United health groupStock drowned 20% on Thursday after the company Reduced its annual profit forecastCiting the higher-to-additional medical costs in private-run medicare schemes.
According to some Wall Street analysts, health care giants seen as Belweather of the insurance industry may be a warning indication for those foggy results with the so -called Medicare Advantage Plan. It comes after a disturbed 2024 for health insurers, hurt by low government payment, increasing after medical costs and public backlash Sarcasm Top Executive of United Healthcare, Brian Thompson.
UnitedHealthcare, the insurance branch of the United Health Group is the largest provider of those schemes. Competitive share Humana 5%fell, while Height health Fall over 1% and CVS Tumble 2%. Signa There is no Medicare Advantage Business. Its stock was about 1% above Thursday.
TD Cowen analyst Ryan Langston said in a note on Thursday that the results of the first quarter of the United Health reveal the “inauspicious signal” to accelerate medical costs in medicine advantage businesses. He said that the company had “properly pretend” to increase medical costs in 2023, so Thursday’s comments would call “the whole year’s approach to every year”.
High medical costs have dogs the entire insurance industry in the last one year because more seniors have returned to hospitals to pass through procedures that were delayed during the Kovid -19 epidemic such as joint and hip replacement. But this issue was not as important earlier in United Healthcare.
Barclays analyst Andrew Mok said that the problems of United Health may reduce an issue for companies who on Thursday, according to a note, made “significant” exit from some Medicare Advantage Markets, including Humana and CVS. Many insurers last year Exhaust unprofitable Medicare Advantage Markets Due to high medical cost and low reimbursement rates from the federal government.
Meanwhile, this issue can be a big deal for companies that have gained more market share in the medicare profit, such as height health and health and health and Alignment healthAccording to Mok.
UnitedHealth said what the company planned for the year in its Medicare Advantage Business, which was for care activity for the rate of activity according to what the company had planned for the year in its Medicare Advantage Business, in its Medicare Advantage Business.
He said that this jump was especially notable in the doctor and outpatient services, in which he does not attend the hospital overnight, he said.
“This is very, very unusual,” Lance Wilks, Senior Equity Analyst of Bernstein, told CNBC’s “squalk box” on Thursday. He said that the growing use is “really surprising” that is coming from high level care activity that the industry saw in the last one year.
Wilks stated that the United Health and comprehensive industry may “pull some activity intensity to manage use”, which causes dissatisfaction in patients. For example, some insurers require pre -authority, which receive the providers from the patient’s insurance company before administering specific treatments.
Wilks said, “I think it is probably united due to policy headwind and investigation on the company.” “I think the terrible thing that happened to Brian Thompson and the company is a part of it, and I think it is reflected to investigate the Department of Justice on United in the last few years.”
United Health is allegedly struggling with one Government inquiry Its medicare billing practices.
In addition, on Thursday, United Health pointed to issues related to changes in the profiles of patients treated under its Optom Health-Care Unit. The segment consists of its pharmacy benefits managers, who interact with the manufacturers on behalf of the insurers and maintain the formular with other responsibilities.
But Vitty said that the company is taking action to improve the results and consider issues related to optum and elevated medical costs “as we look forward by 2026.”
If nothing else, the insurers are ready to promote next year. In April, the Trump administration said that it will happen Considerable increase in reimbursement rates For Medicare Advantage Insurance, extending the proposal before the biden administration.
