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Health insurance stocks decline due to underwhelming Medicare Advantage rates

On Saturday, February 2, 2019, an office building owned by Humana Inc. in Louisville, Kentucky, displayed signage indicating the upcoming release of its earnings figures on February 6. Despite this announcement, Humana’s stock experienced a decline of more than 10% due to the company’s significant reliance on private Medicare plans, particularly Medicare Advantage.

The recent cyberattack on UnitedHealth Group’s tech unit has put additional pressure on insurers dealing with high medical costs and challenges arising from the attack. This has negatively impacted Medicare Advantage businesses, which have historically been sources of growth and profits for the insurance industry.

On Monday, February 4, the Centers for Medicare and Medicaid Services announced that government payments to Medicare Advantage plans are expected to increase by 3.7% compared to the previous year. However, after accounting for certain assumptions, this translates to a 0.16% decline in the final rate. This final rate remains the same as a proposal made in January despite the agency usually increasing the rate from the initial proposal.

The rate set by the Centers for Medicare and Medicaid Services dictates how much insurers can charge for monthly premiums and plan benefits offered to customers, ultimately impacting their profitability. With over half of Medicare beneficiaries enrolled in privately run health insurance plans like Medicare Advantage due to lower premiums and additional benefits not covered by traditional Medicare as reported by health policy research firm KFF, this news is particularly concerning for insurers like Humana that heavily rely on these plans for growth and profits.

Overall, this situation highlights the challenges facing insurers in today’s healthcare landscape as they navigate rising medical costs and shifting consumer preferences towards privately run health insurance plans like Medicare Advantage.

By Samantha Jones

As a dedicated content writer at, I bring a unique blend of creativity and precision to my work. With a passion for storytelling and a keen eye for detail, I strive to craft engaging and informative articles that captivate our readers. From breaking news to thought-provoking features, I am committed to delivering content that resonates with our audience and keeps them coming back for more. Join me on this exciting journey as we explore the ever-evolving world of news and information together.

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