UnitedHealth Group Incorporated (UNH) Q3 2018 Earnings Conference Call Transcript

UnitedHealth Group Incorporated (UNH 3.03%)
Q3 2018 Earnings Conference Call
Oct. 16, 2018, 8:45 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the UnitedHealth Group third quarter 2018 earnings conference call. A question-and-answer session will follow UnitedHealth Group's prepared remarks. As a reminder, this call is being recorded.

Here's some important introductory information. This call contains forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical different 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 will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the financial reports and SEC filing section of the company's investors 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 October 16, 2018, which may be accessed from the investors page of the company's website. I will now turn the conference over to the Chief Executive Officer of UnitedHealth Group, Mr. David Wichmann. Please go ahead.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Good morning, everyone, and thank you for joining us. Earlier today, we reported strong operating and financial results across our enterprise. Those results provide a sense of the capacity to advance growth within our businesses. Capabilities rooted in the breadth and adaptability of our business approach and, above all, in our mission helping people living healthier lives and helping making the health system work better for everyone.

Executing on this mission produces real value for the people we serve and for society in the U.S. and globally, through higher quality healthcare delivery, with better outcomes at lower costs, leading to improved consumer satisfaction. Executing on our mission also produces steadily advancing growth and financial value. Third quarter revenues grew 12% to $56.6 billion, and third quarter adjusted earnings per share grew 28% to $3.41. We now expect our full-year adjusted earnings per share to approach $12.80, growth of about 27%. This increases our outlook by $0.17 per share from the midpoint of our range last quarter.

These results are grounded in persistently applying three core competencies -- information, technology, and clinical insights across our businesses. At no time in our history has our work in these three competencies held more promise than today, as they powerfully combine to unlock healthcare value for those we serve. We organize and align data, both clinical and administrative, around the healthcare consumer, using proprietary tools and technologies which evaluate data and care patterns against evidence-based guidelines.

Comparing highly personalized data and best-known science, we offer next-best action for consumers, while providing them full transparency into the quality and costs of services offered by their local health systems. We engage our own clinical care resources as well, to directly support consumers' individual healthcare needs. We further use data to improve compliance with evidence-based medicine, raising overall satisfaction with care and reducing unnecessary resource consumption. We increasingly doing this through employed and affiliated integrated care teams, and in more ambulatory care settings, sharing this knowledge at critical points of decision making.

Building and applying these competencies persistently to serve each individual we touch, the broader communities and societies we are a part of and you, our shareholders, requires thoughtful, continuing investment internally and in alignment with others through well-developed research and development venture and M&A capacity.

You can see the broad impact of these competencies in each of our five growth pillars. In care delivery, we use data analytics in concert with our knowledge of local market clinical performance to get patients to the best doctors, care pathways, and sites of service for particular conditions, and to inform development of value-based care arrangements for our employed and affiliated care providers. Increasingly, these are shared risk and performance-based relationships. In consumer-centric health benefits, information is powering modern product designs to fortify performance networks, tools, and incentive programs to advance quality and engagement, and approving appropriate consumer access, while reducing the cost of healthcare.

Specific examples include our new on-demand healthcare and Colorado Doctors plan offerings, and our designs for the duly eligible and Medicare Advantage participants. All of these hold promise for continued growth across our benefits businesses. You see it in pharmacy care services, where we have integrated medical and pharmacy information, and provide point-of-care technologies to simplify administration, improve drug selection and adherence, and reduce not only pharmacy cost, but medical care costs as well, all increasingly within the clinical workflow of doctors.

You see it in digital health, where our consumer digital health platform, Rally, is now serving over 20 million registered users. Rally is synthesizing information and engaging people to better manage their health, helping consumers save money by selecting the highest quality care providers, understanding their out-of-pocket costs up front, and in some markets even scheduling appointments for care. We will soon be releasing at scale a first-of-kind, fully integrated and fully portable individual health record that delivers personalized next-best health actions to people and their caregivers.

Finally, in global healthcare, we are bringing payment integrity, analytics, and network and product innovations to key private healthcare markets in South America, in support of both our health benefits businesses, as well as our extensive care delivery operations. These are just a few examples of how we deploy these core competencies in our businesses. Taken more broadly, they give you a sense of UnitedHealth Group's potential to drive distinctive, constructive change, sustained growth and performance for those we serve. Now, let me turn it to Andrew Witty to build on these comments and to update on our Optum businesses. Andrew?

Andrew Witty -- Chief Executive Officer, Optum

Thank you, Dave. Taking a mission and competency approach enables us to think more deeply and holistically about the healthcare landscape. At Optum, we are focused on building and developing a broad set of capabilities which support our vision of delivering better healthcare more affordably. We're still early in the journey of releasing the full potential of our assets, in both the digital and local care environments. Optum will lead by offering deeply customer focused, simple to access, high quality healthcare actions and options. We are seeing opportunities to build out our capabilities and are committed to stepping up our pace of innovation on behalf of our clients and consumers.

Looking at third quarter results, our revenues grew $2.5 billion over last year to $25.4 billion, with growth accelerating to 11% from 9% in the second quarter. This revenue advance was again well balanced, with strong growth rates from both internal and unaffiliated customers consistent with recent quarters. Our metrics are indicative of this growth across the businesses. OptumRx fulfilled 331 million scrips in the quarter, generating revenue growth in excess of 9%; Optum Health served 92 million people with revenues increasing over 15%; and OptumInsight inside backlog grew nearly 13% to $15.7 billion at quarter end.

Themes of productivity and operational excellence continued in the third quarter, as Optum's operating margin of 8% increased 60 basis points over last year, with each business strongly expanding operating margins year-over-year and sequentially. Earnings from operations grew $334 million, or nearly 20% to $2 billion, with strengths across OptumHealth, OptumInsight, and OptumRx. This continues a long-standing trend of proportionally greater Optum earnings in the second half of the year, and positions us well for 2019.

The businesses of OptumHealth engage people in their health and wellbeing, help them manage their health conditions and increasingly provide care through our high-value clinicians and care delivery sites. Growth at OptumHealth continued to be led by the development of the care delivery businesses as a primary care driven, ambulatory care system. OptumCare provides primary care in 35 priority markets, and serves 80 health plans and 14 million people, up 2.6 million patients or 23% compared to a year ago. Patient growth was driven by increases in our high-value site-to-service businesses, and growth in our existing primary care markets. And yet, many of our local efforts remain in an early investment stage. Building out this high performing ambulatory care system will occupy us for the next decade, as we progressively deliver significantly improved outcomes, quality, and value to patients.

At OptumInsight, we serve health plans, care providers, life science organizations, and governments with data analytics, insights, and innovative solutions to make better decisions and investments, and to better manage performance and quality in their cost structures. Over the past several years, we have focused on the further development and growth of our care provider services and capabilities, an area where we see meaningful opportunity. Here in particular, I note revenue management, outsourcing solutions, and data analytics and advisory services as important contributors to our recent growth.

