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The Zacks Analyst Blog Highlights UnitedHealth, Elevance Health, Humana and Centene

For Immediate Release

Chicago, IL – March 9, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: UnitedHealth Group Inc. UNH, Elevance Health, Inc. ELV, Humana Inc. HUM and Centene Corp. CNC.

Here are highlights from Wednesday’s Analyst Blog:

Will Biden's Tax Hike for Higher Earners Extend Medicare's Viability?

A significant element of the White House’s 2024 budget proposal is expected to be the extension of the life of the Medicare program for another 25 years. U.S. President Joe Biden’s budget is expected to propose a tax hike on high-income Americans to make the Medicare trust fund solvent beyond 2050. The President published an op-ed in the New York Times, highlighting the plans.

The proposal will likely include an increased tax of 5% from 3.8% on earned and unearned income of more than $400,000 per annum. It is also expected to enhance Medicare’s ability to negotiate prices for drugs. Last year’s Inflation Reduction Act authorized Medicare to negotiate prices, while the new plan is likely to boost that power.

More high-cost drugs are expected to be considered by the insurance program and negotiations can start sooner after they hit the market. This is predicted to save $200 billion over the next 10 years, enhancing the program’s reserves. Per the latest Medicare Trustees Report, the trust fund is expected to reach insolvency in 2028, without any boost.

It is to be seen how the Congress reacts to the President's budget as Republicans are expected to ask for federal spending reduction. A discussion on raising the U.S. debt ceiling is also expected to take place.

Companies Likely to Witness Membership Growth

With an aging population, demand for Medicare is expected to rise in the coming days. Managed care players who can gain from membership growth and volumes include UnitedHealth Group Inc., Elevance Health, Inc., Humana Inc., Centene Corp. and others.

UnitedHealth’s government business, which consists of Medicaid and Medicare Advantage, is expected to witness significant jumps going forward. This Zacks Rank #2 (Buy) company expects strong growth in individual MA and when combined with its group Medicare gains, the year 2023 is expected to deliver further market-leading growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Elevance Health targets Medicare-eligible individuals by providing great value-affiliated health plans. Last year, it acquired Integra Managed Care to expand its Medicaid business. With high inflation, demand for its affordable products is expected to rise. Adding members to the government business can provide the company with a steady revenue source.

Humana has a significant presence in the Medicare space. It does not expect any tightened government grip in the space to harm the company. In fact, the company expects to grow better than the market despite such tightening moves, highlighting HUM’s confidence in its government business. The company’s acquisition of iCare in Wisconsin expanded its Medicare business a few years back.

Centene’s membership has been rising over the past several years due to the increase in Medicaid and Medicare businesses, contract wins and expansion across different regions. CNC’s total membership came in at 27.1 million as of Dec 31, 2022, which increased 4.8% year over year. The growth came on the back of strength in Medicaid and Medicare businesses.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

Humana Inc. (HUM) : Free Stock Analysis Report

Centene Corporation (CNC) : Free Stock Analysis Report

Elevance Health, Inc. (ELV) : Free Stock Analysis Report

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