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Shares of major health insurers experienced a significant decline on Wednesday following UnitedHealth Group Inc.'s executives' discussion of a potential disruption in its Medicaid business and the utilization of healthcare services by patients at an investor conference.

UnitedHealth CEO Highlights Medicaid Evaluation Delays

Based on UnitedHealth CEO Andrew Witty, the industry has recently experienced a lengthy evaluation period in Medicaid.

According to Market Watch, this evaluation process is used by states to verify the eligibility of Medicaid enrollees for coverage.

Regarding patients' utilization of healthcare services, there has been limited information available since the company's previous public update, as mentioned by Brian Thompson, CEO of UnitedHealth's insurance unit, during the conference.

In the words of Thompson, one of the reasons for this is the cyberattack on the company's Change Healthcare unit, which has caused some delays in processing claims.

UnitedHealth Shares Plummet 3.8%

Shares of UnitedHealth closed 3.8% lower at $484.72, while its competitors Humana, Centene, and Elevance Health saw decreases of 1.1%, 3.1%, and 2.6% respectively, Reuters reported.

"We have successfully navigated through this extensive redetermination cycle in Medicaid, ensuring that the utilization and rates remain perfectly synchronized," Witty stated during the Bernstein investor conference. He mentioned that there might be some disruption, but he didn't provide any further details.

According to KFF, previously known as the Kaiser Family Foundation, it was estimated that as of May 23, a staggering 22 million individuals had been removed from Medicaid and the CHIP insurance program for children.

Additionally, there were still 22 million renewals in progress. Approximately 49 million individuals had their coverage renewed.

Major insurers were impacted by UnitedHealth's comments, while hospital stocks experienced a positive boost. Shares of HCA Healthcare Inc. saw a modest increase of 2.3%, while Universal Health Services Inc. experienced a slightly higher climb of 2.8%.