Medical insurance stocks slide, UnitedHealth warns high medical costs

Health insurer stocks dropped Wednesday after UnitedHealth Group warned of upper medical costs as older Americans begin to compensate for surgeries they delayed throughout the Covid-19 pandemic. 

Shares of UnitedHealth, the most important U.S. health-care provider by market value, closed around 6% lower. Medicare-focused insurer Humana declined 11%. 

Elevance Health closed roughly 7% lower, and CVS Health, which owns insurer Aetna, slid nearly 8%. 

Insurance firms have benefited in recent times from a delay in nonurgent procedures on account of hospital staffing shortages and the pandemic, which saw hospitals inundated with Covid patients. Hospitals at the moment were widely seen as too dangerous to enter for elective procedures.

But on Tuesday, UnitedHealth executives indicated that trend could also be reversing. 

The corporate has recorded “strong outpatient care activity” throughout April, May and the early a part of June, Chief Financial Officer John Rex said at a Goldman Sachs health-care conference.

Many of the uptick in care has come from Medicare enrollees who’re getting heart procedures and hip and knee replacements at outpatient clinics, in keeping with Rex. 

UnitedHealth CEO Timothy Noel said older adults covered under Medicare are getting “more comfortable accessing services for things that they might need pushed off a bit.” 

Rex said the quantity of premium revenue spent on look after the second quarter could also be on the high end or “moderately above” expectations on account of the rise in procedures. 

Shares of medical device manufacturers Medtronic and Stryker jumped 2.5% and 4%, respectively, after UnitedHealth’s remarks.

Shares of hospital operators HCA Healthcare and Tenet Healthcare also edged higher.