Decline In HMO Stocks Underlies A Growing Problem For Consumers
When Wellpoint Inc., the nation’s largest health insurer by membership, unexpectedly cut it’s earnings forecast for 2008, it sent ripples through the entire industry. The stock fell by as much as 29% in trading Tuesday and it’s rivals didn’t fare much better.
Analysts across the country were scrambling to downgrade their ratings for the entire sector, as the announcement took Wall Street by surprise. The industry as a whole was expected to perform well in a weak economy as it typically does, but many feel that is no longer a given.
The reason given for the revised forecast was blamed on rising medical costs, which many analysts fear may be an industry wide problem. Healthcare costs have been outpacing inflation for decades and everyone expects that to continue in to the foreseeable future.
However, for Wall Street to be off by that much, should send alarm bells ringing to consumers because this unexpected rise in costs will eventually get passed on to them. This comes at a bad time for many Americans who are already reeling from soaring food and energy prices.
The problem of healthcare in this country has been growing problem for decades, for consumers as well as the government. Every year healthcare is taking a larger percentage of disposable income for Americans and a larger chunk out of the annual budget for the government to fund Medicare.
It’s ticking time bomb that no one has figured out how to defuse.
