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Coventry Health Care, Inc. : UPDATE : HHS Cites Medicare Advantage Enrollment Growth

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02/01/2012 | 11:37pm CEST

--HHS says enrollment in Medicare Advantage plans up 10% from a year ago

--Government agency says premiums down 7%, on average

--Health insurers' trade group warns of future enrollment decline

(Updates throughout with details on enrollment, industry comment, closing share prices.)

 
   By Jon Kamp 
   Of  
 

Enrollment in Medicare Advantage plans has grown about 10% over the last year, according to new government data released Wednesday, highlighting why health insurers are clamoring to boost their presence in the market for senior-focused plans.

At the same time, the U.S. Department of Health and Human Services reported that premiums for Medicare Advantage plans have fallen by 7% on average since this time last year. Medicare Advantage offerings are private insurers' versions of the traditional government health plan. Shares rose across the sector Wednesday on signs of strong enrollment growth.

The health agency touted the results as evidence the U.S. health-care overhaul law has strengthened these plans. But the health insurers' industry group warned Medicare Advantage will suffer enrollment declines in coming years as program cutbacks under the health law swing into effect.

For now, at least, managed-care firms are broadly trying to increase their Medicare Advantage exposure. Both UnitedHealth Group Inc. (>> UnitedHealth Group Inc.) and Humana Inc. (>> Humana Inc.)--already the industry heavyweights when it comes to Medicare plans--struck deals last year that increase their heft.

Cigna Corp. (>> CIGNA Corporation), traditionally focused more on the commercial market, closed this week on its $3.8 billion purchase of Medicare carrier HealthSpring. Executives at Aetna Inc. (>> Aetna Inc.), following the insurer's earnings report Wednesday, touted the potential to boost Medicare Advantage enrollment by switching over Aetna commercial customers.

Barclays Capital said the enrollment growth highlighted Wednesday was stronger than expected. Goldman Sachs said it underscored a "successful 2012 selling season across health plans."

Barclays highlighted membership gains at Humana, UnitedHealth, Coventry Health Care Inc. (>> Coventry Health Care, Inc.) and Health Net Inc. (>> Health Net, Inc.). The firm noted a drop in enrollment for Universal American Corp. (>> Universal American Corporation), however.

Among these firms, Humana shares rose 3% Wednesday to close at $91.65, while Coventry gained 4.2% to close at $31.33. The sector generally outpaced gains in the broader market.

Medicare Advantage plans, used by roughly a quarter of seniors on Medicare, have gained in popularity because they often offer medical and drug coverage while tying in extra benefits, such as gym membership. They also typically offer lower monthly premiums. Benefits and costs in some plans can change year to year, though.

The Department of Health and Human Services said enrollment in Medicare Advantage plans has risen to 12.8 million from 11.7 million a year earlier. Average premiums, meantime, have fallen to $31.54 from $33.97. HHS Secretary Kathleen Sebelius called the Medicare Advantage program "stronger than ever."

That may not last, however, according to America's Health Insurance Plans, the industry group. It issued a release citing Congressional Budget Office projections that show enrollment declines later this decade.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; [email protected]

(Ben Fox Rubin contributed to this article.)

Stocks mentioned in the article
ChangeLast1st jan.
AETNA -0.29% 177.21 Delayed Quote.-1.48%
CIGNA -0.12% 177.24 Delayed Quote.-12.62%
HUMANA -0.76% 292.39 Delayed Quote.18.06%
UNITEDHEALTH GROUP -1.10% 245.18 Delayed Quote.10.97%
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Financials ($)
Sales 2013 14 376 M
EBIT 2013 -
Net income 2013 -
Debt 2013 -
Yield 2013 -
P/E ratio 2013 -
P/E ratio 2014
Capi. / Sales 2013 0,47x
Capi. / Sales 2014 0,40x
Capitalization 6 736 M
Income Statement Evolution
Managers
NameTitle
Allen F. Wise Executive Chairman & Chief Executive Officer
Tim Thaddeus Weglicki Independent Director
Lawrence N. Kugelman Independent Director
Matthew D. Eyles Vice President-Public Affairs & Policy
James E. McGarry Manager
Sector and Competitors
1st jan.Capitalization (M$)
COVENTRY HEALTH CARE, INC.6 736
UNITEDHEALTH GROUP10.97%235 094
ANTHEM INC3.05%59 173
AETNA-1.48%57 835
CIGNA-12.62%43 243
HUMANA18.06%40 323