US health insurer shares fall after UnitedHealth flags Medicaid enrollment issues

US health insurer shares fall after UnitedHealth flags Medicaid enrollment issues

By Amina Niasse

NEW YORK (Reuters) – Shares of U.S. health insurers fell on Wednesday after UnitedHealth Group cited near-term disruption in Medicaid reimbursement rates due to persistent program-wide enrollment barriers that began about a year ago.

UnitedHealth shares fell 4.2% to $482.46, while rivals Humana, Centene and Elevance Health fell 3.2%, 3.7% and 2.6%, respectively.

“We’ve gone through this very protracted redetermination cycle in Medicaid making sure that utilization and rates stay in perfect sync,” a UnitedHealth official said at the Bernstein investor conference, adding that they expected to “some disturbances” around this cycle.

Insurers calculate the premium rates they charge based on expected enrollment levels and members’ anticipated use of medical services.

A policy related to the COVID-19 pandemic required states to maintain enrollment of people covered by government low-income Medicaid programs. This policy, which began in March 2020, ended in April 2023, prompting each state to reevaluate who was eligible 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 that 22 million renewals were still pending. About 49 million people had their coverage renewed.

“Investors have already been grappling with the mismatch between Medicare Advantage rates and costs over the past year, and now it appears that this dynamic could manifest more visibly on the Medicaid side as well,” said Stephens analyst Scott Fidel. wrote in a note.

In addition to Medicaid plans for low-income people, UnitedHealth and other insurers operate health plans for the U.S. Medicare program for people age 65 and older or disabled.

Insurers were surprised at the end of 2023 and the beginning of 2024 by an increased use of health care within these plans.

(Reporting by Amina Niasse in New York; additional reporting by Mariam Sunny in Bangalore; editing by Bill Berkrot)

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