Stocks up, but health insurers down

While the stock market yesterday enjoyed its biggest gain in five years, based on relief from the Federal Reserve, health insurers’ stocks dropped after Wellpoint warned that the company expects less profit than originally anticipated for the first quarter and all through 2008. After the announcement, Wellpoint shares dropped by more than 28%. The company blamed higher medical costs, lower enrollment, and the “changing economic environment in which we are operating.” Virtually all other health insurers also lost value -- Humana by 24%, UnitedHealth (the nation’s largest) by 15%, HealthNet by 20%, Cigna by 9.8% and Aetna by 8.3%. Health Care Policy and Marketplace Review blames five years of easy profit-making for insurers. “When the trend rate is steadily falling a monkey can make money. . . . Welcome to the health insurance business at a time when you can't count on windfalls!”
Ellen Andrews