Humana and UnitedHealth Group Shares Fall as Government Proposes Medicare Advantage Rate Cuts
RDInvesting Provides Stock Research on Humana and UnitedHealth Group
NEW YORK, NY -- (Marketwire) -- 02/20/13 -- Shares of major health insurers fell Tuesday after analysts stated that proposed reductions in government payments for Medicare Advantage insurance plans would be "unfavorable" for companies. Medicare Advantage is a health insurance program offered by a private provider. Research Driven Investing examines investing opportunities in the Health Care Plans Industry and provides equity research on Humana Inc. (NYSE: HUM) and UnitedHealth Group Inc. (NYSE: UNH).
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Last Friday, the Centers for Medicare and Medicaid Services stated that in 2014 proposed Medicare Advantage rates will decline more than 2 percent. Goldman Sachs analyst Matthew Borsch in a not to investors stated the proposal is "sharply unfavorable" and "significantly worse than expected".
"These changes will disrupt coverage for Medicare Advantage beneficiaries at a time when evidence clearly demonstrates that Medicare Advantage provides higher-quality care than the fee-for-service part of Medicare," Karen Ignagni, president of America's Health Insurance Plans, said in a statement.
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Shares of Human declined 6.39 percent after the proposal was announced. "Humana is closely analyzing all operational avenues available to address those preliminary rates and the related impact upon the company's ability to grow both its Medicare membership and its earnings for 2014," Humana said in a regulatory filing.
UnitedHealth Group offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and contracts directly with 780,000 physicians and care professionals and 5,900 hospitals and other care facilities nationwide. UnitedHealthcare serves more than 40 million people and is one of the businesses of UnitedHealth Group.
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