By Amina Niasse
NEW YORK (Reuters) – U.S. health insurer shares fell on Wednesday after UnitedHealth Group reported near-term disruption around Medicaid reimbursement rates due to ongoing program-wide enrollment hurdles that started about a year ago.
Shares of UnitedHealth fell 4.2% to $482.46, while rivals Humana, Centene and Elevance Health fell 3.2%, 3.7% and 2.6%, respectively.
“We’ve gotten through this very lengthy redetermination cycle in Medicaid and made sure that utilization and rates remain perfectly in sync,” a UnitedHealth executive said at the Bernstein investor conference, adding that they expect “some disruption” around it.
Insurers calculate the premium rates they charge based on members’ expected enrollment levels and use of medical services.
A COVID-19 pandemic policy required states to maintain enrollment for people covered by government Medicaid programs for low-income people. That policy, which began in March 2020, ended in April 2023, prompting each state to reassess who qualified for coverage.
KFF, formerly the Kaiser Family Foundation, estimated that as of May 23, 22 million people had been disenrolled from Medicaid and the CHIP insurance program for children, and 22 million renewals were ongoing. Coverage was renewed for approximately 49 million people.
“Investors have already struggled with the rate-to-cost discrepancy in Medicare Advantage over the past year, and it now appears that this dynamic will now play out more prominently on the Medicaid side of the house as well,” said Stephens analyst Scott Fidel . wrote in a note.
In addition to Medicaid plans for low-income people, UnitedHealth and other insurers administer health plans for the U.S. Medicare program for people age 65 and older or with disabilities.
Insurers were surprised at the end of 2023 and the beginning of 2024 by increasing use of care within those schemes.
(Reporting by Amina Niasse in New York; Additional reporting by Mariam Sunny in Bengaluru; Editing by Bill Berkrot)
