Shares of health insurers plummeted on Wednesday following a warning from the CEO of UnitedHealth Group regarding lower premium payments due to a decrease in Medicaid enrollment. During a conference in New York, CEO Andrew Witty expressed concerns about the impact of changes in Medicaid patient numbers on the health insurance industry. As a result, UnitedHealth Group stock became the biggest drag on the Dow, which experienced a decline of over 1%. The entire health insurance sector was affected by this news, as Witty’s comments raised concerns about potential disruptions as states reduce their Medicaid rolls. At the Bernstein 40th Annual Strategic Decisions Conference in New York, Witty stated that it could take several quarters for states to begin paying Medicaid premium rates that adequately cover the cost of healthcare for Medicaid patients.
During the COVID-19 pandemic, the federal government imposed restrictions on states from terminating individuals with Medicaid health plans. However, as the pandemic subsided, states were once again permitted to make these cuts, resulting in a reduction in the number of individuals covered by these plans. This decrease in enrollment had a direct impact on health insurers, such as UnitedHealth, as they received fewer premiums.
As a result, UnitedHealth Group’s stock experienced a significant decline of nearly 4%, closing at $484.72 on Wednesday. This decrease made it the worst-performing stock in the Dow Jones Industrial Average. Other competitors in the healthcare industry, such as Molina Healthcare and Centene, also saw their stock prices fall on the same day.