I'm enthusiastic about OptumRx and its differentiated, integrative, pharmacy care services approach. This business allows us increasingly to advance high quality, high value specialty pharmaceutical, e-commerce, and site-to-service initiatives, combined with convenient local market dispensing, all centered on whole-person care.

Launching the nation's first-ever scaled application of pharmacy discounts at the point of sale will further improve the value consumers receive. We are actively supporting efforts at HHS and CMS to transform pharmacy pricing by engaging in Part B drug and site-to-service management, form the reapproaches and other initiatives to bring better healthcare value to people. OptumRx is becoming increasingly diversified and capable, meeting consumers where their needs are greatest. With growing contribution from specialty medical management to directly serving high-needs patients with critical access and [inaudible] services, through community-based dispensing and delivery, to offering fulfillment services for limited distribution specialty drugs.

I see OptumRx as a champion of the consumer in an area where it's difficult for individuals to have a truly effective voice. Through our depths of insight, data, and clinical capabilities, we can help inform and amplify their voice. Within our pharmacy care services approach stands an immense opportunity to transform what has been a challenging area of the health system, and positively impact people's lives.

While it's early in my time at Optum, I'm struck by the sheer size and depth of the opportunity, resources, and capacity Optum has to drive extraordinary innovation across healthcare, making people healthier, and helping make healthcare systems work better. After more than three decades in healthcare, I've never seen an organization with the potential of Optum. And now I'd like to turn the call over to Steve Nelson, UnitedHealthcare CEO.

Steve Nelson -- Chief Executive Officer, UnitedHealthcare

Thank you, Andrew. UnitedHealthcare's market position is supported by a foundation of consumer value, drawn from the breadth and diverse array of health benefit choices, competitive costs, distinctive care quality, and market responsive consumer service. Together, these deliver stability, peace of mind, and value to the nearly 50 million people we serve. Our agenda is to drive a higher NPS and increased value by advancing our service experience, market-leading innovations, and the total cost of care. Our approach and mindset across the enterprise enable UnitedHealthcare to serve each individual with compassion, while addressing the evolving healthcare needs of society, driving growth and returns for shareholders.

In the third quarter, UnitedHealthcare revenues grew to $45.9 billion, an increase of $5.2 billion over last year, and accelerating to 13% growth. Over the past 12 months, we have been privileged to serve 2.8 million more people by way of organic growth and an expanded presence in South America. UnitedHealthcare's earnings from operations were $2.6 billion, with a 5.6% operating margin. Overall, medical costs trends remain well managed, predictable, and consistent with expectations.

In operations, we're delivering a better and more modern consumer and care provider experience, while driving productivity and affordability improvements in our cost structure through technology, better processes, and the benefits of growth and scale. In UnitedHealthcare, Medicare, and retirement, we continued to innovate and grow. UnitedHealthcare served 125,000 more people through Medicare Advantage offerings in the third quarter, including the 65,000 members of Peoples Health in Louisiana, the highest Medicare Star Quality plan in that state. We expect strong growth again next year.

With the 2019 marketing season now under way, we're receiving positive feedback on our new offerings from brokers and consumers. This year, more than 50 million people nationwide will have a choice of multiple plans from UnitedHealthcare. We're emphasizing our stability and value for seniors. Well more than 90% of our current Medicare Advantage members, more than 4.5 million people, will see either no premium increase or a premium decrease, even as we provide personalized navigation, introduce new value-added benefits at no additional cost, and increase and modernize access for seniors to fitness and wellness services, virtual visits, and reliable transportation for medical appointments.

Today, Medicare Advantage programs serve only about 20 million people nationally in a growing senior population of 60 million people. We deliver Medicare medical benefits at an average cost that is more than 20% lower than original Medicare, with costs in our higher-performing markets as much as 30% below original Medicare. We convert these cost advantages into highly valued benefits and services for seniors, filling the significant gaps in coverage within original Medicare. Our programs focused on higher acuity populations like Medicare Advantage remain an extraordinary growth opportunity for UnitedHealthcare, because we can offer such strong value.

UnitedHealthcare employer and individual grew to serve 65,000 more people through risk-based commercial products in the third quarter. Our growing market share and fully insured products in recent years reflects our rising NPS with customers, consumers, care provider partners, and our distribution partners. Strong customer retention rates and the increasing value we deliver with consumer-centric products, tailored networks, and greater consumer engagement are important drivers of growth. In 2019 and 2020, we expect to introduce additional products supported by performance networks, and will launch advanced digital capabilities providing even greater personalization, simplicity, and value for consumers.

In UnitedHealthcare Community and State, growth over the past year was led by higher need, and therefore higher revenue membership, such as those who are duly eligible to participate in long-term services and support programs. Medicaid membership grew organically by 5,000 people in the quarter, offset by the divestiture of our plan, representing 85,000 community-based members in New Mexico. We continue to focus on delivering value to our state partners by advancing health, and improving our total cost of care and operating cost positions in Medicaid.

At UnitedHealthcare Global, our integrated delivery systems, primary care health center model and progressive use of information and technology are creating value for our customers in South America. We continue our disciplined approach of pricing health benefits to their expected costs, and our hospitals in Brazil continue to improve their performance, as measured by health outcomes, NPS, and financial returns.

UnitedHealthcare Global is creating value with our Banmédica colleagues in Chile, Peru, and Colombia, with early progress in population health management, clinical management, and analytic capabilities. Initial focus areas include the adoption of evidence-based clinical guidelines, and site of care strategies for high-utilizing patients.

Looking ahead, we expect sustained, strong growth and improved earnings performance from UnitedHealthcare. Our investments in innovative products, capabilities, and the consumer experience will increasingly be brought to market, even as we focus on delivering market-leading total cost of care. And we believe UnitedHealthcare is uniquely positioned to serve in the high growth, higher acuity submarkets like Medicare, [inaudible], or patients with complex and chronic conditions. Now I'll turn the call over to John Rex, UnitedHealth group's Chief Financial Officer.

John Rex -- Executive Vice President & Chief Financial Officer, UnitedHealth Group

Thank you, Steve. To bring all the previous comments together, this morning we reported $56.6 billion in third quarter revenue, growth of 12.4% over last year. Earnings from operations of $4.6 billion grew 12.3% on strong operating margins of about 8%. Adjusted earnings per share increased 28% to $3.41. Third quarter adjusted cash flows were $6.1 billion, or 1.9x net income. Of note, we made a $2.6 billion payment to the U.S. Treasury on October 1 for our customers' portion of the nation's health insurance tax for 2018, which will factor into our fourth quarter cash flow results.

With 9 months of 2018 complete, our original outlook for commercial medical cost trend of 6%, plus or minus 50 basis points, is biasing just slightly lower than 6%. In the third quarter, our consolidated medical care ratio of 81% compares to 81.4% in the year-ago quarter and reflects the impact of the health insurance tax, offset by changes in business mix and development.

