Insurers slip after Medicare pressure forecast

Health insurance stocks slip after Humana predicts deeper funding cuts for Medicare Advantage

Associated Press

Shares of some Medicare Advantage coverage providers fell Friday after Humana Inc. said funding cuts for the government-subsidized program may be greater than expected next year.

The Louisville, Ky., company said Thursday after markets closed that it now expects Medicare Advantage rates to fall 6 to 7 percent next year. It had predicted a drop of 4 to 5 percent.

Medicare Advantage plans are privately run versions of the government's Medicare program for the elderly and disabled people. The government subsidizes the coverage, and insurers offer hundreds of different plans, many with extras like dental and vision coverage that are not available with standard Medicare.

The government has been cutting funding to this coverage to help pay for the health care overhaul, the federal law that aims to cover millions of uninsured people. Insurers have responded by trimming the benefits their Medicare Advantage plans offer, dropping doctors from their coverage networks or, in some cases, pulling out of markets where they feel they can no longer make a profit.

The funding cuts have made investors nervous as they await preliminary rates for next year, which will be announced in February. Humana is the second-largest provider of the plans behind UnitedHealth Group Inc.

Humana also said Thursday that it expects the risk mix of customers enrolled through the overhaul's coverage expansions to be worse than it originally anticipated. That means they generally expect a sicker pool of customers who produce more claims from this business, which is separate from Medicare Advantage.

Shares of Humana fell 2 percent, or $2.04, to $96.95 Friday afternoon, while the Standard & Poor's 500 index edged higher. UnitedHealth dropped 1.7 percent, or $1.28, to $74.80. WellCare Health Plans Inc., another big Medicare Advantage provider, was down 85 cents to $71.14.

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