United GroupThe 20% shares flowed Thursday after the company reduced its forecasts for annual profits, citing higher medical costs than provided in its private health insurance plans.
These darkness results from a health care giant, considered the Bellwether of the insurance industry could be a warning panel for other companies with so -called Medicare Advantage plans, according to some Wall Street analysts. It comes after a turbulent 2024 for insurers-health, injured by the payments of the lower government, the outbreak of medical expenses and the public reaction after the murder of the best framework of Unitedhealthcare, Brian Thompson.
Unitedhealthcare, the insurance branch of Unitedhealth Group, is the largest supplier of these plans in the country. Competient actions Humana fell 5%, while Dark abandoned more than 1% and CVS Tumbled 2%. Cigna does not have a medicare activity admits. Its stock increased by almost 1% on Thursday.
The results of the first quarter of United Health reveal “disturbing signs” to accelerate medical costs in Medicare ADVANTE companies, said TD Cowen Langston analyst on Thursday. He added that the company “prefigured correctly” increasing medical costs in 2023, so Thursday’s comments “will question” the annual prospects for each insurer.
Higher medical costs have rekindled the entire insurance industry in the past year, as more and more elderly people return to hospitals to undergo procedures that they had delayed during the COVID-19 pandemic, such as joint tracants and hip. But the question had not previously been so important to Unitedhealthcare.
Barclays analyst Andrew Mok said that unitedhealth’s problems could be less a problem for companies that have made “important” outings from certain Medicare Advantage markets, including Humana and CVS, according to a note on Thursday. Many insurers last year left the non -profitable markets of Medicare Advantage due to the increase in medical costs and the rate of reimbursement of the drop in the federal government.
Meanwhile, the problem could be a more important affair for companies that have won a larger market share in the advantage of health insurance, such as the health of high and elevance and Alignment healthAccording to Mok.
Unitedhealth said that the increase in the use of care or use, in its Medicare Advantage activity, came well above what the company provided for the year, which was for the care activity to increase at a rate coherent with what it saw in 2024. But the trends that have become obvious to the end of the first quarter suggests that the care activity has increased this level ” Unitedhealth CEO CEO Witty said during an authorization report Thursday.
The jump was particularly notable in doctor and external consultation services, which do not involve stays in the hospital, he added.
“It’s very, very unusual,” said Wilkes, Bernstein Senior Equity Equity Analyst on Thursday. He said the increase in use is “really surprising” that came out of the high level of care activity that industry has seen in the past year.
Wilkes added that Unitedhealth and the wider industry could “remove” “the intensity of some of the activities they do to manage use”, which causes patients dissatisfaction. For example, some insurers require prior authorization, which means that providers obtain approval of a patient’s insurance company before administering specific treatments.
“I think it’s probably United by removing due to the opposite winds and the company’s exam,” said Wilkes. “I think that the horrible thing that has happened to Brian Thompson and to the company is one of it, and I think that it also reflects control of the Ministry of Justice on United in the past two years.”
United was confronted with a government investigation into its Medicare billing practices.
Also on Thursday, Unitedhealth highlighted the problems linked to changes in the profile of patients treated as part of its Optum health care unit. This segment includes its pharmacy services manager, who negotiates medication discounts with manufacturers in the name of insurers and maintains forms, among other responsibilities.
But Witty said that the company was taking action to improve results and examines problems related to the highly achieved “Optum and medical costs while we examine 2026”.
If nothing else, insurers should get a boost next year. The Trump Administration in April said that it would considerably increase the reimbursement rates for the Advantage Medicare insurers, making a previous proposal for the Biden administration.