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Medicare’s been good for Cypress-based PacifiCare Health Systems Inc. of late.
Last week, the health plan operator upped its 2006 revenue projection, thanks to higher government payments to its Medicare plans for seniors.
The payments and other Medicare gains for PacifiCare stem from 2003′s Medicare Prescription Drug, Improvement and Modernization Act, which earmarked billions in federal spending to PacifiCare and other Medicare plan providers.
PacifiCare’s stock jumped on last week’s positive guidance. But some are wondering how long the Medicare party can go on, and if the government will be able to live up to what it’s promised.
“The growth of these programs is simply unsustainable,” Douglas Holtz-Eakin, head of the Congressional Budget Office, said in a speech before the World Healthcare Congress earlier this year. “Big changes are coming regardless of what you might think at the moment.”
Analysts who follow PacifiCare also foresee cuts to Medicare as President Bush looks to rein in spending in his final term.
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“Beyond the (fourth-quarter 2004) earnings season, we see more downside than upside,” Goldman Sachs
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