The Biden Administration’s Failed Medicare Plan Payment Boost Causes Health Insurers’ Stock Prices to Fall

Health insurance company stocks drop after final Medicare Advantage rates fall short of expectations – NBC Chicago

After the Biden administration failed to increase payments for private Medicare plans as much as the insurance industry and investors had hoped, shares of U.S. health insurers fell. The decrease in payments put more pressure on insurers already grappling with high medical costs and uncertainty around claims processing after the ransomware attack at UnitedHealth Group’s tech unit.

The Centers for Medicare and Medicaid Services late Monday announced that government payments to Medicare Advantage plans are expected to rise 3.7% year over year, which was lower than what insurers and analysts had expected. The final rate increase was effectively a 0.16% decline after considering certain assumptions, surprising many as typically the federal agency raises the initial rate proposed in January. This announcement has put more pressure on already struggling health insurers and poses challenges for the Medicare Advantage businesses.

CVS Health fell more than 8%, while UnitedHealth Group and Elevance Health also saw significant drops in their stock values. Humana, which heavily relies on Medicare Advantage plans, experienced a more than 10% decrease in stock value due to this announcement. The decrease in payments for private Medicare plans by the Biden administration led to a decline in stock prices, making it harder for health insurers to profit from their operations.

Overall, the Biden administration’s decision to not raise payments for private Medicare plans has negatively impacted health insurers, leading to a decline in stock prices and putting more pressure on the industry. With challenges already faced due to high medical costs and the recent cyberattack on UnitedHealth Group’s tech unit, health insurers are in for a tough time ahead. Medicare Advantage, a key component of the health insurance industry, is also affected, threatening growth and profits for insurance providers.

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