Medical reserves developed favorably in the quarter by $50 million. Within that result, we had approximately $120 million of favorable development for 2018, and $70 million in unfavorable prior-year development. Our third quarter operating cost ratio of 15% increased only 30 basis points over last year, despite bearing about 1 percentage point of cost increase from the return of the health insurance tax, as well as higher investments in innovation and business development. We offset that pressure with operating expense discipline across the board, and strong revenue growth in lower operating cost ratio businesses, such as Medicare and Medicaid.

Turning to our balance sheet. Return on equity for the third quarter reached nearly 26%, and our debt-to-total capital ratio was 38.9% at September 30. We have repurchased $3.7 billion of stock year-to-date for approximately $233 per share, and we continue to apply capital to our businesses through M&A, venture investments, and organic development to strengthen our offerings for customers and further diversify our enterprise. Taken together, our strong and diversified growth, disciplined cost management, and strategic use of capital are combining to produce another year of meaningful financial performance. As Dave mentioned, we now expect 2018 adjusted earnings approaching $12.80 per share, growth of approximately 27%. Dave?

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you, John. As we close out the third quarter, attention naturally turns to 2019. We will reserve the majority of this conversation for our November 27 investor conference, but I can offer a few high-level observations at this time. The environment in 2019 will contain, as always, a mix of elements common to the broad marketplace and those unique to us. Overall, our individual businesses are building from a fundamentally strong foundation, and we continue to create strong momentum heading into next year.

We will continue to advance NPS, supporting continued growth across our businesses. Our accelerating investment levels will fund the delivery of compelling innovations into 2019 and 2020. As we evaluate the many opportunities we see over the next number of years, we believe our long-term performance will remain aligned with our long-term goal of earnings-per-share growth of 13% to 16%.

We enter 2019 with energy and optimism for the future. I would offer at this distance the current market consensus estimate for adjusted earnings per share captures our 2019 outlook within a typically sized range. As always, we will seek to perform to our full potential. Advancing distinctive, constructive change in healthcare is an enormous and complex undertaking. We believe we have a lot to offer, advancing more value for consumers while mitigating costs for those who pay for care.

Our strategies do not depend or reside on a single piece of technology, database, distribution system, clinical approach, funding mechanism, or any other singular view of what it takes to make a durable and meaningful difference in healthcare. Rather, our potential resides in a combination of our diverse market presence, our data, technology, and clinical competencies, the compassion, integrity, and deep healthcare knowledge and skills of our nearly 300,000 people, the millions of trust relationships we have earned over time, and our understanding of and full alignment to the rapidly advancing standards of performance that individuals and health systems worldwide demand from their healthcare.

Our people, and this deeply motivated, diverse, and adaptable leadership team are fully engaged in improving value for society and delivering consistent, distinctive financial results. Let me close now and open up the call to your questions. One question per person, please, so we can respond to everyone in the queue this morning.

Questions and Answers:

Operator

At this time, if you have a question or comment, please press * and 1 on your touchtone phone. You may remove yourself from the queue by pressing the # key. Again, we ask you to limit to one question, so we can get to as many participants as possible. Thank you.

We'll take our first question from Matthew Borsch with BMO Capital Markets. Please go ahead; your line is open.

Matthew Borsch -- BMO Capital Markets -- Analyst

Thank you, good morning. If you could comment on our outlook for the Medicare open enrollment season. Just within that, the trend in 2018 has been very heavily skewed in favor of the large public companies. I'm wondering if you can comment on that as it relates to prior years, and if you expect that to continue. Thank you.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Matt, thank you for your question. Obviously, it's an area of strength for our organization. We have performed exceptionally well in growing in the Medicare Advantage market. Both the individual, as well as the serving group accounts, as well. It took a lot of planning and execution. Our team is very strong in that regard. I think we expect a very nice result to develop for 2019 as well. Let me ask Brian Thompson to add to that.

Brian Thompson -- Chief Executive Officer, UnitedHealthcare Medicare & Retirement

Thanks, Dave. Brian Thompson here. Yeah, Matthew, '19 is shaping up as a really great year, I think for seniors at large and the MA industry specifically. We are certainly optimistic about our products and how they compare. What we're seeing in the marketplace is consistent with our expectation and certainly gives us confidence about our positioning. We expect to drive another very strong year of MA growth and continue our momentum that we've demonstrated now for several years. I think as we approach the year, what we're seeing in the marketplace looks like what we had expected. I'm very pleased with our position. Really no surprises, and I think you can expect more growth from us in 2019.

Matthew Borsch -- BMO Capital Markets -- Analyst

All right. Thank you.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Next question, please.

Operator

We'll go next to Justin Lake with Wolfe Research. Please go ahead; your line is open.

Justin Lake -- Wolfe Research Securities -- Analyst

Thanks. First on that, I apologize. On the Medicare Advantage, the CMS is estimating 11.5% growth for next year. I'm just curious if you agree with that. And then my question is really on the TBM side. You acquired two specialty pharmacies in the quarter. I wanted to get your updated view on the PBM business, given all the debate in the sector around the sustainability of margins and economics in general, and the future of rebates in particular.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you, Justin. Of course, we have our own points of view about what we expected the growth rate to be in the Medicare Advantage market. Of course, CMS's number was quite a bit higher than that. I think we'll still indexed on a lower expectation, but we certainly would be pleased to see that growth rate overall. Brian, if you have anything to add to that?

Brian Thompson -- Chief Executive Officer, UnitedHealthcare Medicare & Retirement

No, I think you said it right, Dave. As we said in previous quarters, we look at the long-term industry growth rate for MA more in that 7% to 8% range, as I said last quarter, Justin. Our planning is certainly to outpace that rate, as we have now for four or five years. As Dave said, a lot of optimism, but a lot of ranges around what the growth rate might be for 2019. I don't think it'll be instructive for us to chime in on what that percentage might be, but certainly optimistic. Certainly reasons for it to strengthen and we're pleased with how we're positioned as we approach '19.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

A very insightful question also, Justin, on the specialty pharma acquisitions. We are very excited about those. There's a lot of adaptability for those across multiple aspects of our business. Andrew Witty, would you like to comment?

Andrew Witty -- Chief Executive Officer, Optum

Yeah, thanks, Dave. Again, thanks for the question. Yes, during the quarter, we acquired both Avella and Genoa, both of which are going to be potentially very important additions to our specialty pharmacy portfolio. They've made a very small contribution in the quarter itself. But going forward, we see them offering distinctive contributions in the behavioral space, as well in the specialty, particularly in the oncology space.

To your more general question around the role and the importance of PBMs, I think it's important to reflect on really the fundamental role the PBM offers, which is to aggregate volume and to ensure a pricing discipline within the pharmaceutical sector, without which there really wouldn't be any kind of discipline around drug price increasing. As you know, drug companies are free to increase drug prices at will. The PBM acts as a mechanism to discipline that process. Historically, that's been through the rebating mechanism.

As we look forward, we're ready for whatever evolution of that marketplace might take place. The diversification of the OptumRx portfolio into a really diversified portfolio of pharmacy services is really displayed in its continued growth rate. Development of the Briova infusion business is one example. We've seen a significant set of positive evolution there.

