(Bloomberg) -- Health insurance stocks dove after UnitedHealth Group Inc. said it sees a “disturbance” coming as states pare enrollees in their Medicaid health programs following the end of the pandemic emergency.

As patients leave Medicaid, pressure is building on insurers to make sure reimbursements from states cover medical costs. It may be a “multi-quarter cycle” for states to start paying premium rates sufficient to cover the medical care that Medicaid members need, UnitedHealth Chief Executive officer Andrew Witty said Wednesday at the Bernstein 40th Annual Strategic Decisions Conference.

Health insurers’ stocks dropped following the comments, with Medicaid-focused Centene Corp. and Molina Healthcare Inc. each losing more than 8%. UnitedHealth and Humana Inc. both dropped as much as 6%, while Elevance Health Inc. dropped as much as 5.4%. All the stocks later pared those losses. 

Centene, in a filing after the New York market closed, said it saw higher medical claims than expected in April and May in its Medicaid segment, echoing the concerns its larger rival raised. The insurer affirmed its 2024 earnings guidance and outlook for medical costs overall.

During the Covid emergency, states were barred from terminating people from Medicaid health plans for low-income people. The terminations resumed last year, with millions of people losing coverage, resulting in reduced payments to companies that receive flat rates per member to manage their care. Those rates must be high enough to cover the medical costs insurers face, and companies negotiate with states for higher rates if they see costs outpacing premiums.

“We’ve come through this very sort of prolonged redetermination cycle in Medicaid,” Witty said. Ensuring that “the utilization and the rates and everything else stay in perfect synchrony through a multi-quarter cycle, there’s probably going to be some disturbance around that,” he said.

(Updates with Centene filing in fourth paragraph)

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