NEW YORK (Reuters) - Shares of U.S. health insurers fell on Wednesday after UnitedHealth Group ( UNH ) cited a near-term disturbance around reimbursement rates for Medicaid due to ongoing program-wide enrollment hurdles that began about a year ago.

UnitedHealth ( UNH ) shares were down 4.2% to $482.46, while rivals Humana, Centene ( CNC ), and Elevance Health ( ELV ) fell 3.2%, 3.7%, and 2.6%, respectively.

"We have come through this very prolonged redetermination cycle in Medicaid making sure that the utilization and rates stay in perfect synchrony," a UnitedHealth ( UNH ) executive said at the Bernstein investor conference, adding that they expect "some disturbance" around it.

Insurers calculate the premium rates they charge based on expected enrollment levels and anticipated medical services utilization by members.

A COVID-19 pandemic policy required states to maintain enrollment for people covered by government Medicaid programs for those with low income. That policy, which began in March of 2020, was terminated in April 2023, prompting each state to reassess who was eligible for coverage.

KFF, formerly the Kaiser Family Foundation, estimated that as of May 23, 22 million people had been disenrolled from Medicaid and the CHIP insurance program for children, and that 22 million renewals were still underway. About 49 million had their coverage renewed.

"Investors have already been grappling with the mismatch between rates and costs in Medicare Advantage over the past year, and it now seems like this dynamic may also now be manifesting more prominently on the Medicaid side of the house, too," Stephens analyst Scott Fidel wrote in a note.

In addition to Medicaid plans for people with low income, UnitedHealth ( UNH ) and other insurers manage health plans for the U.S. Medicare program for people aged 65 and older or with disabilities.

The insurers were surprised in late 2023 and early 2024 by increased healthcare use within those plans.