To the degree to which there is change in the PBM environment, I come back to my first point. It's critical that any environment ensures that there is a disciplining mechanism for price increases in the U.S., and whether that's through rebates or any other mechanism, we're ready to engage with whatever changes might come along.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Justin, I may just add. You probably noticed, or the markets have noticed a pivot for us from a PBM to a pharmacy care services-based business. I know we've been talking about that for some time, but more increasingly, over the course of the last couple years or so, with Andrew here, Andrew Witty, he's taken and actually modernized and advanced that approach even more so for us, really enhancing our thinking in this area. I think what you can expense from us is that we'll be deeply thoughtful about how we engage and participate broadly, but also have confidence that we will navigate through this change, similar to the way we have across our changes in healthcare in the past. Next question, please.

Operator

We'll go next to Kevin Fischbeck with Bank of America Merrill Lynch. Please go ahead.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

Thanks. I want to go back to MA, if I can. And really just thoughts about the margins, the sustainability in that business. It seems like every company is really looking to grow MA as a key driver going forward. Every company seems to have talked about growing faster than the industry. I think CMS's comments about an 11.5% number is, to some degree, driven by the view that companies are largely improving benefits, which all else equal, I guess would imply margin compression. So, I would just love to hear your thoughts about how competitive that marketplace is and the ability to maintain margins and grow the way that you're targeting over time.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

That's a great question, Kevin. Obviously, we have great confidence in our ability to sustain our margins and continue to grow the business. It has always been a competitive marketplace and clearly there is a lot of new entrants into that market as well. I think those entrants in the competitive field make us just that much better. We've had some distinctive capacities in this category, and I think that's what makes us different and really enhances our ability to continue to grow and sustain margins by creating real value. I'll ask Brian Thompson, once again, to comment on maybe what some of those capacities are and provide further context.

Brian Thompson -- Chief Executive Officer, UnitedHealthcare Medicare & Retirement

Sure. Thanks, Dave. As Dave said, certainly pleased with the outlook for what we see in 2019, but I certainly want to point out the strong momentum that we've demonstrated. This is the fourth year of outpacing the industry growth rate quite meaningfully. I think it's a signal that our value is resonating in the marketplace. Over the last four years, benefit stability, as well as the enhancements we've added, our focus on a hassle-free agenda; taking out the complications for those we serve; our service model, which we call our advocate-for-me service model; our very popular household program; the various care management programs we have; all virtually Optum-enabled. They're really resonating. And we're seeing that value with our members. With our physician partners, and our distribution channel at large. We're really pleased to have that sort of track record and momentum as we answer what's appearing to be a very optimistic season for seniors.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you, Kevin. Next question, please.

Operator

Our next question comes from Dave Windley with Jefferies. Please go ahead.

David Windley -- Jefferies -- Analyst

Hi, good morning. I wanted to shift over to OptumCare. I'm wondering how many markets do you have substantial buildout where say a material portion of your benefit spend on the UnitedHealthcare side in those service areas where you choose to compete would be flowing through OptumCare. What kind of savings do you see from using OptumCare? And then how do you foresee the buildout of subsequent markets, of more markets to that level of influence?

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

That's a great question, Dave. I think the script covered some of that when we were referring to Medicare Advantage products, in particular the value that are created relative to original Medicare and we were talked about the upper limits of that being the 30% or so savings category. That's really what we're referring to is the deep relationships that UnitedHealthcare, and frankly others have with the OptumCare enterprise, which is a fiercely multi-payer business. So, serving many payers, as we outlined in the script as well. We have Andrew Hayek here. He'll answer the balance of your questions.

Andrew Hayek -- Chief Executive Officer, OptumHealth

Thanks, Dave. To add to what Dave shared, just high level, we're really pleased with the performance of OptumCare in terms of improving quality, measured by Stars, HEDIS measures, our consumer experience. We're average a Net Promoter score of 71 across OptumCare and OptumHealth. And the total cost of care savings, savings to the system by driving better health, by preventing avoidable admissions, by practicing evidence-based care. To Dave's point, when we do these things, we're seeing savings in the order of magnitude of 30% compared to traditional Medicare in a growing number of our mature markets. As was referenced earlier, we're present in 30 markets across OptumCare.

There are varying levels of depth in those markets, but all of them are on the pathway toward value. Value-based contracting, value-based clinical programs, culture, how we orient our positions. We're deepening our presence in those communities that we serve. Again, at different points along the continuum, but we're all deepening and growing. And we're optimistic. We're in the early stages, as Andrew Witty shared, of the potential of OptumCare. As we generate these kinds of results for the communities we serve, the patients we serve, and our 80 health plan partners, we see continued and growing interest to enter new markets, and to deepen our presence in our current markets.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you for the question, Dave. Next question, please.

Operator

We'll go to Sarah James with Piper Jaffrey. Please go ahead; your line is open.

Sarah James -- Piper Jaffray -- Analyst

Thank you. I wanted to go back to your comment on 2019, being within the range of the long-term growth, which you've previously said was 13% to 16%. So, there were bullish comments on Medicare and Optum growth, then we have the HIF break, so stacking up to be more tailwinds than headwinds. Can you run us through headwinds or tailwinds that may be missing from that and spike out the impact of the HIF tailwind? I think this year it was $0.75 headwind to '18, so how much is it rolling off for the benefit to '19? Thanks.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Sure, Sarah. Thank you. So maybe what I'll give you a sense of is the generally speaking, the headwinds and tailwinds as we see, and then I'll ask John Rex to cover the HIF, which I'm sure there's a lot of interest in. Generally, headwinds end up being matters that are less specific to us, so I'll call them industry-related headwinds, but we certainly have things that are unique to us as well. I think it's really important always as we think about planning, and we're in the midst of it right now, that we always start with a deep respect for medical costs, and also around positioning in a conservative posture on pricing to ensure that we fully consider those medical costs in that pricing.

Next to that, I'd say the sufficiency of government funding is always of concern, specifically in an environment where budgets begin to tighten and our population continues to age. That's going to put pressure broadly on budgets. Our response to that is to continue our extensive advocacy activities that we have in this area to ensure that the voices of those that depend on Medicare and Medicaid are heard and well heard.

At the same time, you've heard a lot of conversation this morning around managing total cost of care and being very restless around driving greater value to the market. So, we clearly respond to the sufficiency of government funding call by making sure that costs are contained, and that consumers, Medicare consumers in particular, receive additional value for their premium dollars.

The health insurer fee tax is an interesting item. I'll give my take on it first, and then as I said, I'll ask John at the end to comment on it as well. But I see it as a negative. I see it's return as a negative for people, for the industry, for business, for society broadly. If it returns, the industry is going to need to once again build it into premiums. That's going to elevate them to a point of dissatisfaction among consumers. We saw that when it came back here for 2018, in particular. It affects our NPS. It causes unnecessary instability for those we serve, particularly our Medicare members who are on fixed incomes.

