US insurers including United Health and Humana are cutting healthcare services for elderly clients and increasing the price of prescription drugs next year, raising costs for Americans already struggling with inflation. Older voters last week began picking their government healthcare plans for next year but face costlier and more limited options after insurers scrapped hundreds of plans for 2027 and reined in coverage. Medicare, the US healthcare scheme for people 65 and older or who are disabled, covers about 70mn Americans and costs the government more than $1tn annually, but it does not cover everything.
Certain Medicare plans in some areas that have historically had no monthly payments would cost $79 a month starting in January, according to industry experts. These increases affect the 35mn Americans with so-called Medicare Advantage plans, the largest segment of the federal health insurance system for people over 65, according to 2026 figures. United Health and Humana are the two largest Medicare Advantage providers with about 46 per cent of the market.
The cost surge is good news for insurers, with investment banks tracking the Medicare changes saying they are likely to improve the companies’ profitability. Operating margins at United Health’s healthcare division rose 3.3 per cent in the last quarter, up from 2.1 per cent a year earlier. Barclays said in an October 2 report that all public managed-care organisations are reducing benefits, with Humana adopting the largest average reduction in supplemental benefits.
United Health and Humana increased the maximum amount an individual would need to pay for medical services in 2027 by 11 per cent and 8 per cent respectively, according to Leerink, an investment bank. They also both raised the costs for prescription drug coverage by about 30 per cent, the bank said.
Source: Financial Times Companies · Summarized by HeadlinesBriefing