The Medicare Bubble Has Burst

May 20, 2024

Close up of 100-dollar bills

(Wall Street Journal) – With hundreds of billions of taxpayer dollars flowing to insurers in a fast-growing market buoyed by aging baby boomers, there was little not to like as far as Wall Street was concerned. Companies like UnitedHealth Group and Humana bet big on the program, and investors generally rewarded them for it. Medicare Advantage, in which the government pays insurers a set amount to manage the care of seniors, recently surpassed traditional Medicare’s share of beneficiaries. It was 30% a decade ago.

But the gold rush is over for investors, at least for now. After years of reports, lawsuits and whistleblower accounts accusing big insurers of gaming the system and overcharging the government, the Biden administration has made a series of policy changes that have negatively affected what the plans get paid. Meanwhile, a post-Covid surge in seniors’ medical costs caught insurers by surprise. (Read More)

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