Submitted by Armen Hareyan on Jun 20th, 2008
Stockprices for UnitedHealth, WellPoint and other U.S. health insurers declinedThursday after an announcement by Coventry Health Care that it had lowered its earningsestimates for the second quarter and the full year after reporting that it hadunderestimated claims in Medicare plans, Bloomberg reports.
In a conference call with investors, Coventryofficials on Wednesday said the company failed to anticipate the extent ofclaims from new enrollees in its Medicare Advantage plans, reflecting backlogsfrom last year and higher than expected plans for the first quarter of thisyear. According to Carl McDonald, an analyst with Oppenheimer,Coventry hasadded 89,000 new beneficiaries to its MA plan, increasing its total MA planenrollment to 371,000. Coventryalso decreased expected enrollment among employers (Goldstein, Bloomberg,6/19).
Shares of Coventrystock fell 23% on Thursday (Louisville Courier-Journal, 6/19).
According to Bloomberg, health insurers have been "pressuredby unanticipated costs" and increased patient claims related to their MAbusiness. MA reimburses health care providers an average of 13% more per claimthan traditional Medicare. Bloomberg reports that several insurershave reduced earnings forecasts (Bloomberg, 6/19).
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