weave together the assets that Andrew has already touched on, we will do this through organic growth. We're already in 36 markets, and if you include our MedExpress and ambulatory surgical centers, it would be 60 markets. We have 38,000 employed and affiliated physicians, and this will continue to grow organically as well as inorganically.
Most exciting is what happens when you bring together a value-based reimbursement system with a culture of commitment to patients and providers and layer on technology. That's what we're committed to doing in Optum Care. Thank you.
Thank you. Thank you, Sarah. Next question, please.
Our next question comes from Josh Raskin with Nephron Research. Please go ahead. Your line is open.
Thanks. Good morning, guys. Question really around just the broad risk membership segment, so commercial Medicare, Medicaid. I know you don't typically update revenues or membership with the quarters, but I guess other than the obvious Iowa exit, just broadly, the risk membership numbers came in a little bit lower than we were expecting. Any changes to the outlook there by any of the segments or any color you can give in any of the individual areas?
Josh, we typically don't update those, particularly this early in the year. Steve Nelson, you want to comment on growth overall and then gauge your team accordingly?
Sure. Morning, Josh. Thanks for the question. Maybe just a few broad comments about UnitedHealthcare overall and how we think about growth. As you know, we start with really strong market positions across all the businesses that you mentioned and have a history of growth in those positions. As I mentioned earlier in my comments, that we're going to add over 1 million medical members this year. Great growth track record.
As we look forward, our intention and our ambition is to continue to grow those positions, particularly as we think about some of the really strategic segments, such as Medicare Advantage and Dual Special Needs Plans, where we have invested in capabilities and really strengthened our product offerings and some really innovative collaborations with Optum as well to really position ourselves to grow there, not only this year but continue to grow share as we look forward. Having said that, as you look across all the risks of different businesses, we are looking for long-term sustainable growth. We do remain disciplined in our pricing. We're very intentional about where we grow and how we grow. Really I'll just end by saying that the path for growth for us is a continued focus on value. The products that we offer need to be innovative.
They need to be directed towards where the consumer needs our help. We are very adamant about driving a better experience while we lower the cost and improve the outcomes. We continue to be really bullish and optimistic about our growth opportunities, but we're going to be really thoughtful about it. Maybe I'd ask Dan to talk a little bit more about the commercial fully insured and some of the progress we're seeing there.
Sure. Good morning, Josh. As it relates to the commercial risk-based enrollment, we had expected declines in the first quarter. That was largely driven by two public sector clients. Similar to the enrollment pattern we experienced last year, we do expect to grow over the remaining quarters of the year. Inside the results, I'll tell you, we are growing in some markets and segments that are very important to us. As Steve mentioned, we are very focused on increasing the value of our offerings. We do that through a combination of some of the innovations you heard of earlier, deeper collaborations with high-performing care providers, Optum Care, as well as others. Also contributions from our multi-year, multi-billion dollar cost efforts. We feel well positioned.
I'd also be remiss if I didn't mention that we're pleased with the results that we've driven on the self-funded side. We've had a very focused effort to return to growth, and we did that nicely in the first quarter. We grew strongly on an organic basis, and we also supplemented that with some nice M&A as well. Overall, well positioned and feel good about it.
Okay. Thank you. Thanks, Josh. Next question, please.
Our next question is from Gary Taylor with J.P. Morgan. Please go ahead.
Hi. Good morning, gentlemen. I wanted to delve into the MLR just a little bit and see if I could maybe roughly just tie out some numbers. MLR up about 60 basis points year-over-year. I think given the comments you made a year ago quarter about flu contributing about 50 basis points, it looks like MLRs may be up 110, very in line with your guidance for the full year. It still looks better than what we would estimate Health Insurance Tax might push that number up roughly 140. Government growing faster than commercial, might be another 25 basis points or so. It still looks like, if I'm right, kind of an adjusted up 110 is still improving the real underlying trend, primarily excluding the HIF.
I just wanted to see if those numbers sort of ballpark, and if so, where are you seeing sort of the true underlying improvement?
Great. Thanks, Gary. John Rex?
