:max_bytes(150000):strip_icc()/GettyImages-2253535972-86f9595801d545ccb3236e47e0a95c0e.jpg "UnitedHealth Stock Plunges 20%—Here’s What’s Driving the Huge Decline")
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Key Takeaways
- UnitedHealth Group shares tumbled Tuesday after the health insurer reported disappointing earnings and the Trump administration announced Medicare rates would be effectively unchanged next year.
- Shares of CVS Health, Humana and other health insurers also fell sharply.
- Health plans have struggled with high healthcare costs in recent years, leading some insurers, including UnitedHealth, to cut back their services.
Shares of UnitedHealth Group led a sell-off in health insurance stocks on Tuesday after the company reported its quarterly results and the Trump administration announced Medicare rates would be effectively unchanged next year.
The Centers for Medicare and Medicaid Services on Monday night estimated payments to private Medicare Advantage plans will rise just 0.09% next year, a much smaller increase than expected. Next year’s rate increase also pales in comparison to recent years; CMS estimated payments would rise by 5% this year and about 4% in 2025.
UnitedHealth (UNH) stock was down 20% recently, trading at its lowest level since August and pulling the Dow Jones Industrial Average down on an otherwise positive day for U.S. equities. (Follow Investopedia‘s live markets coverage here.) Shares of Humana (HUM) also dropped 20%, while Aetna owner CVS Health (CVS) and Elevance Health (ELV) slid 14% and 13%, respectively.
Why This Is Important
Healthcare stocks, with a few exceptions, have posted lackluster returns in recent years, weighed on by Wall Street’s AI obsession and mounting frustration among consumers and politicians over high healthcare costs. The Trump administration’s efforts to address affordability ahead of this year’s midterm elections could generate more headwinds for the industry.
The healthcare sector entered the year with momentum, having risen double digits in the last months of 2025 as investor concerns about an AI stock bubble drove a risk-off pivot. Still, the sector has trailed the market for years and could continue to lag as political risks loom. Healthcare investors are wary of Health Secretary Robert F. Kennedy Jr., a vocal critic of the industry, and President Trump’s push to lower costs in a healthcare system that a record number of Americans say is unaffordable.
While investors digested the news on Medicare rates, UnitedHealth’s quarterly results also weighed on sentiment Tuesday. The company’s fourth-quarter revenue of $113.2 billion fell short of expectations while adjusted earnings per share were in line with forecasts at $2.11.
In 2026, total revenue should exceed $439 billion, a 2% year-over-year decrease “reflecting planned right-sizing across the enterprise,” according to the company. UnitedHealthcare, the conglomerate’s insurance subsidiary, expects to insure up to 2.8 million fewer people this year, and Medicare Advantage is forecast to account for nearly half of that reduction.
UnitedHealth is in the midst of a turnaround effort prompted by a stock meltdown last year, when shares traded at their lowest price since the depths of 2020’s Covid crash. The stock had its worst day in 25 years last April when it slashed its full-year profit forecast, citing both high health care costs and “heightened care activity.” Shares continued to slide in the following months as the company withdrew its guidance completely, its CEO stepped down, and the Justice Department opened an investigation of its Medicare Advantage billing practices.
