The stock prices of U.S. health insurers took a hit on Wednesday as UnitedHealth Group announced a disruption related to reimbursement rates for Medicaid. This disruption was caused by ongoing enrollment challenges that began about a year ago, with UnitedHealth shares dropping 4.2% to $482.46, while competitors such as Humana, Centene, and Elevance Health saw decreases of 3.2%, 3.7%, and 2.6%, respectively.
During the Bernstein investor conference, a UnitedHealth executive mentioned the difficulties faced during a redetermination cycle in Medicaid to ensure that rates and utilization are aligned. This has led to some disturbances that are expected to affect the industry as a whole. Insurers set premium rates based on projected enrollment and expected medical service usage by members, but this has been impacted by unexpected increases in healthcare use noted in late 2023 and early 2024.
The COVID-19 pandemic policy required states to maintain enrollment for individuals covered by government Medicaid programs for those with low income, but this policy was terminated in April 2023 leading to reassessments in each state to determine eligibility for coverage. As of May 23, KFF reported that 22 million people had been disenrolled from Medicaid and CHIP insurance programs, with 22 million renewals still ongoing due to policy changes affecting eligibility criteria for coverage under Medicaid programs.
Insurers manage health plans for both Medicaid and Medicare programs, with unexpected increases in healthcare use noted in late 2023 and early 20
