Medicare Advantage Enrollees to Rise 10% in 2012, U.S. Says

Enrollment in the Medicare program administered by private insurers will increase next year as premium rates decline, the U.S. government projects.

Enrollment in Medicare Advantage plans for the elderly and disabled will climb 10 percent in 2012, the U.S. Department of Health and Human Services said today in a statement. Premiums paid to market leaders UnitedHealth Group Inc. (UNH), Humana Inc. (HUM) and WellPoint Inc. (WLP) will decline 4 percent.

“The plans have made a very strong statement that they intend to commit to the program and price their products competitively,” Jonathan Blum, director of the U.S. Center for Medicare said on a call with reporters. Blum credited the rise in enrollment to improving quality of the plans and government negotiating lower costs.

Shares of the top Medicare Advantage companies rose following the announcement. Shares of Minnetonka, Minnesota- based UnitedHealth gained $1.06, or 2.2 percent, to $49.74 at 11:37 a.m. in New York Stock Exchange composite trading.

“This is very good news for insurers,” said Ana Gupte, an analyst at Sanford C. Bernstein in New York, in an e-mail.

Insurers, through their Washington lobbying group America’s Health Insurance Plans, have argued that reductions in U.S. payments to the industry in the 2010 health-care overhaul will eventually slash enrollment. The Congressional Budget Office estimated in 2010 that, because of the law, the number of people in the program would be 35 percent lower in 2019.

Blum said that the 2012 enrollment projections had proved insurers wrong. “If we were going to see pull-outs we would have seen them by now,” Blum said. “It tells me the program is going to continue to be strong, even though payment rates are going to come down over time.”

To contact the reporter on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net

To contact the editor responsible for this story: Steve Walsh at swalsh@bloomberg.net

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