Unitedhealth groupThe shares fell by 20% on Thursday after the company reduced the annual profit forecastciting higher than expected medical costs in your private Medicare plans.
According to some analysts from Wall Street, these gloomy results of the healthcare giant perceived as a Bellweth insurance industry may be a warning sign for other companies with so -called Medicare Advantage Plans plans. Comes after the turbulent 2024 for health insurers, wounded with lower government payments, growing medical costs and public loose after murder The best director of Unitedhealthare, Brian Thompson.
Unitedhealthare, the Unitedhealth Group insurance arm, is the largest supplier of these plans in the country. Competitive shares Humane fell by 5%, while Health about a spoon fell by over 1% and CVS fell by 2%. Pipe There is no Medicare Advantage business. On Thursday, his supplies increased by almost 1%.
Unitedhealth results in the first quarter reveal “sinister signs” accelerating medical costs in Medicare Advantage Business, said on Thursday the TD Cowen Ryan Langston analyst. He added that the company “correctly announces” the growing medical costs in 2023, so Thursday comments “will take a question” about year -round perspectives for each insurer.
Over the past year, higher medical costs have organized the entire insurance industry, when more and more seniors return to hospitals to the procedures that they delayed during the Covid-19 pandemic, such as common substitutes and hips. But this problem was not so significant in Unitedhealthare before.
Analyst Barclays Andrew Mok said that Unitedhealth problems may be a smaller problem for companies that have created “significant” exits from some Medicare Advantage markets, including Humana and CVS, according to the note on Thursday. Many insurers last year I have left the unprofitable Medicare Advantage markets due to higher medical costs and lower reimbursement rates than the federal government.
Meanwhile, the problem may be a larger offer for companies that have gained a larger market share in Medicare Advantage, such as Elevance Health and Equalization healthAccording to MOK.
Unitedhealth said that the increase in the use of care or the use of Medicare Advantage in its business has exceeded what the company planned for a year, which was aimed at increasing the activities of care at a pace in accordance with what he saw in 2024, but trends that became visible at the end of the first quarter Unitedhealth Group Group group Andrew.
He added that the jump was particularly noteworthy in medical and outpatient services, which do not include the hospital's night stay.
“It's very, very unusual,” Lance Wilkes, a senior analyst at Bernstein,, he said “Squawk Box” CNBC on Thursday. He said that the growing use is “really surprising” from a high level of care, which the industry has seen over the past year.
Wilkes added that Unitedhealth and a wider industry may “withdraw” the intensity of some activities that they perform to manage use, “which causes the dissatisfaction of patients. For example, some insurers require prior consent, which means that the suppliers obtain the patient's approval from the patient's insurance company before conducting specific treatment methods.
“I think it probably united because of the company's policy and analysis of the company,” said Wilkes. “I think that the terrible thing that happened to Brian Thompson and the company is part of this and I think it also reflects the control of the Department of Justice in United over the past few years.”
Unitedhealth is supposed to be struggling with Government investigation from Medicare invoicing practices.
Also on Thursday, Unitedhealth pointed to problems related to changes in the profile of patients treated under his healthcare unit. This segment covers its manager for pharmaceutical benefits, which negotiates drug discounts with producers on behalf of insurers and maintains, among others, formulas.
But the windows said that the company is taking action to improve the results and considers problems related to optummy and increased medical costs “highly addressed when we look into the future until 2026”.
If nothing more, insurers are aimed at increasing next year. The Trump administration in April said it would be so significantly increase reimbursement rates In the case of Medicare Advantage insurers, the journey of an earlier proposal of Biden administration.