Share prices of health insurers fall after the US government reduces Medicare reimbursements.

Photo above – Screen shot from “The Deer Hunter”. Christopher Walken finds out his best friend is in a VA hospital back in the US . . .

(Full disclosure – this writer currently holds no shares of United Healthcare. I bought some at $250 last year after their CEO was assassinated, and sold them later at $330. UNH is $280 a share this morning, after dropping 20% yesterday. I currently have an alert and potential buy order if UNH returns to its 52 week low of $240 a share.)

I didn’t feel guilty last year about snapping up shares of United Healthcare at $250 after Luigi (“the maniac”) Mangione assassinated their CEO on the sidewalk. Killing off a business executive or president or holy man rarely changes things over the long term. Corporate America and most nations have orderly succession plans to deal stuff like that. Share price disruption likely to be temporary . . .

Yesterday’s 20% drop in UHN share prices is a different matter. In fact, 3 or 4 other major insurers are also way down. (See link below) The proximate cause? “The Centers for Medicare & Medicaid Services, proposed a 0.09% increase for 2027 rates, versus the expectations of 5%." (exact quote).

The US government is the major payer (but not the single payer) for most government health coverage in the US. If Washington DC doesn’t want to pay those companies, then there’s an immediate existential threat to profits.

The probability that United Healthcare will go completely bankrupt is low, but not zero. Right now a bunch of “free healthcare for everyone” people are cheering, as if cutting reimbursement rates means better care, better prices, or longer lifespans. When the government pays less for healthcare, it probably means the opposite: worse outcomes. If you doubt this, then consider the up and down fortunes of the Veterans Administration hospital system. The VA actually IS a single payer system. And it ranks at the bottom compared to other hospital systems for patient care. At one point there was a 6 month wait for veterans to even get appointments, while VA administrators collected record incentive/performance bonuses. This was during a previous presidential administration, but I doubt things are much better today.

I get it that Trump (and the centers for Medicare/Medicaid, and the VA) want to reduce health care costs. Since 2000 healthcare inflation has been 120%, while the CPI “only” rose 80%. Healthcare inflation is 50% faster than food and salaries. So something should be done.

Evidently the Trump administration wants to choke off the money spigot, and let insurers and hospitals and pharmacies figure it out themselves. This might possibly work, except that the way they will do this is by hiring more foreign-born doctors who barely speak
English, curtailing research into new drugs, and stacking more patients in each hospital room.

Stop tsk-tsking. How else could cost cutting possibly happen?

I don’t have a solution for this. I’m just sayin’ . . .


https://www.msn.com/en-us/health/other/why-shares-of-unitedhealth-humana-and-other-insurers-tanked-and-took-the-dow-with-them/ar-AA1V47pD?ocid=msedgntp&pc=HCTS&cvid=6979fe021bdc4174ac012d4b78d4efe1&ei=136&cvpid=697a00defc1043258b9e714892f6ecb1


https://www.healthsystemtracker.org/brief/how-does-medical-inflation-compare-to-inflation-in-the-rest-of-the-economy/