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Medicare is big business, so when companies like UnitedHealth Group (UNH) and its peers see improvement on the rates they're paid by the government to insure people on Medicare, people pay attention. But what's more important than a change in Medicare rates is that uptick in physician utilization (i.e. people going to the doctor's office). Our Healthcare team has forecast an increase a recovery in utilization for some time, as outlined in the charts below. A revision to medicare rates is irrelevant if the commercial business begins to deteriorate meaningfully this year.

Meaningful Medicare? - healthcarechart1

After a bounce in 2011 and a slowdown in 2012, 2013 is surprising everyone as utilization accelerates meaningfully. A number of factors have influenced the increase, including the worst flu season in years. accelerating maternity and cardio costs for hospitals, and premium growth continues to decelerate to multi-year lows.

Meaningful Medicare? - healthcarechart2