• Thu. Apr 18th, 2024

Medicare Rate Increase Hits Health Insurance Stocks: What Investors Need to Know

BySamantha Jones

Apr 2, 2024
Lower Medicare rates impact CVS, Humana, and other health stocks

On Tuesday, the stocks of several major health insurance companies took a hit after federal regulators announced that Medicare payments would increase by only 3.7% or $16 billion year-over-year in 2025. The announcement caused shares to drop for Humana, CVS Health, UnitedHealth, and Elevance Health.

Humana, the second-largest Medicare Advantage health insurer in the country, saw a significant decrease of 12% in its stock on Tuesday morning. UnitedHealth stock fell by 6%, CVS Health shares slid by 8%, Centene Corp. stock dropped by 5%, and Elevance Health stock dropped by 4%. Despite this news, Humana CFO Susan Diamond expressed disappointment in the rate increase during an investor call in March. She stated that it may be challenging for the company to reach its goal of boosting earnings by $6 to $10 without a bigger increase in payments.

The rate increase announced by the Centers for Medicare and Medicaid Services (CMS) is the same as a rate proposal made in January and over the past ten years, final rates have not been increased from their initial proposal more than once. This news comes as other pharmaceutical companies face challenges such as Eli Lily’s ZepboundOzempic weight loss drug shortage and backlash over low cost producing drug.

By Samantha Jones

As a content writer at newsnnk.com, I weave words into captivating stories that inform and engage our readers. With a passion for storytelling and an eye for detail, I strive to deliver high-quality and engaging content that resonates with our audience. From breaking news to thought-provoking features, I am dedicated to providing informative and compelling articles that keep our readers informed and entertained. Join me on this journey as we explore the world through the power of words.

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