Medicare Advantage Rates Changes Better Than Expected: How To Play It

Health insurers that offer private Medicare Advantage plans will be getting a better payment increase than many had expected next year. The U.S. recently decided on a 0.85 percent payment hike in 2017.

Cowen and Company analyst Christine Arnold expects that Medicare Advantage payments will rise in 2017 and that Aetna Inc AET, Anthem Inc ANTM, Humana Inc HUM and UnitedHealth Group Inc UNH will be the biggest beneficiaries.

Cowen maintains Outperform ratings each of the four stocks mentioned above, as well as CIGNA Corporation CI.

“The disclosures and subsequent stakeholder call would suggest that all MA plans benefit in the final rate to a modest degree even though the headline rate is seemingly lower by 50 bps,” Leerink analyst Ana Gupte writes.

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Leerink singles out WellCare Health Plans, Inc. WCG as a winner from the new plan.

“We remain positive on MA and its outlook in 2017 and beyond as the reimbursement cuts from Obamacare subside, but we no longer see WCG (OP) as disadvantaged in the Final vs. the Initial rate notice,” Gupte explains.

Leerink maintains Outperform ratings on each of the stocks mentioned above.

Disclosure: the author holds no position in the stocks mentioned.

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Posted In: Analyst ColorNewsHealth CareTop StoriesAnalyst RatingsGeneral
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