Log in
Login
Password
Remember
Lost password
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

Health Insurers Tumble on Medicare Advantage Rate Proposal

02/19/2013 | 09:04am US/Eastern
   By Jon Kamp 
 

Shares of Humana Inc. (>> Humana Inc.) and other major health insurers tumbled in premarket trading Tuesday following an unfavorable government proposal for Medicare Advantage rates in 2014 that analysts said came in worse than expected.

The late-Friday proposal is open to outside comments until March 1, ahead of a final announcement due April 1, so there is time for the industry to lobby for less pressure on rates. Insurers see Medicare Advantage--their version of the government health plan for seniors--as a key growth area, but ramping up exposure there means more exposure to pressure on government payments.

The proposal from the Centers for Medicare and Medicaid Services is "sharply unfavorable" and "significantly worse than expected," Goldman Sachs analyst Matthew Borsch said in a note to investors.

There are several moving parts in the complicated proposal, and different companies could be affected in different ways depending on the people they serve and the quality ratings their plans achieve. Nevertheless, Humana indicated that the government proposal would reduce benchmark payment rates by a mid-single-digit percentage next year, compared with earlier company expectations that rates would be "flat to slightly down."

Based on that prior assumption, Humana management recently expressed confidence that the health insurer would grow both Medicare membership and earnings next year.

But after the worse-than-expected proposal, "Humana is closely analyzing all operational avenues available to address those preliminary rates and the related impact upon the company's ability to grow both its Medicare membership and its earnings for 2014," the company said in a Securities and Exchange Commission filing.

Humana shares tumbled 9% to $71 in recent premarket trading. Louisville, Ky.-based Humana has tethered its fortunes to Medicare plans more than other major health insurers, although other companies also see it as an important growth market and have bulked up there.

UnitedHealth Group Inc. (>> UnitedHealth Group Inc.) shares slid 4.9% to $54.50 premarket, while Cigna Corp. (>> CIGNA Corporation) declined 3.4% to $59, Aetna Inc. (>> Aetna Inc.) fell 3.5% to $47.50 and WellPoint Inc. (>> WellPoint, Inc.) fell 3.6% to $60.47.

Among smaller firms with Medicare ties, WellCare Health Plans Inc. (>> WellCare Health Plans, Inc.) declined 5.8% to $56.75, while Universal American Corp. (>> Universal American Corporation) was recently inactive.

Write to Jon Kamp at jon.kamp@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

React to this article
Latest news
Date Title
10:14a IIROC Trading Halt - DGA.P
10:14a ABERDEEN UK TRACKER : Underperforms Benchmark In First Half
10:14a CAMECO : misses 2Q profit forecasts
10:14a SIERRA METALS : Appoints gordon babcock p.eng. as chief operating officer enhancing its current management team
10:14a SPARK ENERGY : to Present Second Quarter 2015 Financial Results on Thursday, August 13, 2015
10:14a SHERRITT : Announces Q2 2015 Results
10:14a Quality Remains Strong as Cost Increases Slow Dramatically for Members in Patient-Centered Medical Home Program
10:14a Trafico y Transito, Madrid-Based Road Safety Consulting Firm, Partners with AlertDriving
10:14a RESEARCH AND MARKETS : Eosinophilic Esophagitis Therapeutics Pipeline Insights Study 2015
10:13a HUDSON RESOURCES : IIROC Trading Resumption - HUD
Latest news
Advertisement
Hot News 
ARCH COAL : Announces Receipt of Requisite Consent for 2020 Exchange Offer and Extension of Private Debt Exchange Offers
ACCESSO TECHNOLOGY : *numis raises accesso technology price target to 910 (730) pence - 'buy'
PRIVATE EQUITY INVESTOR : Annual Financial Report
HELLERMANNTYTON : Surges Higher On Delphi Automotive Takeover
TP : Trading update and notice of half-year results
Most Read News
12:17a Patent Issued for Organic Light Emitting Diode Display and Method for Manufacturing the Same
07/29 Patent Issued for Canceling Narrowband Interfering Signals in a Distributed Antenna System
07/29 Patent Issued for Projection Display Apparatus and Control Method Therefor
07/29 BOEING MAY MOVE WORK ABROAD WITH EX-IM FUTURE UNCERTAIN : chairman
07/29 Patent Issued for Receiver Circuit
Most recommended articles
10:13aDJMARKET SNAPSHOT : U.S. Stocks Fall As GDP Data Leave Fed On Track To Hike
10:10aDJGlobal Stocks Mixed After U.S. Growth Data -- 3rd Update
10:08aDJU.S. Cattle Futures Climb on Demand Hopes; Hogs Advance
10:06aDJBOND REPORT : Treasury Yields Rise, Reverse Amid GDP Data, Month-end Extensions
09:58a Wall St. lower at the open after GDP data