Why UnitedHealth Group Stock Soared on Tuesday

UnitedHealth Group (UNH) was the best-performing stock in the Dow Jones Industrial Average and the S&P 500 on Tuesday after the health care giant said the vast majority of its Medicare Advantage enrollees are likely to qualify for bonus payments from the federal government. 

UnitedHealth, in a regulatory filing on Tuesday, estimated that 78% of its Medicare Advantage membership would be enrolled in plans rated 4 stars or higher, according to an internal review of preliminary ratings by the Centers for Medicare & Medicaid Services (CMS). The forecast, based on ratings that have yet to be finalized, “is consistent with our expectations and in line with historical performance,” the company said. 

Shares of UnitedHealth Group were up 9% in recent trading, but remain down about 30% since the start of the year. 

Medicare Advantage—Medicare coverage administered by private health insurers rather than the federal government—has been a major reason for UnitedHealth’s rough year. Shares suffered their worst day in more than 25 years in April after UnitedHealth cut its full-year earnings outlook, citing “heightened care activity indications” in its MA business. Simultaneously, the health care industry broadly, and UnitedHealth in particular, have faced increased scrutiny amid a surge in public outrage over high health care and drug costs. 

Medicare Advantage plans with ratings of 4 stars or higher are eligible for quality bonus payments, which plan administrators can, but are not required to, use to lower costs or provide additional benefits to plan participants. The CMS is expected to distribute $12.7 billion in bonus payments to Medicare Advantage plans in 2025, according to a Kaiser Family Foundation analysis.

UnitedHealth’s estimated enrollment runs slightly ahead of the average in 2025, when 75% of Medicare Advantage participants were enrolled in 4-star or higher plans.