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IMAGE SOURCE: ©iStockphoto/ medical profits/ author: deliormanli
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Following details of President Obama’s budget proposals, shares of health insurers and pharmaceutical companies took a dive Thursday.
A proposal to cut federal payments that run private health insurance such as Medicare Advantage plans sent stocks down such as Humana - down 20 percent; UnitedHealth Group - down 14 percent; Coventry Health Care - down 14 percent. All are participants in Medicare Advantage. Aetna was also down 13 percent upon the news that the health care proposal might limit profits.
The trade group, America’s Health Insurance Plans, issued a statement praising the president’s support of health reform while defending Medicare Advantage.
“Unfortunately, this proposal would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system. A cut of this scale would jeopardize the health security of more than ten million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive,” says Karen Ignagni, President and CEO of America’s Health Insurance Plans.
Meanwhile investors sold off shares of Merck amid worries that President Obama’s proposal will further erode profits by allowing consumers to buy cheaper medicines and preventing drug companies from blocking generics, reports Reuters.
Merck’s stock fell about 48 percent last year. CEO Dick Clark’s compensation was just $19.9 million in 2008, up $200k from the previous year, and his base salary rose to $1.8 million from 1.6 million, according to a Securities and Exchange Commission proxy statement.
His salary will remain flat in 2009 the company’s board has decided. “Merck’s 2008 performance wasn’t as strong as it could have been” reports the Wall Street Journal.
Merck dropped 6.7 percent at $26.04. Humana was down 19.5 percent to $23.64. #