What was the proposed Medicare Advantage payment rate increase for 2027?

The Trump administration proposed a 0.09% increase for 2027 Medicare Advantage plan payment rates.

Which major health insurers were impacted by the Medicare Advantage proposal?

UnitedHealth Group, Elevance Health, and CVS were significantly impacted, with their shares dropping considerably.

What are the potential consequences of the proposed Medicare Advantage rate increase?

The proposal could lead to benefit cuts and higher costs for 35 million seniors and people with disabilities.

Home / Business and Economy / Insurers Plunge on Low Medicare Rate Hike

Insurers Plunge on Low Medicare Rate Hike

28 Jan

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Summary

Medicare Advantage rates proposed to rise 0.09% for 2027.
Major insurers like UnitedHealth saw shares drop significantly.
Potential benefit cuts and higher costs for 35 million seniors.

Insurers Plunge on Low Medicare Rate Hike

Health insurance stocks plummeted on Tuesday after the Trump administration proposed a modest 0.09% increase for 2027 Medicare Advantage plan payments. This figure falls far below the 6% increase analysts had predicted, significantly impacting major insurers. UnitedHealth Group, which has the largest Medicare Advantage enrollment share at approximately 30%, saw its stock decline by nearly 20%.

Elevance Health and CVS experienced stock drops of around 14%. The minimal proposed rate hike comes at a time when insurers are already operating with tight margins, as indicated by UnitedHealth's Medical Care Ratio of 89.1%. The industry group AHIP warned that this proposal, if implemented, could lead to benefit reductions and higher expenses for 35 million seniors and people with disabilities.

This development follows a more favorable 5.06% increase for 2026 Medicare Advantage plans. Final rates for 2027 are expected by April 6. UnitedHealth also reported fourth-quarter and full-year 2025 revenues below expectations, adding to investor concerns. The company anticipates a 2% year-over-year decline in 2026 revenue, partly due to a cyberattack's impact.