Health insurer shares fell Wednesday after UnitedHealth Group warned of higher medical costs as older Americans begin to catch up on surgeries they had postponed during the Covid-19 pandemic.
Shares of UnitedHealth, the largest U.S. healthcare provider by market value, closed about 6% lower. Medicare-focused insurer Humana fell by 11%.
ElevanceHealth closed around 7% lower, and CVS healthwhich owns insurer Aetna, fell nearly 8%.
Insurance companies have benefited in recent years from delays in non-urgent interventions due to staff shortages in hospitals and the pandemic, which has caused hospitals to be inundated with Covid patients. Back then, hospitals were generally considered too risky to visit for elective procedures.
But on Tuesday, UnitedHealth executives indicated the trend may be reversing.
The company saw “strong outpatient care activity” in April, May and early June, CFO John Rex said at a Goldman Sachs health conference.
According to Rex, the largest increase in coverage has come from Medicare participants undergoing outpatient heart surgery and hip and knee replacements.
UnitedHealth CEO Timothy Noel said older adults who are covered by Medicare “get more convenient access to services for things they might have put off a little.”
Rex said the amount of premium income spent on care in the second quarter could be on the high end or “moderately above” expectations due to the increase in procedures.
Medical device manufacturer stocks Medtronic And stryker rose 2.5% and 4%, respectively, following UnitedHealth’s comments.
Hospital operator stocks HCA Healthcare And principle of health care also a bit higher.