Key Takeaways
- Shares of health insurers dropped Wednesday after the CEO of UnitedHealth Group warned about lower premium payments as Medicaid rolls shrink.
- UnitedHealth Group CEO Andrew Witty reportedly told a conference in New York that the health insurance industry will face a “disturbance” because of the changes in Medicaid patient numbers.
- UnitedHealth Group stock was the biggest drag on the Dow Wednesday, which fell over 1%.
Health insurance stocks dropped Wednesday after the head of UnitedHealth Group (UNH) reportedly warned that the sector could face a “disturbance” as states cut their Medicaid rolls.
UnitedHealth CEO Andrew Witty reportedly told the Bernstein 40th Annual Strategic Decisions Conference in New York on Wednesday that it may become a “multi-quarter cycle” for states to begin paying Medicaid premium rates that are high enough to meet the cost of coverage for Medicaid patients, according to Bloomberg.
UnitedHealth, Other Insurers Face Cuts
During the COVID-19 pandemic, the federal government blocked states from terminating those with Medicaid health plans. However, with the pandemic over, states were again allowed to make those cuts starting last year, reducing the number being covered. Millions were taken off the rolls, lowering how much health insurers that offer the plans, such as UnitedHealth, received.
Witty reportedly said that the industry has gone through a “very sort of prolonged redetermination cycle in Medicaid.” He added that making sure “the utilization and the rates and everything else stay in perfect synchrony through a multi-quarter cycle, there’s probably going to be some disturbance around that,” Bloomberg reported.
UnitedHealth Stock Takes a Hit
UnitedHealth Group shares lost nearly 4% to finish at $484.72 Wednesday, making it the worst-performing stock in the Dow. Rivals including Molina Healthcare (MOH) and Centene (CNC) also fell Wednesday.