Beyond that, the rest of the items are pretty unique to us. But I'd call out one in particular, which is around the pacing of investments. As you know, we have NPS ambitions in this company. We have growth ambitions in this company. We have ideals around how we can add value to the health system broadly over time. So, we have new R&D. Our research and development capacities. You heard us talk about a lot of start-up-based businesses. OptumCare is still a start-up; probably midstream in its overall development. Something that will take nearly two decades to fully develop. But you also heard us talk about things like buying the Colorado's Doctors plan.

While we didn't talk about it today, we are also entering into new geographic markets for Medicare, and also for our commercial-based business. All of those things take deep investment. But they're investments that are necessary in order to sustain that long-term, and I underscore long-term growth rate of 13% to 16% over time. You're absolutely right. We have a lot of tailwinds and they surpassed our headwinds, and that's why we can offer up the strength of that 2019 guidance that we have. Those include advances in NPS, cost containment, and the innovation that's a hallmark of this company. All those things continue to fuel growth.

We expect a strong year of Medicare Advantage, as you heard from Brian. But we also expect continued strong growth in returns from our market competitive commercial offerings. As I said, last quarter we were a bit dissatisfied with our ability, particularly in the national accounts market, to advance our self-funded business. I think that's going to pivot in 2019 and begin to produce growth in 2020. Our Medicaid businesses do very well on the duals, and with the long-term services in sports populations, I think they can perform a lot better with the base Medicaid plans as well.

OptumCare is going to enter into more new markets. It's going to also advance its risk-bearing capacities. We talked about OptumRx. They had a successful selling season again this year, but it has a lot of momentum, particularly in specialty, and delivering considerable supply chain value. OptumInsight is performing really well revenue cycle management and cost containment lines, and our global businesses continue to expand across both insurance and delivery.

We're going to continue to deploy capital in the business and grow, as you've come to expect from us in the past. So sustaining all that really requires a significant investment. What we do is we thoughtfully plan about what investment capacities we have, so that we can invest and continue to sustain that kind of 13% to 16% long-term earnings growth rate over time. Our idea is to provide the maximum return possible for society, and then also our shareholders.

With that, maybe I'll ask John just to touch on the mechanics of the HIF tax as well.

John Rex -- Executive Vice President & Chief Financial Officer, UnitedHealth Group

Sure. Sarah, good morning. Just a few components here as we think about the HIF tax and our view on it and expectations going into next year that might be instructive. I think the first thing to recall is when we laid out our initial $0.75 back in November, that was prior to a very important event that occurred later on, which was the reduction in the corporate tax rate. That meaningfully muted the impact, the headwind impact of the health insurance headwind for us this year. I know you're aware of that one. That's a significant reduction.

There are other true-ups and miscellaneous items as the year goes on, but far and away, that would be the biggest component. So, with 9 months of actuals now, we sized the 2018 year-over-year headwind just over half the level or around half the level we'd initially expected back then. Again, vast majority of that just due to the corporate tax reduction. As we start considering things and elements for 2019, among things we'll have to consider and be watchful for is when and how any conclusions are made for the reintroduction of the tax in 2020 also, as that would have impact on the 2019 view. So, all elements will be in play, but I just want to also provide a little guidance on where we think it's, the impact we think it's had in 2018 also.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thanks for the question, Sarah. You got probably more than you asked for in the answer, but we hope we were very thorough.

Sarah James -- Piper Jaffray -- Analyst

That's fantastic; thank you.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you. Next question, please.

Operator

And we'll go next to Josh Raskin with Nephron Research. Please go ahead.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Josh, you may be on mute. Josh, are you on mute?

Operator

We'll move on. We can go to Michael Baker with Raymond James. Please go ahead.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Great. Thank you.

Michael Baker -- Raymond James -- Analyst

Thanks a lot. Looking for an update on the shift from fee-for-service to fee-for-value, both in terms of where you guys are at now, as well as on the OptumInsight side, the systems that you're delivering to aid providers and payers in that move.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Okay. Well, I think the shift from fee-for-service to fee-for-value, I'll have Dan Schumacher, President of UnitedHealthcare discuss. Then maybe, Andrew, if you want to tie into that as well.

Dan Schumacher -- President and Chief Operating Officer, UnitedHealthcare

Sure. Thank you, Michael, for the question. To your good point, we have long been pursuing the transition on greater orientation toward value over volume. We're doing it in a couple of ways. First, trying to get an increasing amount of spend under value-based constructs, but then importantly, second, working to make sure that spend migrates toward managing the health of the population, versus just individual quality metrics. As you think about each of those components on the amount overall, today we have about $69 billion in value-based constructs. That represents a little under half of our medical/surgical spend. We had set a goal to get to $65 billion, and we got there early. So, we've reset our sights toward $75 billion by 2020. So, we'll continue to progress the total volume of spend that comes under value-based constructs.

Then inside that, we've been very successful in that migration toward a population orientation. If you look at where that sits today, about half of our value-based spend is in the more progressive relationships that orient around population outcomes. That's up from about 38% to 39%, if we look just five years ago. So, we've got a lot of focus around deepening those partnerships. Some of our most progressive relationships are actually with our ACO partners. In those relationships, we work to share data, share insights, drive better coordination, close gaps in care for people, and as you look at that, we've had some very successful outcomes with our ACO partners. In total, we've got about 1,000 ACOs under way. As you look at it across Medicare, Medicaid, and commercial, we're able to drive less inpatient stays, lower readmission rates, less primary care, less ER, and more preventative screening. So, overall, we're pleased with our progress there, and we continue to do more work, and we look to build on it in future.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

I think you know, Andrew Hayek and his team at OptumCare in particular are enabling all this by putting the deep infrastructure in local markets, from primary care to development of ambulatory care systems to enable the other side of that coin, if you will, that Dan has just described. So, having heard from Andrew, I think we'll just go to Eric Murphy for some comments on the OptumInsight side.

Eric Murphy -- Chief Executive Officer, OptumInsight

Thanks, Dave. Thanks for the question, Michael. Just picking up on what Dan Schumacher shared, is payers and providers continue to shift from fee-for-service to value-based care arrangements. OptumInsight offers the market what we refer to as a plan-build model. On the plan side, we've got one of the largest advisor consulting services organizations in the healthcare industry, where a number of our subject matter experts assist payers and providers with how to build those arrangements so they can move from fee-for-service to value-based care. On the build side, we have Optum Performance Analytics, which we've talked about many times on this call in the past. It is one of the market-leading platforms to enable payers and providers to not only establish risk-based relationships, but really manage both the cost and quality of care. But we see a continued shift in the marketplace from fee-for-service to value-based care, and feel very strong about the enablement capabilities of OptumInsight.

Michael Baker -- Raymond James -- Analyst

Thanks.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you. Next question, please.

Operator

We'll go next to Zach Sopcak with Morgan Stanley. Please go ahead.

Zachary Sopcak -- Morgan Stanley -- Analyst

Hi, thanks for the question. I wanted to ask on your experience now with point-of-sale rebates. I think it was about six months ago that you announced that you were going to do it for 2019 for your risk book. How have those clients been taking it? Are they understanding what has to be done to convert to that, and have you seen any increased interest in your fee-based book, in going to point-of-sale rebates for 2019?

