Oct 15 (Reuters) - UnitedHealth Group ( UNH ) reported a

surge in third-quarter medical costs on Tuesday, as the company

struggled with lower government payments in its insurance

business and persistently high demand for medical care, sending

its shares 3% lower.

For the quarter, the company's medical loss ratio - the

percentage of premiums spent on medical care - was 85.2%, higher

than the 82.3% reported a year earlier, as well as analysts'

estimate of 84.2%, according to data compiled by LSEG.

Demand for healthcare services under Medicare plans - for

people aged 65 years and older or those with disabilities - has

also exceeded industry expectations since late last year as

older adults underwent procedures they had postponed during the

pandemic.

The company also faced elevated medical costs as a turnover

in people enrolled in Medicaid left most health insurers with

more sick patients.

States have been reassessing enrollment for Medicaid plans

for low-income people since April last year, when a COVID-19

pandemic requirement that states keep consistent coverage of

participants lapsed.

UnitedHealth's ( UNH ) adjusted profit of $7.15 per share, however,

beat Wall Street estimates by 15 cents as the health

conglomerate, which also runs a healthcare services business,

saw increased membership across its businesses.

The company reported revenue of $100.8 billion, compared

with estimates of $99.28 billion.

(Reporting by Puyaan Singh and Leroy Leo in Bengaluru; Editing

by Shinjini Ganguli)