SOURCE: Research Driven Investing

Research Driven Investing

February 20, 2013 08:20 ET

Major Health Insurers Fall on Medicare Rate Cut Proposal

RDInvesting Provides Stock Research on Aetna and WellCare Health Plans

NEW YORK, NY--(Marketwire - Feb 20, 2013) - Shares of major health insurers fell Tuesday after analysts stated that proposed reductions in government payments for Medicare Advantage insurance plans would be "unfavorable" for companies. Medicare Advantage is a health insurance program offered by a private provider. Research Driven Investing examines investing opportunities in the Health Care Plans Industry and provides equity research on Aetna Inc. (NYSE: AET) and WellCare Health Plans, Inc. (NYSE: WCG).

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Last Friday, the Centers for Medicare and Medicaid Services stated that in 2014 proposed Medicare Advantage rates will decline more than 2 percent. Goldman Sachs analyst Matthew Borsch in a not to investors stated the proposal is "sharply unfavorable" and "significantly worse than expected".

"These changes will disrupt coverage for Medicare Advantage beneficiaries at a time when evidence clearly demonstrates that Medicare Advantage provides higher-quality care than the fee-for-service part of Medicare," Karen Ignagni, president of America's Health Insurance Plans, said in a statement.

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Aetna is one of the nation's leading diversified health care benefits companies, serving approximately 37.3 million people with information and resources to help them make better informed decisions about their health care. The company reported a net income of $190.1 million, or $.56 per share, in the fourth quarter. Aetna's Board of Directors has recently declared a quarterly dividend of $0.20 per share.

WellCare Health Plans, Inc. provides managed care services targeted to government-sponsored health care programs, focusing on Medicaid and Medicare. The company serves approximately 2.7 million members nationwide as of Dec. 31, 2012. WellCare reported premium revenues increased 24 percent year-over-year to $2 billion in the fourth quarter.

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