United Healthcare 2012 Annual Report Download - page 33

acquired businesses before we realize anticipated benefits or synergies from the acquired businesses. These
challenges vary widely by country and may include political instability, government intervention, discriminatory
regulation, and currency exchange controls or other restrictions that could prevent us from transferring funds
from these operations out of the countries in which our acquired businesses operate or converting local currencies
that we hold into U.S. dollars or other currencies. If we are unable to successfully manage our foreign
acquisitions, our business, prospects, results of operations and financial position could be materially and
adversely affected.
Additionally, foreign currency exchange rates and fluctuations may have an impact on our shareholders’ equity
from period to period, which could adversely affect our debt to debt-plus-equity ratio, and the future costs of or
revenues and cash flows from our international operations, and any measures we may implement to reduce the
effect of volatile currencies may be costly or ineffective.
Sales of our products and services are dependent on our ability to attract, retain and provide support to a
network of independent producers and consultants.
Our products are sold in part through independent producers and consultants who assist in the production and
servicing of business. We typically do not have long-term contracts with our producers and consultants, who
generally are not exclusive to us and who typically also recommend and/or market health care products and
services of our competitors. As a result, we must compete intensely for their services and allegiance. Our sales
would be materially and adversely affected if we were unable to attract or retain independent producers and
consultants or if we do not adequately provide support, training and education to them regarding our product
portfolio, or if our sales strategy is not appropriately aligned across distribution channels.
Because producer commissions are included as administrative expenses under the medical loss ratio requirements
of the Health Reform Legislation, these expenses will be under the same cost reduction pressures as other
administrative costs. Our relationships with producers could be materially and adversely impacted by changes in
our business practices and the nature of our relationships to address these pressures, including potential
reductions in commissions.
In addition, there have been a number of investigations regarding the marketing practices of producers selling
health care products and the payments they receive. These have resulted in enforcement actions against
companies in our industry and producers marketing and selling these companies’ products. These investigations
and enforcement actions could result in penalties and the imposition of corrective action plans, which could
materially and adversely impact our ability to market our products.
Unfavorable economic conditions could materially and adversely affect our revenues and our results of
operations.
Unfavorable economic conditions may impact demand for certain of our products and services. For example,
high unemployment rates have caused and could continue to cause lower enrollment or lower rates of renewal in
our employer group plans and our non-employer individual plans. Unfavorable economic conditions have also
caused and could continue to cause employers to stop offering certain health care coverage as an employee
benefit or elect to offer this coverage on a voluntary, employee-funded basis as a means to reduce their operating
costs. In addition, unfavorable economic conditions could adversely impact our ability to increase premiums or
result in the cancellation by certain customers of our products and services. All of these could lead to a decrease
in our membership levels and premium and fee revenues and could materially and adversely affect our results of
operations, financial position and cash flows.
During a prolonged unfavorable economic environment, state and federal budgets could be materially and
adversely affected, resulting in reduced reimbursements or payments in our federal and state government health
care coverage programs, including Medicare, Medicaid and CHIP. A reduction in state Medicaid reimbursement
rates could be implemented retrospectively to payments already negotiated and/or received from the government
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