Health insurance stocks decline due to underwhelming Medicare Advantage rates

In Louisville, Kentucky, an office building owned by Humana Inc. displayed signage on Saturday, February 2, 2019. The company’s earnings figures were set to be released on February 6. However, prior to that date, Humana’s stock experienced a decline of more than 10%. Unlike its competitors, Humana heavily relies on private Medicare plans such as Medicare Advantage.

The announcement of Humana’s earnings puts additional pressure on insurers that are already facing high medical costs and challenges resulting from the recent cyberattack on UnitedHealth Group’s tech unit. This situation has negatively affected Medicare Advantage businesses, which have historically been sources of growth and profits for the insurance industry.

On Monday evening, 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, according to insurers and analysts. Despite the agency usually increasing the rate from the initial proposal, this final rate remains unchanged from a proposal made in January.

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 affecting their profitability. Medicare Advantage is a privately run health insurance plan contracted by Medicare with over half of Medicare beneficiaries enrolled in such plans due to lower premiums and additional benefits not covered by traditional Medicare as reported by KFF health policy research firm.

By Riley Johnson

As a content writer at, I dive into the depths of information to craft compelling stories that captivate and inform readers. With a keen eye for detail and a passion for storytelling, I strive to create engaging content that resonates with our audience. Whether it's breaking news, in-depth features, or thought-provoking opinion pieces, I am dedicated to delivering high-quality, informative content that keeps readers coming back for more. My goal is to bring a fresh perspective to every article I write and to make a meaningful impact through the power of words.

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