3 Healthcare Stocks to Buy as Medicare Goes Private

Company Overview - Humana is the second-largest Medicare Advantage firm with an 18% market share and 5.5 million enrolled members, holding the largest market share in nine states, including Florida at 31% [1] - Elevance Health has the highest Medicare Advantage market share in Ohio at 25%, with a total Medicare membership of 2.91 million [6] - UnitedHealth Group leads the Medicare Advantage market with a 29% share and 8.9 million enrolled members, nearly equal to the combined total of the second and third-largest players [14] Financial Performance - Humana reported Q1 2024 revenue from Medicare Advantage premiums of $24.44 billion, a 13.3% increase from $21.57 billion a year earlier, accounting for 82% of its total revenue [2] - Elevance Health's overall revenue for Q1 2024 was $42.58 billion, a 1.0% increase year-over-year, with an operating income of $2.94 billion, up 12.2% from Q1 2023 [6][7] - UnitedHealth's Medicaid & Retirement segment generated $35.49 billion in Q1 2024, an 8% increase, contributing 47.1% to the company's overall revenue [15] Earnings Projections - Humana expects adjusted earnings per share (EPS) of $16.00 for 2024, down from $26.09 in 2023 due to higher Medicare Advantage medical costs [3] - Elevance Health anticipates adjusted EPS of $37.20 or higher for 2024 [7] Market Valuation - Humana's shares are trading at 22.3 times the 2024 earnings estimate, slightly above its five-year average of 18.3 times [4] - Elevance Health trades at 14.3 times its projected earnings, also slightly above its five-year average [7] Industry Context - The privatization of Medicare has led to significant growth for private insurers, with approximately 50% of the $68 billion Medicare beneficiaries in the U.S. covered by private insurers [11] - Concerns have been raised about the impact of privatization on patient care, as private insurers are known to deny medical coverage to maintain lower premiums [11]