Health insurance companies have a problem – people use their plans more

When the Centene (CNC) medical insurance provider opened its books to investors on Friday, the company reported a surprising loss and a step in use.

The latter is a wider problem for the industry.

In the second quarter, Centene reported a corrected loss of $ 79 million and a “ratio of health benefits” of 93%. The coefficient of its benefits or the amount of its revenue received from premiums, which he pays for medical care, jumped from 87.6% in the same quarter last year.

Movements in this figure can have huge effects on the financial results of health insurers.

“Due to the narrow margins of our healthcare business, relatively small changes to our HBR can create significant changes in our financial results,” Centene wrote in his Q2 report on Q2.

And the problem is not isolated for Centene.

Elevance Health (ELV), which offers plans, including Blue Cross and Blue Shield, reported a similar jump in its benefit ratio of up to 88.9% in the second quarter, compared to 86.3% last quarter.

Both Centene and Elevance attribute the leap to their proposals furnished by the Government under Medicaid and Medicare programs.

Molina Healthcare (MOH), which reported the profits of Q2 earlier this month, reported a similar perspective, attributing its more low -profile guidance to the same trend that other medical insurers face.

“The short -term profit pressure we are experiencing results from what we consider to be a temporary dislocation between premium interest rates and a trend at a medical price, which has recently accelerated,” Molina Joseph Executive Director said in a statement.

The Elevance action dropped by approximately 12% after its report earlier this month, while Molina’s shares dropped by approximately 8%. Both shares remain depressed since then.

Health Care (XLV) is the worst performing sector in the S&P 500 this year.

Centene’s shares dropped by approximately 15% in the marketing of prevailing after release of its profit before recovering to a positive profit of approximately 6% of Closing Bell on Friday.

The Buyan was led by the statement of Executive Director Sarah London that Centene is restoring profit guidelines after withdrawing this forecast earlier during the month. The company also reported revenue of $ 48.7 billion, which exceeded estimates of $ 44.2 billion and said it expected it to be able to raise the payments it receives from Medicaid plans, which would improve its margins.

The premium / price coefficient will be carefully monitored in the United States Group (UNH), which refers to this measure as its “Medical Assistance coefficient” (MCR) and is planned to release the Q2 profit next week.