Medicare Advantage costs could rise in the second half of 2024, CVS Health CFO Tom Cowhey told investors.
On an Aug. 7 call, Mr. Cowhey said costs in inpatient care, dental and pharmacy all rose toward the end of the second quarter. The company's guidance for the rest of the year reflects that costs in the second half of the year could be higher than the first, the CFO said.
CVS Health cut its 2024 earnings guidance based on the performance of its insurance business. It expects to earn between $4.95 and $5.20 per share in 2024, down from its previous estimate of at least $5.64.
If the current trend continues, CVS may have to dip into its reserves to cover the cost of claims, Mr. Cowhey said. The potential shortfall in premiums should not affect the company's earnings, he said.
CVS Health CEO Karen Lynch said she is "very confident" the company caught rising trends in time to account for the spending in its 2025 plan bids.
Other insurers have reported medical costs in the Medicare population are rising. Humana CEO Jim Rechtin told investors July 31 that inpatient costs were higher than expected in the second quarter of 2024.
Revenues in the company's health benefits segment are down 40% year over year. The company ousted Aetna President Brian Kane over the financial results. Ms. Lynch and Mr. Cowhey will oversee Aetna's day-to-day operations until a successor is named.