New York Times Examines Health Insurers' Declining Stock Shares, Potential Effect Of Medicare Drug Benefit Business

Main Category: Health Insurance / Medical Insurance
Also Included In: Medicare / Medicaid / SCHIP
Article Date: 17 Apr 2006 - 18:00 PDT

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The New York Times on Thursday examined how the price of health insurer stocks on the Standard & Poor's index has decreased by 8.6% since Jan. 1 -- after five consecutive years of increases -- and whether the trend will continue in the future. Analysts attribute the recent decrease to large investors who have sold their stock in heath insurers and have moved into higher-profit areas, such as commodities and energy. In addition, with health insurers "getting deeper into government business with the advent of the Medicare Part D prescription drug benefit, their financial patterns will be complicated by government spending patterns," the Times reports. According to the Times, subsidies from the federal government to cover the cost prescription drug coverage for millions of Medicare beneficiaries "are not likely to arrive until later this year," and profit margins for health insurers "are expected to be slim," although the companies "see them as a chance to expand more lucrative types of Medicare-related business." Lawmakers also might reduce the subsidies in the future, although such a move is unlikely this year, Ira Loss of Washington Analysis said. Phillip Seligman, a health care analyst at Standard & Poor's, said, "After tremendous growth in stock prices throughout the industry, the question is whether we will see similar growth going forward. Many investors do not expect that" (Freudenheim, New York Times, 4/13).

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