The Medicare Advantage gold rush is slowing down, Wall Street Journal columnist David Wainer wrote Dec. 5.
A potential merger between Humana and Cigna has signaled to some Wall Street analysts that insurers are no longer as confident in the business as they once were.
"One line of thinking is: If Humana is willing to sell itself or do a merger of equals that doesn't represent a huge takeout price, then what are they signaling about the future of Medicare Advantage?" TD Cowen analyst Gary Taylor told the WSJ.
UnitedHealthcare projected lower membership growth in its Medicare Advantage business this year, another "red flag" worrying analysts, according to the WSJ.
Reimbursement changes from CMS will have a "ripple effect" through the company, CEO Andrew Witty told investors on Nov. 29. The payment rates amount to a pay cut for Medicare Advantage, Mr. Witty said.
Still, he said the rate changes are "incredibly positive," because they "gave us the stimulus to rechallenge ourselves on how we do things even more effectively going forward."
As government scrutiny increases on Medicare Advantage payments, and the program's rapid growth may slow, healthcare giants will "double down on their strategy to be not just your insurer, but your doctor, too," Mr. Wainer wrote.
"Medicare Advantage is still a highly attractive business, and it will continue to grow indefinitely as seniors age into it," Mr. Wainer wrote. "The opportunity just might not be as stellar as it once was as fewer seniors convert into it, competition grows and government scrutiny increases."
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