Yeah, thanks, Gary. Good morning. I'd start with the medical care ratio in the quarter. It was in line with our expectations for the one Q. I think you're correct in terms of the things you're seeing across it, in terms of some of your observations that would create movement and such. I would point out in the one Q, one of the comments we made last quarter was around the workday content of one Q19 versus one Q18 having some impact, which was one of the reasons we wanted to create some awareness around that. That's just the calendar's fairly stable over a course of a year, but there are differences in quarters. When you have that content, sometimes we would point that out. We had one fewer weekday in the one Q19 than one Q18.
The opposite effect occurs in three Q this year, actually. We have one more day in the three Q19 than three Q18. No annual impact. It's just the quarterly timing, how it flows across the year. One Q benefits, three Q gets that offsetting weekday content. That's where we expect it to fall. That's really it.
One clarification, if I could. Since there's not much Medicaid growth this year, which is usually much higher MLR, is the MA enrollment growth, is that really any material mixed effect on MLR in the guidance for the year?
No, I wouldn't call it material.
Thank you.
All right. Thank you, Gary. Next question, please.
We'll take our next question from Scott Fidel with Stephens. Please go ahead. Your line is open.
Hi. Thanks. Good morning. Just interested in your early thoughts on the Medicare outlook now for 2020 in terms of sustaining sort of the MA growth profile, now that we have the final rates visibility and sort of assuming that the HIF comes back next year or so. Maybe sort of thinking about how you view the rate outlook at this point on a net basis for 2020 and individual MA, and then maybe an update on how the group MA pipeline is shaping up for 2020 as well.
Brian Thompson?
Sure. Thanks for the question, Scott. First off, we're pleased with our growth here through the first quarter in 2019 and our positioning. As we have said before, we looked at 2019 through the lens of long-term view, expectant of the potential headwind of the return of the tax in 2020. As we've seen the rates now, we're encouraged by the rate improvement that we've seen since the advance notice, up about a point, but still not enough to cover the expected return of the Health Insurance Tax. I think that'll be pressure point industry-wide.
What I can say to UnitedHealthcare in particular is that, like I said, we went to market in 2019 with a long-term view and expectant of this headwind, and we're thoughtful and disciplined and intend to approach 2020 with the goal of keeping our benefits and our margins as stable as possible, despite these headwinds, while at the same time driving continued growth like we have demonstrated now over the course of the last five to six years and improving our operating earnings overall. That's been the formula that we've executed again successfully and intend to do so again here in 2020. Optimistic about the outlook and our positioning here ending the first quarter 2019.
Great. Thank you, Brian. Thank you, Scott. Next question, please.
Our next question comes from Steve Tanal with Goldman Sachs. Your line is open. Please go ahead.
Morning, guys. Thanks for the question. You've covered a lot of ground. Maybe just one on the business combination announced today. If you could give us any color on that, maybe the revenue and earnings impact for the quarter and the year and whether that was contemplated in the prior 2019 guidance, that'd be helpful. Thank you.
It's a very small acquisition, Steve. It's of an ASO-based business or a self-funded business, about 630,000 lives, if I recall correctly. Relatively small purchase price. Nice tuck-in acquisition. Brings us a few new capabilities and technologies, quite pleased to align with this company. Relatively small and not really influencing our earnings expectations for the year.
Perfect. Thanks.
Next question, please.
Next question comes from A.J. Rice with Credit Suisse. Please go ahead. Your line is open.
Hi, everybody. I just thought I'd ask about the PBM selling season for 2020. I assume we're well into that now. I think Andrew's comments about some early successes maybe flushed that out. I guess there's two aspects to it I'd ask you about. You got more people that seem to be trying to pitch the synchronization strategies you guys have been doing for a while. Is that changing the dynamics of the selling season in any way? Then I know a few years ago, the Health Transformation Alliance was a big discussion point. Those contracts sound like some of them may now be coming up for renewal. Is that presenting any challenges or opportunities for you?
Andrew?
AJ, thanks for the question. Just before I ask Jon to comment more specifically about 2020, I think what we are seeing is some of the benefits of a very substantial amount of innovation around our offering design that Jon and his team have been developing. Partly in anticipation of changes in the policy environment that obviously have been touched on already in this call conversation, also taking advantage of technology and other levers that have been brought alongside the traditional core PBM of OptumRx. I think it's that combination of all of those things, really leaning into exploring value-based propositions, really being extremely dynamic in the way in which we start to bring to bear some of these different tools. It has created a very competitive set of offerings.
Let me ask Jon just to describe to you how that's landing for us this year and projected for next year.
