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Insurers await final 2014 Medicare Advantage rates

The Associated Press

Health insurance stocks were mixed Monday as investors and analysts await final word from the federal government on Medicare Advantage rates for 2014.

Investors have been wary about possible steep cuts to Medicare Advantage plans since the Centers for Medicare and Medicaid Services said Feb. 15 that it expects costs per person to fall more than 2 percent in 2014, a bigger drop than many analysts who cover the industry anticipated.

The government uses that figure as a benchmark to determine payment for Medicare Advantage plans, which are privately run versions of the federally funded Medicare program for the elderly and disabled people.

CMS said in February it will announce final rates April 1. The announcement is expected after markets close.

Analysts have said some plans could see payment reductions topping 5 percent for next year because they also face funding reductions from the health care overhaul and the steep federal budget cuts that started in March. Analysts also expect insurer profits from the plans to be squeezed by the growing cost of care and a premium tax imposed to help fund the overhaul, which aims to cover millions of uninsured people.

The trade association America's Health Insurance Plans launched an intense lobbying and marketing push after the CMS announcement in February, warning of cuts to benefits and premium hikes for many seniors. Analysts have since said they expect CMS to take steps to ease the severity of any payment reductions.

Wall Street appears to be expecting that too. Shares of the two biggest providers of Medicare Advantage plans — UnitedHealth Group Inc. and Humana Inc. — both climbed in late trading. UnitedHealth stock rose 46 cents, about 0.8 percent, to $57.67, while Humana was up almost 2 percent, or $1.32, to $70.43. Shares of Blue Cross Blue Shield coverage provider WellPoint Inc. dipped 9 cents to $66.14, and Aetna Inc. fell 11 cents to $51.02.

Meanwhile the Standard & Poor's 500 index was off less than 1 percent.