Health Insurers’ Stock Prices Fall After Coventry Health Reduces Earnings Estimates
Stock prices for UnitedHealth, WellPoint and other U.S. health insurers declined Thursday after an announcement by Coventry Health Care that it had lowered its earnings estimates for the second quarter and the full year after reporting that it had underestimated claims in Medicare plans, Bloomberg reports.
In a conference call with investors, Coventry officials on Wednesday said the company failed to anticipate the extent of claims from new enrollees in its Medicare Advantage plans, reflecting backlogs from last year and higher than expected plans for the first quarter of this year. According to Carl McDonald, an analyst with Oppenheimer, Coventry has added 89,000 new beneficiaries to its MA plan, increasing its total MA plan enrollment to 371,000. Coventry also decreased expected enrollment among employers (Goldstein, Bloomberg, 6/19).
Shares of Coventry stock fell 23% on Thursday (Louisville Courier-Journal, 6/19).
According to Bloomberg, health insurers have been "pressured by unanticipated costs" and increased patient claims related to their MA business. MA reimburses health care providers an average of 13% more per claim than traditional Medicare. Bloomberg reports that several insurers have reduced earnings forecasts (Bloomberg, 6/19).
