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Insurer Says Economy Has Dented Its Prospects
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| Contributor | RP |
| Last Edited | RP Apr 23, 2008 06:58pm |
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| Category | General |
| Media | Newspaper - New York Times |
| News Date | Thursday, April 24, 2008 12:00:00 AM UTC0:0 |
| Description | It is never a good thing if many of your customers can no longer afford what you are selling.
The UnitedHealth Group, which announced disappointing first-quarter earnings on Tuesday, said the weakening economy was causing fewer businesses and employees to sign up for its health insurance. UnitedHealth, whose stock fell sharply on the report, also cut its overall profit outlook for 2008.
In recent years, despite soaring medical costs, insurers have made big profits by keeping premiums well ahead of health care inflation. But analysts say that business strategy may be reaching its limits, with companies finding it harder to raise prices without losing substantial numbers of customers.
“The market is not growing — it’s shrinking,” said Sheryl Skolnick, a health care analyst for CRT Capital Holdings in Stamford, Conn.
The main issue facing UnitedHealth is how much it can protect its profits as it loses customers for its traditional health insurance. “The issue for them is growth, and where is the growth going to come from?” asked Les Funtleyder, the health care strategist for Miller Tabak & Company, who rates the stock as neutral. |
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