Great. Thanks, Andrew. AJ, it's John Prince. In terms of our 2020 selling season, it is still early, we have a very healthy pipeline of opportunities. We've already had some really good wins for 2020. We've sold several large health plans, a state, a variety of large employers. Two good examples of large wins already was the Harvard Pilgrim announcement of our partnership in early January. They've selected us because of our partnership around total cost of care, clinical outcomes, consumer experience, sort of resonating what Andrew already just mentioned around our innovation, around the consumer, clinical outcomes. Another example of a good win for 2020 is with HealthTrust and their division, CoreTrust. They selected OptumRx as their exclusive pharmacy care services provider to improve the performance of healthcare. We'll be their key strategic channel partner for health systems and Fortune 500 companies.
In the overall market, you asked around our value story. I think our value proposition is resonating in the market. Others might be now using the same vocabulary as we have, but we've been working at this for five years. We continue to modernize our offering, continue to innovate around clinical outcomes, and also, we've continued to expand the services that we have to support unique communities and partnerships, and I think that's also a differentiation for us in the market. Thank you.
It's a great question. What you're seeing there is innovation in play, starting with synchronization, but really the development of a much more modern pharmacy care services business that continues to stay ahead of the marketplace and is really responding to the needs of employers, health plans, and others out there, and seeing the growth as a result. Next question, please.
Our next question comes from Ana Gupte with SVB Leerink. Please go ahead. Your line is open.
Hey, thanks. Good morning. My question was about telehealth. I think I saw a set of national TV ads on virtual health from UnitedHealthcare. I was wondering if you could comment on what your strategy is. Is this mostly for urgent care, or is it also for longitudinal pop health chronic care management? Does that differ by peer mix? How are you preparing for the CMS inclusion of telehealth in the bundle? Can you talk about how this dovetails with your Optum Care strategy of MedExpress and employed physicians in the scene, if you're thinking any single vendor or multi-vendor contracts for anything.
Thank you, Ana. Andrew?
Yeah. Ana, thanks so much for the question. I think telehealth is an interesting potential ingredient for how we think about delivering improved outcome and value for patients and customers within our Optum Care environment. I think the really central part is to ensure that we have a really, really strong integrated physical engagement with patients as a core platform. That needs to be very much empowered by information, clinical insight, and needs to be real time. That's very much where we're building. I think, wrapped around that, we envision substantial portfolios of digital engagement and also platforms such as telehealth. I think on their own, they have relatively limited runway, frankly.
I think as a component or as an ingredient of a much more comprehensive care delivery platform, which is what we envision, clearly a role, but very much alongside what you're seeing us develop within the Optum Care environment. Very much patient centric, very much focused on the best possible clinical outcome, focused on the best possible patient experience at the lowest possible cost. We think that is a strategy which will require modern technologies, innovative technologies like telehealth, but it fundamentally will be built around a physician-led physical engagement with the patient.
Thank you.
I think you got it. Next question, please.
Our next question comes from Lance Wilkes with Sanford Bernstein. Please go ahead. Your line is open.
Yeah, just had a question on medical cost trend and just general kind of medical cost performance for the first quarter. Can you just talk a little bit about how it's tracking to the guidance that you guys have given? In particular, are you seeing better than expected results on the pharmacy side? And if so, is anything else offsetting that?
I assume you're referring to commercial, Lance?
Yeah, I was just thinking about your commercial medical cost trend target of 6%.
Dan?
Sure. Good morning, Lance. I would tell you that our medical costs in the quarter were very much in line with our expectations, and on track as we look to the full year. That's 6% plus or minus 50 basis points. Frankly, I wouldn't call out anything as being different than what we had expected coming in.
Great. Thank you, Lance. Next question, please.
Our next question comes from John Ransom with Raymond James. Please go ahead. Your line is open.
Hi, good morning. We attempted to kill some trees last week and tease out some of the organic growth numbers from the acquired growth. The number that was kind of astounding to me at least was, we calculated a mid-teens organic growth at OptumHealth, which as you know, would be 3X the organic growth of any kind of standalone services provider that's tracked publicly. I was wondering if you could just give us some help as to how you get to those numbers that are frankly 3X anything else we see out there in the standalone market. Thanks.
