Hello! Health insurance companies are feeling the pinch as elderly patients head to the doctor more than expected.
CVSThe company, which owns health insurance company Aetna, said on Wednesday: Full-year profit forecast downwardly revisedHe said rising medical costs could put pressure on profits.The warning comes two weeks after the insurance giant humana I cited the same factors as when I announced it. Disastrous 2024 earnings outlook.
Medical expenses from Medicare Advantage patients are increased sharply from last year More seniors are returning to hospitals for surgeries such as joint and hip replacements that were delayed during the coronavirus pandemic.
Medicare Advantageis a type of private health insurance plan contracted by Medicare and has long been an important source of growth and profit for the insurance industry. more than half According to health policy research firm KFF, 50% of Medicare beneficiaries enroll in these plans, attracted by lower monthly premiums and additional benefits not covered by traditional Medicare.
But investors are increasingly concerned about runaway costs, and insurers say they may not come down anytime soon. Other companies in the Medicare Advantage space include: united health group and Elevance Health.
CVS executives said on an earnings call Wednesday that the company’s insurance division saw a slight increase in the percentage of outpatient visits, including hip and knee surgeries, in the fourth quarter. It also saw increased use of supplementary benefits such as dental and vision care, and “some pressure” from respiratory syncytial virus vaccination.
Executives said inpatient care, or formal hospitalization, was in line with the company’s expectations for the period.
The insurance sector’s medical benefit ratio (a measure of total medical expenses paid relative to premiums collected) rose to 88.5% in the fourth quarter from 85.8% in the same period last year. A low ratio usually indicates that the company is collecting more premiums than it is paying out in benefits and is therefore more profitable.
Humana announced last month that its results were even. bigger jump Medical expenses increased in the fourth quarter. The company said some of this increase was due to an increase in outpatient activity, but the company attributed it primarily to an unexpected increase in inpatient care in November and December.
As a result, the medical benefit ratio in the insurance sector for the quarter was 91.4%, up from 87.4% in the same period last year.
Rising medical costs could be a bigger problem for Humana than for CVS and other insurance companies. That’s because Humana is more reliant on the Medicare Advantage business than its competitors, with more than 80% of its profits coming from it, UBS analysts said in a Jan. 25 note. mentioned in.
They added that no other Humana business can meaningfully mitigate the impact of rising health care costs on the insurance front. Humana has a specialty pharmacy division called CenterWell, but it brought in only about one-fifth of the revenue the company’s insurance division posted in the fourth quarter.
Meanwhile, CVS operates retail pharmacy and medical services businesses, both of which posted better-than-expected revenue in the quarter.
UnitedHealth Group Inc., another insurance giant hit by rising medical costs, is diversifying its revenue streams with large health care services and pharmacy businesses.
The bigger issue for all three companies is that “ “2am rule” It will affect their insurance business.
Starting this year, Medicare Advantage plans must cover a member’s hospitalization at a higher rate if the doctor anticipates having to stay past 2 a.m. This policy has been in place in traditional Medicare plans for nearly a decade.
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A sign posted in front of 23andMe’s headquarters in Sunnyvale, California, on February 1, 2024.
Trouble with 23andMe
It’s been a tough few months. 23 and me.
A genetic testing company that became famous for its home DNA testing kits reported: 3rd quarter of fiscal year Last week’s results. 23andMe’s revenue for the quarter was his $45 million, down from his $67 million in the year-ago period.
On the company’s quarterly call with investors, co-founder and CEO Anne Wojcicki said 23andMe is a consumer The company said it is considering separating its business and therapeutic drug business.
The company received a letter of deficiency from the Nasdaq listing qualification department in November, giving it 180 days to return its stock price above $1. If 23andMe fails to clear the threshold, it will be delisted from the exchange.
“We have not yet made any final decisions about what we will do going forward,” Wojcicki said in a telephone conversation.
23andMe is also grappling with growing legal issues as it faces more. 30 class actions Following the data breach disclosed by the company. The end of last year It affected nearly 7 million people. The company has so far incurred $2.7 million in costs related to this incident.
For now, investors are focused on how 23andMe navigates the difficult road ahead.
Amazon Pharmacy cuts jobs across One Medical
Amazon last week cut “hundreds of roles” across its One Medical and Pharmacy division. confirmed by the company To CNBC’s Annie Palmer.
Neil Lindsay, head of Amazon Health Services, said in a memo to employees that the company has “identified areas where we can redeploy resources,” leading to the reductions.
Amazon has been moving into the healthcare industry in recent years, building its own medical ecosystem.
In 2018, the company announced plans to acquire online pharmacy company PillPack, which would later help Amazon launch its own pharmacy. Four years later, Amazon announced it would acquire a primary care provider. one medical Approximately $3.9 billion.
But despite its lofty ambitions in health care, the sector is not exempt from CEO Andy Jassy’s aggressive cost-cutting efforts. In recent weeks, the company has announced layoffs at Audible, Prime Video, Twitch, MGM Studios and Buy With Prime, bringing the total to more than 27,000 jobs starting in late 2022. Adding.
Read the full memo regarding recent Amazon Pharmacy and One Medical job cuts. here.
Please feel free to send tips, suggestions, story ideas, and data to Annika ([email protected]) and Ashley ([email protected]).
