Health insurer stocks experienced a decline on Wednesday following a warning from UnitedHealth Group about higher medical costs. The company highlighted that older Americans are starting to catch up on surgeries they delayed during the Covid-19 pandemic (source). As a result, UnitedHealth’s shares, the largest U.S. health-care provider by market value, closed around 6% lower, while Medicare-focused insurer Humana declined 11%. Elevance Health and CVS Health, which owns insurer Aetna, also saw significant declines in their share prices.
The delay in nonurgent procedures due to hospital staffing shortages and the pandemic has been beneficial for insurance companies in recent years. However, UnitedHealth executives indicated that this trend may be reversing. The company has observed a significant uptick in outpatient care activity throughout April, May, and the early part of June. Most of the increased demand for care is coming from Medicare enrollees who are seeking heart procedures and hip and knee replacements at outpatient clinics. UnitedHealth CEO Timothy Noel stated that older adults covered under Medicare are becoming more comfortable accessing healthcare services. Consequently, the amount of premium revenue spent on care for the second quarter may exceed expectations.
Following UnitedHealth’s remarks, shares of medical device manufacturers Medtronic and Stryker experienced increases of 2.5% and 4% respectively. On the other hand, shares of hospital operators HCA Healthcare and Tenet Healthcare also saw slight gains.
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