Thanks for the question. It's a compelling growth platform, and it's doing exactly what we had hoped and designed it to do. Andrew?
Yeah, listen, John, thanks so much for the question. I think what you're seeing within OptumHealth is really a whole series of self-reinforcing, very complementary, growth drivers, all beginning to kick in together. I think the leadership team, Andrew Hayek's leadership team, now led by Dr. Wyatt Decker, I think deserve a lot of credit for bringing on stream all of these various activities. As you look across, you're seeing geographic growth. We're seeing a greater shift of physician groups to value. We're seeing those physician groups deliver great quality of clinical care at better costs. That's making those practices more attractive for membership, clearly. As you think through, you can layer on lever after lever, and each of them kind of amplifies the growth velocity of the business. We feel very good about the track record that this business is delivering.
Honestly, I think we're still in the very early days of the evolution of the OptumHealth and Optum Care business. You'll see substantial degrees of innovation over the next year or two. We've got significant ambition for layering on and developing the Rally platform, for example, alongside the Optum Care platform. As you heard in the prepared remarks, things like the Optum Care Cancer Center begins to open up yet another dimension, and the work that Andrew Hayek is now leading alongside me directly to look at further expansion points for the OptumHealth, Optum Care agenda. Early days. We feel good about where we are so far. Very clearly a function of many streams of work beginning to gear together very positively.
Just expect us to continue to invest in this category. We're talking 5 to 10 years out to build this health system that has the capacity to make a real difference on outcomes quality, and patient experience and costs, frankly, delivering really strong-
If you could permit me a follow-up. How much of it is the move where a primary care doctor goes from getting $0.05, $0.10 on the dollar to getting the full capitation dollar? Is that bigger than a mousetrap in terms of the overall growth, or is that just a small piece of it?
John, as you know, a key part of the philosophy of how we're developing Optum Care is exactly that journey, we believe that's very important. We see repeatedly that that helps facilitate and free up physicians to make great decisions on behalf of their patients, ensure the best care is delivered at the best possible cost. Yeah, that's a key part of the journey, and it's certainly a part of the philosophy of how we run that set of clinics. Yeah.
Thank you, John. Next question, please.
We'll take our next question from Charles Rhyee with Cowen. Please go ahead. Your line is open.
Yeah, thanks. Hey, I just want to get a clarification, Dave, because there's some headlines that came across regarding your comments earlier about the Medicaid business. I recall hearing earlier you saying that you expect to get to your target margins by 2020, but headlines are coming across saying probably take till 2022. Can you just clarify what you had said earlier?
Yeah. Our expectation is that we'll be in the zone of our target margins, probably closer to the bottom end of it, in 2020.
Okay, thanks. My question actually, if I could ask my question around point-of-sale rebates. You guys had mentioned, not just you, but all the PBMs in general, that point-of-sale rebates have been available to the employer market for some time. It just wasn't really an appetite for it. You guys are now making the decision to move ahead in the commercial market with this kind of strategy. Does this potentially put you at risk here that employers aren't going to be still that attracted to this type of model as you move forward?
It's possible that that would be the case. For situations where consumers are exposed to high inflation on list prices of drugs, we think it's important that discounts are applied at the point of service. We believe that that's the proper plan design, again, where there's a high deductible health plan or there's other benefit designs that leave patients exposed. Again, we're seeing as much as a 16% improvement in adherence, and we believe the long-term health effects for the people we serve will be substantial as a result. We think we're doing the right thing for people, and if that means we have to offer designs that are more restrictive, we will. Next question, please.
Next question comes from Zack Sopcak with Morgan Stanley. Please go ahead. Your line is open.
Thanks. To that last point, do you think the adherence benefit and improvement in cost that you're seeing in your commercial book is translatable to Medicare, or do you think you could get more leverage just given a general sicker population?
Theoretically, yes, we believe so. We'd like to see it prove out over time. We'd probably expect the benefits in the Medicare population will be more immediate than you might see in a commercial population. Thanks for the question. Next question, please.
Our next question comes from Steve Willoughby with Cleveland Research. Please go ahead. Your line is open.
Good morning. Just one point of clarification and then a question. The point of clarification, just on the 2020 selling season comments, is there any way to quantify where you're thinking your positioning might be in terms of a net basis going in for next year on the PBM business? My question was just on duals, and if you could just provide a little bit more color on the importance of duals to your growth, what you're seeing so far this year, and where you expect that to go over the rest of this year and next year. Thank you.