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thanks for the question, Zack. It's obviously a very timely one as well, given all the news around this. We did back in the beginning of March this year make a decision for the 7 to 8 million people that are in our fully insured employer base business to convert them to a point-of-sale rebate format. I'll ask Dan Schumacher to comment on that. Then John Prince, if you have any observations about how the market is adopting these ideals as well, I'd appreciate it. Dan?

Dan Schumacher -- President and Chief Operating Officer, UnitedHealthcare

Good morning, Zack. So we did, as Dave mentioned, we announced our change earlier this year. That actually goes into effect beginning 1/1/2019 for all new and renewing groups forward in our fully insured group portfolio. So, at this point, it's coming up on 1/1/19, where we'll see that roll into place. The reaction from our customer base and the broker community has been strong. I think it adds a level of transparency to consumers and helps to return the economic incentive associated with the rebates to them at the point of sale, and that's particularly important when people are in high-deductible offerings where they're sharing the first-dollar burden of healthcare more broadly.

As it relates to our self-funded client base, we continue to see more interest in that offering. Obviously, they're trying to think about how it all balances out in the context of how they set their contribution strategy, their benefit strategy that underpins that. But we have seen some more interest. We've seen some take-up in sales. Let's see if John Prince can offer anything from his perspective.

John Prince -- Chief Executive Officer, OptumRx

Sure, Dan. Thanks. This is John Prince. In terms of the broader market, we've seen good uptake. We've been doing this in the market for several years in terms of our large, sophisticated clients. We've seen a real sea change this past year, first with UnitedHealthcare doing it in their fully insured book. We have an additional million lives that are picking up in the self-insured market. We also have additional health plan clients that are going to adopt it later in 2019-2020. In terms of a consumer experience, we're seeing a value of about $150 of value delivered back to an individual consumer when they have a point-of-sale rebate. Specifically on the high-deductible high plans, there's a lot of value from a consumer experience of doing point-of-sale rebates. But overall, a very solid uptake.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Great. Thank you. Thank you for the question, Zack. Next question, please.

Operator

We'll go next to AJ Rice with Credit Suisse. Please go ahead.

Albert Rice IV -- Credit Suisse -- Analyst

Hi, everybody. I might take a minute to ask you about our MLR trend in the quarter. You were 81%. That was better than we were thinking, and I think better than the consensus. A couple of moving parts there. I guess I'd be interested to hear your comment on first if there's any way to flush out a little bit more granularity between the business lines and what you saw on MLR, whether one particularly outperformed or was there any area where you had any issues? And second, I guess, in that the development, we knew that you would not have probably as strong a development as you had last year, but we didn't really assume that you have actually the negative of developments that you had in 2017, related to 2017. Any comment on that? Then I think finally, as MLR trends impact, I think last quarter you highlighted that we should be aware that Latin America, particularly Banmédica, have a negative MLR impact in the second and third quarter because of the winter, and it's hard to see that in the combined results. I wonder if that played out like you expected, or did you have some unusual favorable trend down there?

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thanks, AJ. All good questions. In the interest of time, it's just a seasonal adjustment in South America. So, they're moving into the spring and summer months now. So, we'll definitely see that as we move into Q4 and into Q1. John Rex, would you like to comment on our performance on MLR and development?

John Rex -- Executive Vice President & Chief Financial Officer, UnitedHealth Group

Good morning, AJ. John Rex here. Yeah, just a few comments on that. I'm going to try to pick up the various components there, and hopefully I'll hit on them all. One element I heard you refer to was development in the quarter. So, net $50 million of favorable development in the quarter, and within that we talked about $120 million of that being in year and $70 million of that relating to prior years. Nothing really significant within those prior-year components I would tell you. The way we look at that, that's roughly on $130 billion of medical spend from 2017. So, very modest within the scheme of things. There's always different quarters in the year.

You get coordination of benefits impact. You get other little impacts that come in. But within the scheme of our medical spend itself, .05%. So, relatively modest. I look back a little past through years, so 70 this year is 110 favorable. In '17, it was $110 million unfavorable. In '16, a very small amount that rolled through there, and nothing significant that I'd point out. In terms of across the lines of business, also nothing really meaningful to point out across the different lines. If I were to bias it a little bit, I'd bias it just slightly to the employer-based businesses in terms of where some of that development was occurring in the course of the quarter.

You probably heard me comment during my prepared comments that we were biasing our trend outlook in commercial down a bit. Within that, in terms of trend, we continue to see really what's driving most of trend is still unit cost as the main driver versus utilization. If I were to break down the components in terms of what we're seeing versus what we staked out back in November in terms of the individual trend components, I'd characterize that probably pharmacy and inpatient are coming in at the low end of the expected ranges that we provided at that time.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Hopefully that was responsive. AJ, thank you for the question. Next question, please.

Operator

We'll go next to Steve Tanal with Goldman Sachs. Please go ahead.

Stephen Tanal -- Goldman Sachs -- Analyst

Good morning, guys. Let me just follow up with that on the commercial side. First, it sort of sounds as those medical costs trend may have decelerated during the quarter. Is that a fair read? And if so, can you comment on where you're seeing the change in the secondary, if not for the buckets you listed? Then also just benefit on any preliminary comments on how the '19 selling season is shaping up in the commercial book, and maybe a little bit of our outlook for the cost trend moving forward?

John Rex -- Executive Vice President & Chief Financial Officer, UnitedHealth Group

Stephen, John Rex here again. So, yeah, with regard to the buckets I think is what was you were asking in terms of trend. The components we're seeing against our initial expectations we laid out back in November were really pharmacy and inpatient, in terms of coming in at the lower end of the range. As relates to inpatient, it's been a very long-term decline in inpatient. I think we've had 9 years or so of declining inpatient utilization. So, that has been a long-term trend. But those components where the buckets were, we're seeing the lower end of the range and where we've seen some deceleration.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

I don't think we're in any different place in trend on MLR this quarter versus where we were last. There's no watershed moment that occurred in the Q3. I think it's intensely consistent in terms of overall performance, as well as we look at how we select our reserves and the development that comes as a result. Dan, do you want to pick up the last piece?

Dan Schumacher -- President and Chief Operating Officer, UnitedHealthcare

Thanks, Steve. I think you asked about how the '19 selling season was shaping up. I assume that orients toward the self-funded marketplace, just given where we sit in the year. Maybe I'll break that into a couple of pieces. As it relates to first the national account market segment, as I've shared for the last couple of quarters, the theme there is really one around incumbency. We've done well to win when given the opportunity, but the reality is we do have a larger base that we're defending inside that. We were successful again this year in converting our retirees to group Medicare offerings. Obviously, those are a strong value for clients and consumers, as well as for our enterprise.

