Chicago, IL – September 17, 2010 – Today, Zacks Equity Research discusses the Health Care Industry, including UnitedHealth Group (UNH), Humana (HUM), HealthSpring Inc. (HS) and Universal American Corp. (UAM).
A synopsis of today's Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/40266/Health+Care+Review+and+Outlook+-+Sept.+2010.
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Medicare Advantage will see significant cuts under the new program, and reimbursement rates are expected to be set for the 2011 budget year. The plans affected the most are the ones that have a higher exposure to Medicare Advantage revenue; the higher the exposure, the greater the decline. Health insurers such as UnitedHealth Group (UNH) and Humana (HUM) have the highest exposure to the Medicare Advantage program compared to others in the field. HealthSpring Inc. (HS) and Universal American Corp. (UAM) also have a substantial exposure.
However, the Act expands the Medicaid program to additional lower income bracket. Thus, Medicaid managed care plans will likely benefit from this expansion.
Effect on the Industry
The legislation is expected to have a mixed impact on the industry. The benefits of covering more than 30 million uninsured will likely be offset by the negative impact of Medicare Advantage payment cuts, industry taxes and stringent new regulations on underwriting practices, leading to an overall loss for the industry.
On the other hand, as the insurance and managed care sector responds to these reforms, insurers will likely seek to increase their footprint in an effort to become more desirable to the state insurance exchanges. This may drive consolidation in the sector.
Going Forward
As the economy recovers, unemployment will decrease and discretionary spending will rise, leading to industry growth as individuals, families and self-employed business owners are better able to afford health care coverage. Moreover, as employment increases, the demand for employer-sponsored plans, which generates the majority of industry premium, will improve.
The U.S. population is aging, which is an important indicator of the demand for health insurance coverage. Older individuals are generally more likely to utilize medical coverage than their younger -- and healthier -- counterparts. Consequently, the aging population is expected to support industry growth as individuals look to lower their exposure to health-related costs.
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HEALTHSPRING IN (HS): Free Stock Analysis Report
HUMANA INC NEW (HUM): Free Stock Analysis Report
UNIVL AMERICAN (UAM): Free Stock Analysis Report
UNITEDHEALTH GP (UNH): Free Stock Analysis Report
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