Insurer stocks drop; Drugmakers shed 35,000 jobs

News outlets report on a drop in health insurance stocks and the elimination of 35,000 jobs in the drug industry this year.

"Shares of Cigna Corp. and other major health insurers slid deeper than the broader market Thursday, as investors remain nervous about health care reform's impact on the sector," Bloomberg Businessweek reports. "Managed care stocks have gone through spurts of volatility for more than a year now, as Congress debated and then passed" the bill. With many details still unclear, some investors are worried. "Of particular concern are the unresolved details of a new guideline that starts next year and requires insurers to spend a certain percentage of the premiums they collect on medical costs" (Murphy, 7/1).

In other health market news, "[i]nvestors are warming to Humana Inc (HUM.N), the large U.S. health insurer whose fate is inextricably linked to the massive Medicare government health program for seniors," Reuters reports. "Humana's dependence on Medicare Advantage -- the growing part of the program run by private companies -- has been a red flag. Under the new U.S. healthcare reform law, Medicare payments to insurers will be frozen next year and be reduced beginning in 2012. Many on Wall Street are worried about the future of private insurers' role in Medicare… But as Wall Street digests the health reform overhaul, Humana is becoming attractive" (Krauskopf, 7/1).

Meanwhile, "[t]he nation's drug makers have eliminated nearly 35,000 positions in the first half of this year, second only to government in cutting jobs," according to a new report by Challenger, Gray and Christmas, out-patient consulting firm, The New York Times reports. "The firm noted in a release that the pace of retrenchment has slowed compared to last year, when drug companies cut 51,000 jobs… Still, the industry faces the prospect of more job losses to try to help its bottom line as patents expire on prominent drugs within the next year" (Wilson, 7/1).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.