So, for the self-funded portion of the national accounts segment, we do expect enrollment to decline in 2019. Our team is really focused on, as Dave mentioned, redoubling our efforts around total cost of care. Importantly, our effectiveness in demonstrating that clearly to clients and consultants. As you look at the broader self-funded market, we continue to perform very well in the middle market segment, so clients with employees up to 3,000. And our public sector performance has seem some very nice improvement for 2019, including some large wins. So when we put that all together and look at the self-funded market overall, we expect some very strong year-over-year improvement, and that should result in a modest growth profile in 2019. We'll look forward to breaking apart the pieces and discussing it further at the investor conference in November.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you, Steve. We have several calls left in the queue and I'd like to see if we can get through this in the next 15 minutes or so. So, we're going to go ahead and take the next question, but you'll probably hear us tighten up our responses a bit here. Next question, please.

Operator

We'll go to Ralph Giacobbe with Citi. Please go ahead; your line is open.

Ralph Giacobbe -- Citigroup Global Markets -- Analyst

Thanks, good morning. I just want to get a little more clarification on the HIF. Seemingly you priced it through to customers, and it sounds like obviously the tax benefit came after. So, is it sort of the mindset that you expect to pay it back in 2019? Is that why it might not be the sort of magnitude of tailwind we initially thought? Or help us think through that. Thanks.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

John Rex?

John Rex -- Executive Vice President & Chief Financial Officer, UnitedHealth Group

Yeah, Ralph. So, in terms of -- are you focusing on the 2019 aspect? Or my comments were specifically related to 2018 and the impacts that the reduction in the corporate tax rate had.

Ralph Giacobbe -- Citigroup Global Markets -- Analyst

That benefited to you essentially in 2018 versus when you priced the book. So in 2019, are customers asking for that back? How do we think that through?

John Rex -- Executive Vice President & Chief Financial Officer, UnitedHealth Group

That was a significant headwind. That's part of what came into our earnings outlook when we revised earnings in January. So, that was a meaningful part of that. Then we did not have to then price on renewing books, have to price that in to any renewing books that were coming on at that point. So, a significant benefit for our customers in terms of how we approach the market, and how we were able to pass on that benefit to our customers. Certainly, that's also a benefit that our customers are receiving in 2019 because of the absence of the HIF. We would hope to also have that benefit as we move into future years. As Dave pointed out, the mere existence of the health insurance tax is a headwind for healthcare costs. So, we look for that to accrue to our customers.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you, Ralph. Next question, please.

Operator

We'll go next to Lance Wilkes with Sanford Bernstein. Please go ahead.

Lance Wilkes -- Sanford C. Bernstein & Co. -- Analyst

Yeah, I've got just a question on PBM. It's kind of three short points, but very tight, don't worry. The first one is if you could talk about the mail penetration rate and how you're doing with specially steerage there, how they contrast with prior years? And I guess related to that, how you're thinking about e-commerce and potentially adding online pharmacy options like Amazon. Then within the context of that, if you want to talk a little bit about PBM sales for 2019, both direct and the cross-sales for the large, self-funded groups. Thanks.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you. I'll direct it straight to John Prince.

John Prince -- Chief Executive Officer, OptumRx

Great, Lance. John Prince. I'll cover the selling season first. We're just wrapping up the 2019 selling season. If you look at the season, we had additional RFP volumes, so it was up year-over-year. In terms of clients sold, we've actually sold more clients in 2019 for a business that we did in 2018 selling season. So, we have additional clients year-over-year. This was in line with our expectations. So, we're excited about our sales. We've had a couple good state wins, a couple next health plans, unions, as well as a couple large employers. Retention is also very solid as we look into '19. We're going to have retention of 98% or higher as we go into 2019, which is three years in a row of solid retention.

In terms of the other part of your question, which is mail penetration, especially in e-commerce. That has really been the driver of our growth over the last year is we've been increasing our mail penetration, driving additional specialty volume. We've been very successful in winning the open market. Remember, the biggest volume of business in specialty infusion is open source in terms of competing in the market. We've done a great job of getting the salesforce out there, competing with a great product, solid NPS from a consumer standpoint and from a physician standpoint. We're just winning better day in, day out in terms of in the market, and that's been driving our growth.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Thank you for the question, Lance. Next question, please.

Operator

We'll go next to Mike Newshel with Evercore ISI. Please go ahead.

Michael Newshel -- Evercore ISI -- Analyst

Thanks. We've seen a few recent data points suggesting that the trend toward high-deductible plans in the employer business maybe slowing or even peaking. Is that something you're seeing? And do you think there's a certain point where employers have already exercised that high-deductible for new benefit design options? What would that look like? Are you seeing any pickup in interest in things like narrower, high-value networks, medical and pharmacy integration, digital and wellness tools, things like that?

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

You just hit up on all the I think some of the primary growth drivers and what a lot of employers are looking for in healthcare. High-deductible health plans have been one of the fastest growing product lines out there for some time now, having been first introduced back all the way into 2004, I guess it was, or maybe 2003, maybe even earlier than that, for that matter. But the items you just pointed out are the same items that we also labeled in the script.

Our work around digital technologies, providing deeply personalized information to consumers, the way in which we drive value-based arrangements, connect incentives across both the continuum of care, but also between healthcare consumers, and healthcare providers that is all, those are all essential parts of what employers are looking for. They're also looking for tighter levels of integration too. They're expecting that not only from our benefits business, but they're also expecting it from our services business, particularly as we get into healthcare delivery.

That's where the technical solutions and information solutions that OptumInsight offers to both OptumRx, as well as to OptumHealth, really deeply respond to the demands of that marketplace. Frankly, they transcend employer into the Medicare and Medicaid market as well. Next question, please.

Operator

We'll go next to Charles Wright with Cowen. Please go ahead; your line is open.

Charles Wright -- Cowen & Co. -- Analyst

Thanks for taking the question. I wanted to follow up on earlier comments, when you were talking about point-of-sale rebates. Just trying to get a sense on are you guys passing back 100% of rebates to the member at the point of sale, or is it maybe some portion of it? Because my understanding is there's some concerns perhaps from PBMs themselves. If you pass back 100%, the retailers can backtrack into what your rebate arrangements are like. Can you give us a sense of a little bit more of the mechanics on how the process works? Then related to that, as this market evolves in the PBM space, are you looking at, can you talk about what types of new pricing models you're exploring with clients? Perhaps going more at-risk on price in a PMPM model? Thanks.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Dan, do you want to take the point-of-sale rebate piece? Because I believe that relates to UnitedHealthcare's healthcare effort effective 1/1/19, and what percentage of that gets passed back through, which is the vast majority of it sans a hold-back for some of the work that we do as well. But anyway, anything further to add to that, Dan?

Dan Schumacher -- President and Chief Operating Officer, UnitedHealthcare

No.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Okay, great. Thanks. Sorry to drain that for you. John Prince, do you want to comment on the second part?

John Prince -- Chief Executive Officer, OptumRx

Sure. Thank you for the question, Charles, about new pipes and models. We've been out in the market talking about total cost of care for several years, which has really resonated with the market. Clients have been interested in how we an guarantee that. So, we've had models in the market for about two years of total cost of care guarantees. So if they work with us around medical behavioral pharma, around what additional value we can deliver. Another model we've been in the market with is also around a trend guarantee around pharmacy. And so we have a variety of models that we've been partnering with our more leading-edge clients to develop a solution and deliver that value.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Great. Thank you for the question. Next question, please.

