The U.S. government recently proposed a slight increase in payments to private insurers that run Medicare Advantage plans, setting the average increase at just 0.09% for the next year. This news caused stock prices for major health insurers like UnitedHealth, CVS Health, and Humana to drop sharply—by over 10% in after-hours trading.
CMS Administrator Mehmet Oz highlighted that this proposed update reflects changing costs and quality ratings. The government aims to ensure Medicare Advantage works better for its members and protects taxpayer dollars from excess spending. They predict this small increase will lead to over $700 million in additional payments in 2027.
However, this modest adjustment caught many experts by surprise. Kevin Gade, COO at Bahl and Gaynor, noted that many had expected increases closer to 4% or 5%, given rising medical costs and the growing demand for senior care. Analysts are particularly concerned about how this will affect insurers’ profit margins and earnings per share.
Julie Utterback from Morningstar pointed out that the industry is waiting to see if the agency will reconsider its assumptions before making a final decision. She mentioned that the proposed rate doesn’t account for another anticipated 2.45% increase in payments related to coding.
Health care advocates are alarmed about the impact of a flat funding structure amid rising medical costs. Chris Bond from America’s Health Insurance Plans warned that the proposed changes might lead to benefit cuts and increased costs for millions of seniors who rely on these plans.
Interestingly, more than half of Medicare enrollees use Medicare Advantage, highlighting the importance of these decisions. The final rates are expected to be announced on April 6, when health care stakeholders will closely analyze the implications for seniors and the industry.
Overall, this small proposed increase holds significant consequences for many Americans. As discussions unfold, it will be crucial for consumers, insurers, and policymakers to stay informed about the changes ahead.
Source link
RHPI:HEALTH-INSURANCE,TOPIC:PHARMA-HEALTHCARE-BUSINESS-HEALTH,RHPI:HEALTHCARE-PROVIDERS,MTPIX,CMPNY,GEN,HEA,HECA,HFAC,HFAC1,HLTHSE,HMOS,HMOS1,HPAS,PUBL,PXP,AMERS,US,NAMER,DEST:OUSHEM,DEST:OUSBSM,FIN,FINS,INSR,TOPIC:MARKETS-COMMODITIES-METALS,TOPNWS,BMAT,GLDMIN,GOLM,HOT,MIN,MINE,MTAL,NEWS1,POL,POTUS,PRECAL,STX,TOPCMB,WASH,BLR
