New Medicare Bill Knocks Health Care Stocks

A new bill approved by Congress will cut reimbursement payments to insurers that contract with Medicare.
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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) - Get Report

and

Aetna

(AET)

-- 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) - Get Report

was down 78 cents, or 2%, at $37.86;

Universal American

(UAM)

was losing 81 cents, or 8.5%, to $8.67;

Coventry Health Care

(CVH)

was down $1.20, or 4%, at $28.90.

Cigna

(CI) - Get Report

lost 27 cents, or 0.8% to $35.34, and

WellPoint

(WLP)

lost 70 cents, or 1.5%, to $46.85.

This article was written by a staff member of TheStreet.com.