Operator

We can go next to Gary Taylor with J.P. Morgan. Please go ahead.

Gary Taylor -- J.P. Morgan Securities -- Analyst

Hi, good morning. I wanted to ask about something I thought was fairly significant in the prepared comments and wanted to flesh out a little bit. But you had talked about the fully portable electronic health record soon to be released at scale. I know you've talked about that as an ambition on the Rally chassis, I believe. But my two questions would be when, and when you say at scale, what lines of business and what parts of the country are we talking about? And just the last piece, just give us a little bit on the technology. So if I roll in with my Rally EHR and my provider is on Cerner, or Epic, or Athena, how do they actually interface with this portable medical record that I'm going to be coming in with? Thank you.

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

That's a great question, Gary, and thank you for it. As outlined in our November 2017 conference, we had the ambition by the end of 2019 to develop individual health records for the 50 million fully benefited members that we serve. We would use the Rally chassis, which as indicated, now has 20 million registered users, to provide individuals in a way in which they can comprehend a tool, if you will, not only outlining their individual health record, but also giving them next-best action detail. That's what I mean by when I say it's deeply personalized. It's organized around them, not based upon generic criteria. It also assesses to what extent that they've been, and how they've been served by the health system broadly, and whether or not there's been any gaps in care that have been left behind.

Our ambitions are also to take that to care providers to provide them with similar information, but in a format that looks a little bit more like their EHR. So, and again, it would include next-best action as well. And so, that would be provided to the physician in the workflow of the physician's office. You might imagine what that could ultimately lead to in terms of a continuing to develop a transaction flow between the physician and us and the consumer and us, as we us being the custodian to try to drive better health outcomes for people, but also ensure that the highest level of quality is adhered to. Quality as defined by evidence-based practices. And then also containing costs. Eventually to incent the health system about responding to those deeply personal circumstances and situations.

So, we believe it to be pretty transformative across our business. It's something that we'll update you again here this coming November at our investor conference. We look forward to doing so. Thank you for the question. Next question, please.

Operator

Our next question is from Peter Costa with Wells Fargo. Please go ahead.

Peter Costa -- Wells Fargo -- Analyst

Thanks for squeezing me in, guys. Just looking at your performance. It really is quite strong in a number of areas. It makes you wonder when you look at the not-for-profit Blue Cross and Blue Shield plans, their performance seems to have improved as well. One of the few places where you have some weakness is where they're the biggest competitor. That's in terms of the national account business. Do you think that's a sign that the health insurance cycle is starting to turn over at this point? Or is the health insurance cycle dead at this point?

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

I don't know that I'd be willing to make any specific projections on the cycle overall. All I can say is that our business, in a very multi-dimensional way, both on healthcare benefits and services is seeking to compete on multiple fronts, really driving or accessing the strengths of the organization around its ability to take information and apply technology and then in local markets, organization a clinical delivery system to drive better outcomes, lower total cost of care, and greater consumer satisfaction. You see that measured pretty consistently across the board of our organization. My only regret sometimes is whether or not we can do that faster and to have an even greater impact. That is what our deep intention is.

I do think that our momentum around our competitiveness continues to accelerate. As a result, I think you continue to see the broad-based results that are indicated in this release, and also in the ambitions that we have for 2019 and beyond. It takes a lot of thought to make a commitment around a 13% to 16% long-term growth rate, and to step out in 2019 the way that we have. We're highly confident. This is a highly engaged management team. They are confident in their abilities to deliver those kinds of results consistently. Our aim is to do so, both to serve society, as well as each and every one of our shareholders.

So, thank you for the question. We'll take one more question and then we'll be done.

Operator

We'll take that question from Ana Gupte with Leerink Partners. Please go ahead.

Anagha Gupte -- Leerink Partners -- Analyst

Hey, thanks for squeezing me in. I wanted to follow up on your commentary about trending '19, then pivoting to growth and self-funded in 2020. Any thoughts on the recent news flow about employers going direct to providers doing their own member engagement and so on? Is there anything you're doing to improve NPS scores there? What's driving the possible growth in 2020?

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Ana, that's a good question. Our NPS scores with large employers are very strong. They continue to advance nicely year-over-year as well. As it relates to specific arrangements that employers may want to pursue in individual markets, we of course enable that. We're not biased by any particular format. They're our customers. We aim to serve their needs. We do assist in enabling that, as well as a number of other features that may exist in their benefit design and service composition. So, we're an adaptable company. Our goal is to serve; serve people, serve consumers, and also serve health systems broadly. I think that shows up in some of the most prolific ways in the large employer market. Thank you for your question.

If I can then, I will close our comments today. UnitedHealth Group, Optum, and UnitedHealthcare are driven by a single mission that we are actively and persistently engaged in helping to transform healthcare to make higher quality care accessible to more people, more simply and affordably in the U.S. and worldwide. We expect to continue to build on this year's strong momentum through the end of 2018, into 2019, and well beyond. But we never take our forward advance for granted. Every day, the people of this enterprise are committed to serving individuals and local communities. One person, one system at a time with true compassion, high quality, and innovative performance. We look forward to sharing much more with you during our annual investor conference on November 27th. Thank you for joining us this morning. This concludes our call.

Operator

This will conclude today's program. Thanks for your participation. You may now disconnect.

Duration: 77 minutes

Call participants:

David S. Wichmann -- Chief Executive Officer, UnitedHealth Group

Andrew Witty -- Chief Executive Officer, Optum

Steve Nelson -- Chief Executive Officer, UnitedHealthcare

John Rex -- Chief Financial Officer, UnitedHealth Group

Brian Thompson -- Chief Executive Officer, UnitedHealthcare Medicare & Retirement

Andrew Hayek -- Chief Executive Officer, OptumHealth

Dan Schumacher -- President and Chief Operating Officer, UnitedHealthcare

Eric Murphy -- Chief Executive Officer, OptumInsight

John Prince -- Chief Executive Officer, OptumRx

Matthew Borsch -- BMO Capital Markets -- Analyst

Justin Lake -- Wolfe Research Securities -- Analyst

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

David Windley -- Jefferies -- Analyst

Sarah James -- Piper Jaffray -- Analyst

Michael Baker -- Raymond James -- Analyst

Zachary Sopcak -- Morgan Stanley -- Analyst

Albert Rice IV -- Credit Suisse -- Analyst

Stephen Tanal -- Goldman Sachs -- Analyst

Ralph Giacobbe -- Citigroup Global Markets -- Analyst

Lance Wilkes -- Sanford C. Bernstein & Co. -- Analyst

Michael Newshel -- Evercore ISI -- Analyst

Charles Wright -- Cowen & Co. -- Analyst

Gary Taylor -- J.P. Morgan Securities -- Analyst

Peter Costa -- Wells Fargo -- Analyst

Anagha Gupte -- Leerink Partners -- Analyst

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