The Centers for Medicare and Medicaid Services announced that government payments to Medicare Advantage plans are expected to rise only 3.7% from the previous year, disappointing health insurers already facing high medical costs and uncertainty following a ransomware attack on UnitedHealth Group’s tech unit. The decision added additional pressure to insurers that rely on these plans for growth and profits.

Following the announcement, several health insurers saw their share prices fall. Shares of CVS Health fell more than 8%, while shares of UnitedHealth Group fell nearly 7%. Elevance Health and Centene also saw shares drop more than 3% and 6% respectively. Humana, which relies heavily on private Medicare plans, saw its stock drop more than 10%.

The announcement is particularly impactful for companies that rely on Medicare Advantage plans for growth and profits. Rates set by the Centers for Medicare and Medicaid Services have significant implications for insurers, affecting monthly premiums, plan benefits and ultimately, profitability. Medicare Advantage plans are a popular option for more than half of Medicare beneficiaries because of their lower monthly premiums and additional benefits not available with traditional Medicare plans, according to KFF.

By Samantha Johnson

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