Health Care Stocks Face Medicare Advantage Hit

Some of the cuts in reimbursements under Medicare Advantage already affect the teaching hospitals that were receiving expenses as well as the insurers when providing clinic care where double cost was eliminated. It would be reasonable to expect that if elected president, Obama would not reinstate these payments.

The high cost private fee-for-service (PFFS) plans operated by the insurers that are now required to establish a provider network unless exempted because of insufficient network plans will almost certainly decide that this is not a business to stay in.

Overall, these changes in Medicare Advantage would be expected to reduce the rapid growth of the plans and the enrollment in PFFS because of the reduction in profits available. Medicare Advantage-only providers may well withdraw from the market, meaning that under an Obama presidency it is likely that there will be a resurgence of Medigap policies.

TheStreet.com Ratings issues financial strength ratings for 4,000 life, health, annuity, and property/casualty insurers are available at no charge on the Insurers & HMOs Screener. In addition, the Financial Strength Ratings on each of the nation's 8,600 banks and savings and loans are available on the Banks & Thrifts Screener.