Here's the good news for health insurers: The Centers for Medicare and Medicaid Services (CMS) increased next year's payments for Medicare Advantage by more than the amount the agency proposed back in February. The bad news? The difference between the actual 0.8% increase and the proposed 0.5% increase isn't going to mean a whole heck of a lot.
With the increased costs of services, that 0.8% isn't going to cover it. Insurers like Humana
Congress could still save the companies somewhat. The puny increase in payments is partially due to an expected 21% decrease in Medicare payments to doctors. If Congress increases those payments, like it's done in the past, CMS could increase the payments to the insurance companies.
This is only the first in a series of changes that the Obama administration has in store for the health care industry. Insurers like Aetna
The health insurers are fairly cheap right now, with many trading at P/Es in the single digits, but there's also a quite a bit of uncertainty about their futures. Investing now could result in huge returns if everything turns out all right, but Foolish investors would be wise to keep them at a reasonable portion of their portfolio.
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