New Medicare Bill Knocks Health Care Stocks

A medical bill that won congressional approval Wednesday would cancel a planned 11% pay cut to physicians who treat Medicare patients -- a move funded by cutting reimbursements to insurers.

In an unexpectedly early return to vote, Sen. Edward Kennedy (D, Mass.) who in June had surgery to remove a malignant brain tumor, helped champion the measure.

The bill is funded in large part by cutting some $13 billion in reimbursements to insurers -- such as UnitedHealth Group (UNH Quote)and Aetna (AET Quote) -- that contract with Medicare, according to the Reuters report..

The Reuters report cited Lehman Brothers analyst Tony Clapsis who predicted that shares of companies that operate a lucrative version of the Medicare Advantage program, dubbed fee-for-service, will be weaker today.

Medicare covers 44 million elderly and disabled Americans, while roughly 10 million seniors use the private plans known as Medicare Advantage.

Stocks in the health-care space were generally trading lower Thursday morning. UnitedHealth edged down 15 cents, or 0.7%, to $22.78, while Aetna slipped 25 cents, or 0.7%, to $37. Humana (HUM Quote) was down 78 cents, or 2%, at $37.86; Universal American (UAM Quote) was losing 81 cents, or 8.5%, to $8.67; Coventry Health Care (CVH Quote) was down $1.20, or 4%, at $28.90. Cigna (CI Quote) lost 27 cents, or 0.8% to $35.34, and WellPoint (WLP Quote) lost 70 cents, or 1.5%, to $46.85.