Yeah, Steve, we're not going to comment on 2020 at this stage, we can answer the duals question. Heather?
Sure. Duals, you mean the Dual Special Needs Programs. As you know, UnitedHealthcare's been in this space and growing strong, we're about over 30% of the market today. Why we really invest in the Dual Special Needs Program is because we see that it's really the best for our consumers. It's aligned benefits, care coordination that our members cannot get from Medicaid or Medicare alone, often they get supplemental benefits on top of it. As we continue to see alignment with states and the federal government to make this program even better, it's a place we're going to continue to invest. We had another strong year in 2018.
As you know, the first quarter, we saw strong growth in this again, and we think that's really our experience, our Medicaid footprint, our unique programs through Optum, like our HouseCalls program, and our strong brand and service to our Dual Special Needs. This will be an area you'll see us continue to invest in. We expect strong growth again this year in 2019.
Thank you, Steve. Good question. Next question, please.
We'll take our next question from Michael Newshel with Evercore ISI. Please go ahead. Your line is open.
Thanks. I'll flip in a quick one on the tax rate. It was close to the full year guidance, but in the past, the first quarter has been lower due to stock comp expense timing. Is there any change in seasonality this year, or any change to expectations for the full year tax rate?
John?
Hey, Michael. John Rex. No change in our full year outlook. I would say in terms of a 1Q, there was a little reduced impact from share-based exercise benefits that as you realize that has impact. That is typically why the 1Q trends lower than other quarters, because there is more activity there. The volume of exercise was just a little bit lighter, and that is probably likely due to share price fluctuation. That was it.
Thank you, Michael. Are there any questions remaining?
We have one question remaining on the line.
Okay.
From Matt Borsch with BMO. Please go ahead. Your line is open.
Matt? Matt, you may be on mute.
Yes. Thank you, Dave. I'm sorry.
No problem.
I was on mute. I'll make this quick. You've been very patient going through all the questions. Just curious to ask, at this stage of the game, are you concerned that you'll be loading a lot on price going into 2020? Clearly the industry fee, assuming that comes back, is going to be something that was out of pricing that's going to come back into pricing for 2020. You've also got maybe something to add on to pricing with the PBM change, or maybe not to your pricing, but the employers do effectively, if they're not using the rebate to reduce employee side premiums. Is that going to be a factor as you're going into next year?
Matt, good question. I think as you know, we already have converted the, or we're in process of converting the 8 million fully insured commercial lives to move to point-of-sale rebates. That consideration is already played out for the most part overall. I think Brian talked earlier about how he's positioned a multi-year strategy and very important commentary from him about maintaining benefit stability and maintaining margins through the 2020 time period here, recognizing that there's some friction on rising cost structures overall. I don't really see a meaningful impact on our self-funded market, either from the modification that we made on point-of-sale and announced earlier this year. The thing I am concerned about is the return of the Health Insurance Tax in 2020. That will increase the cost of healthcare by at least $20 billion for 142 million people.
If you do the math on that increased MA premiums for a senior couple by $500, and for families with small business coverage by about the same amount. That outcome, from our standpoint, is entirely unacceptable. Healthcare already costs too much, and these unnecessary taxes layered on top of what is already a high-cost health system is just untenable. We continue to pursue a deferral, if not an outright repeal, on behalf of those we serve. We can't comment on or speculate on the outcome at this stage. We're operating as if the law is the law and that there is no deferral. We certainly hope and will continue to advocate aggressively on behalf of the consumers we serve to keep these healthcare costs in check. Thanks for the question, Matt.
Thank you.
Is that it in the queue?
There are no further questions in the queue.
Okay, great. Well, thank you. To sum up our discussion today, UnitedHealth Group began 2019 with strong operational and financial performance from both Optum and UnitedHealthcare. We achieved this robust performance by increasing the healthcare value we deliver to people every day, providing more affordable, higher quality healthcare while improving patient and care provider satisfaction. As an innovative technology-enabled healthcare company, the value we offer society is rising at an accelerating pace. In turn, we expect to continue to grow, serving more people in more ways across the U.S. and worldwide. Thank you for joining us. This concludes our call.
This does conclude today's program. Thank you for your participation, and you may now disconnect.