Many stocks in the healthcare sector are up strongly in 2026. But not health insurance giant UnitedHealth Group (NYSE: UNH). The stock is down almost 13% this year, far underperforming both the S&P 500 healthcare sector (up 1.7% this year) and the broader S&P 500 (up 0.6%). What’s going on?
Well, the company announced fourth-quarter results on Jan. 27, and investors were not impressed. UnitedHealth beat Wall Street’s expectation on earnings by a penny, which is not overly impressive. Worse, revenue of $113.2 billion came in under the consensus analyst forecast of $113.8 billion, never a good sign.
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Even worse for the share price, management’s outlook for full-year 2026 revenue was unexpectedly low. The company said it expects revenue of $439 billion, about $15 billion lower than Wall Street was expecting. If that comes to pass, it will be the company’s first annual revenue contraction in more than 30 years.
The share price plummeted 20% that day.
But that’s not all. On the very same day, the Trump administration proposed keeping federal payments to Medicare Advantage plans basically flat — with an increase in payment rates of less than 0.1% — in 2027, which is far less of an increase than what analysts and insurers expected. Industry analysts expected that the Centers for Medicare & Medicaid Services, which sets the rate, would propose an increase of between 4% and 6% for the year.
Medicare Advantage, or privately run health insurance plans contracted by Medicare, is critical to UnitedHealth’s business. In fact, the company is the largest provider of Advantage plans in the U.S., with a market share of 29%. At the end of 2025, the company served almost 9.4 million people through these plans.
So when the federal government limits growth for Advantage plans, it has a huge negative impact on Advantage plan providers.
In fact, the entire health insurance sector got hit by the news on Advantage payments. And it looks a lot like a government effort to end certain billing practices by Advantage providers. It’s somewhat surprising, as Wall Street analysts expected the Trump administration to be friendlier to health insurers. Instead, President Donald Trump has called the insurers “big, fat, rich,” and seems to be including them among companies that should charge consumers less.
