Health insurer stocks slide as final Medicare Advantage rates disappoint

Shares
of
U.S.
health
insurers
fell
Tuesday
after
the
Biden
administration
didn’t

boost
payments
for

private
Medicare
plans
as
much
as
the
insurance
industry
and
investors
had
hoped. 

Shares
of


CVS
Health
fell
more
than
8%
on
Tuesday,
while


UnitedHealth
Group‘s
stock
slid
nearly
7%.
Shares
of


Elevance
Health
dropped
more
than
3%
and


Centene‘s
stock
fell
6%. 

Meanwhile,


Humana‘s
stock
fell
more
than
10%.
The
health-care
giant
is
far
more
dependent
on
those
private
Medicare
plans,
known
as
Medicare
Advantage,
than
its
rivals. 

The
announcement
puts
more
pressure
on
insurers
already
grappling
with
high
medical
costs
and
uncertainty
around
claims
processing
after
the

cyberattack
on
UnitedHealth
Group’s
tech
unit.
It
also
deals
a
blow
to
Medicare
Advantage
businesses,
which
have
long
driven
growth
and
profits
for
the
insurance
industry.

The
Centers
for
Medicare
and
Medicaid
Services
said
late
Monday
that
government
payments
to
Medicare
Advantage
plans
are
expected
to
rise
3.7%
year
over
year.
That
is
effectively
a
0.16%
decline
after
stripping
out
certain
assumptions
baked
into
that
rate,
according
to
insurers
and
analysts. 

That
final
rate
is
unchanged
from
an
earlier
proposal
in
January.
Typically,
the
federal
agency
raises
that
rate
from
its
initial
proposal. 

The
closely
watched
rate
determines
how
much
insurers
can
charge
for
monthly
premiums
and
plan
benefits
they
offer,
and
ultimately,
their
profits.

Medicare
Advantage
is
a
privately
run
health
insurance
plan
contracted
by
Medicare.

More
than
half
of
Medicare
beneficiaries
are
enrolled
in
such
plans,
enticed
by
lower
monthly
premiums
and
extra
benefits
not
covered
by
traditional
Medicare,
according
to
health
policy
research
firm
KFF.