The guidance of Unitedhealth can mean problems for more insurers
Unitedhealth GroupThe share dropped by 20%on Thursday after the company reduced its annual profit forecast and in its privately managed Medicare plans at higher than expected medical costs.
These bleak results of a health giant, which is considered a Bellwether in the insurance industry, could be a warning sign for other companies with so-called Medicare Advantage plans, according to some Wall Street analysts. After a turbulent 2024 for health insurers, violated by lower government payments, rising medical costs and public counter reactions after the murder of the Top Executive by Unitedhealthcare, Brian Thompson,.
Unitedhealthcare, the UNITEDHEALTH Group's insurance arm, is the largest provider of these plans in the country. Shares of the competitor Humana fell by 5%while Surcharge fell by more than 1% and CV 2%. Cigna Has no Medicare Advantage business. The stock rose by almost 1%on Thursday.
The results of the first quarter of Unitedhealth show “threatening signs” of the acceleration of the medical costs into Medicare Advice companies, said TD Cowen Analyst Ryan Langston in a note on Thursday. He added that the company had “correctly indicated” the increasing medical costs in 2023, so that the comments on Thursday “would question the prospects of the year for every insurer.
Higher medical costs set the entire insurance industry last year, as more seniors return to hospitals in order to be delayed in the Covid 19 pandemic, such as common and hip replacement processes. However, the problem has not been so significant with Unitedhealthcare.
The analyst Andrew Mok from Barclays said that the problems of Unitedhealth for companies that made “significant” outputs from some Medicare Advantage markets, including Humana and CVS, could make “significant” outlets, less a problem, including a note on Thursday. Last year, many insurers left unprofitable Medicare Advantage markets due to higher medical costs and lower reimbursement rates of the federal government.
In the meantime, the problem could be a larger offer for companies that have gained a higher market share on the Medicare advantage, such as: B. Elevance Health and Orientation of healthAccording to Mok.
Unitedhealth said that the increase in care or use in his Medicare Advantage business rose well above what the company had planned for the year, namely the care activity to increase at a speed that was increased with what it corresponded in 2024. But trends that rose at the end of the first quarter at the end of the first quarter that nursing activity “at this level, at this level, at this level, at this level, the CEO -CEO CEO CEO CEO, said Andrew Witty during a call on Thursday on Thursday, on Thursday, on Thursday.
The jump was particularly noteworthy in medical and outpatient services, which were not about hospital stays overnight.
“It is very, very unusual,” said Lance Wilkes, Bernstein Senior Equity Analyst, to CNBCs “Squawk Box” on Thursday. He said that increasing use was “really surprising” if she was of a high degree of care that the high standards of care that the industry saw last year.
Wilkes added that Unitedhealth and the broader industry may “withdraw” the “intensity of some activities to treat usage”, which leads to dissatisfaction in patients. For example, some insurers need prior approval, which gives the providers a permit from the insurance company of a patient before the management of certain treatments.
“I think it is probably united to withdraw due to the headwind of politics and the test of the company,” said Wilkes. “I think the terrible thing that Brian Thompson and the company happened is part of it, and I think it also reflects the examination of the Ministry of Justice in recent years.”
Unitedhealth reports on a state investigation by his Medicare -Billing practices.
Unitedhealth also pointed out problems in connection with changes to the profile of patients treated as part of his optum Health-Care unit on Thursday. This segment includes his Pharmacy Benefit Manager, who, among other things, negotiates drug discounts with the manufacturers on behalf of insurers and maintains forms, among other things.
However, Witty said that the company took measures to improve the results and to take into account the problems related to optum and increased medical costs, “very addressable if we look at 2026.”
If nothing else, the insurers will get a boost next year. The Trump administration in April said it would significantly increase the reimbursement rates for Medicare Advantage insurers and hike a previous proposal from the bidges.
