Health Insurance Shares Climb After Medicare Reimbursements are Boosted

Shares of health insurance firms in the U.S. jumped after the federal government announced a reimbursement rate increase which was higher than what had been expected by the industry. The rate increase applies to Medicare Advantage plans and will take effect next year. This increase was welcome news to the industry that had seen their margins squeezed by rising costs of medical care.

Humana, an insurer specializing in Medicare, saw its shares soar by 16% while other firms, such as Centene, UnitedHealth Group and CVS saw upticks ranging from 5% to 10%.

After the Covid-19 pandemic, there was a surge in the demand for various medical procedures. This surge exerted immense pressure on the profits of insurers as their costs went up significantly. The recently announced average increase of 5.06% offers some relief to the medical insurance industry.

Steven Couche and David Windley, both analysts at Jefferies, wrote that the reimbursement rate increase has more significance for the health insurance industry beyond a boost to their margins. They add that the generous rate increase speaks volumes about the favorable impression that the Trump administration has towards MA plans. The decision, they say, reflects “more art” rather than science being at the heart of the rate increase.

Previously, the CMS had proposed that reimbursement rates be boosted by 2.2% for the coming fiscal year. The federal agency explained that their proposal was based on the latest data covering Q4 of 2024 regarding the increasing costs insurers are incurring.

Given this background of the recommendation from CMS, the industry was pleasantly surprised when the government announced a rate increase that was more than twice what had been suggested by the agency overseeing Medicare and Medicare Advantage.

Analysts are also seeing the confirmation of Dr. Mehmet Oz as the overseer of Medicare & Medicaid as further proof that the health insurance industry may not have hostile political issues to deal with since Dr. Oz has expressed views in support of expanding MA coverage.

2024 was a particularly tough year for medical insurers due to increasing costs of medical care, low payments from government and a hostile public especially after an executive from UnitedHealth was murdered. Those headwinds shook the industry to the core, with some providers opting to scale down their involvement or exit MA coverage.

With this rate increase and a sympathetic federal administration in place, things are beginning to look up once again for the industry. Entities like Astiva Health can now begin planning how they can extend their services to more people within their areas of operation.

NOTE TO INVESTORS: The latest news and updates relating to Astiva Health are available in the company’s newsroom at https://ibn.fm/Astiva

About BioMedWire

BioMedWire (“BMW”) is a specialized communications platform with a focus on the latest developments in the Biotechnology (BioTech), Biomedical Sciences (BioMed) and Life Sciences sectors. It is one of 70+ brands within the Dynamic Brand Portfolio @ IBN that delivers: (1) access to a vast network of wire solutions via InvestorWire to efficiently and effectively reach a myriad of target markets, demographics and diverse industries; (2) article and editorial syndication to 5,000+ outlets; (3) enhanced press release enhancement to ensure maximum impact; (4) social media distribution via IBN to millions of social media followers; and (5) a full array of tailored corporate communications solutions. With broad reach and a seasoned team of contributing journalists and writers, BMW is uniquely positioned to best serve private and public companies that want to reach a wide audience of investors, influencers, consumers, journalists and the general public. By cutting through the overload of information in today’s market, BMW brings its clients unparalleled recognition and brand awareness.

BMW is where breaking news, insightful content and actionable information converge.

To receive SMS alerts from BioMedWire, “Biotech” to 888-902-4192 (U.S. Mobile Phones Only)

For more information, please visit https://www.BioMedWire.com

Please see full terms of use and disclaimers on the BioMedWire website applicable to all content provided by BMW, wherever published or re-published: https://www.BioMedWire.com/Disclaimer

BioMedWire
San Francisco, CA
www.BioMedWire.com
415.949.5050 Office
Editor@BioMedWire.com

BioMedWire is powered by IBN