:max_bytes(150000):strip_icc()/GettyImages-2257538343-b3e2c35e471d4fe987b1b1e0d7d1104b.jpg "Here’s Why Health Insurance Stocks Are Sinking Tuesday")
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Key Takeaways
- Shares of a number of health insurance providers sank sharply Tuesday following a proposal from the federal government.
- The Centers for Medicare and Medicaid Services said it was proposing a 0.09% increase in Medicare payments in 2027, far less than expected after a 5.06% rise this year.
Several health insurer stocks tumbled Tuesday following a proposal from the Centers for Medicare and Medicaid Services that would raise payments to insurers less than expected in 2027.
CMS proposed lifting Medicare insurer payments by just 0.09% next year, well below what the industry was anticipating. Wall Street had forecast a bump between 4% and 6%, according to The Wall Street Journal. That’s after payments increased by 5.06% for 2026.
The proposal also includes modifications to rules about diagnosing patients, amid a Department of Justice investigation and Journal reports last year that claimed UnitedHealth Group (UNH) trained its doctors to diagnose Medicare Advantage patients with specific conditions that could result in higher payouts for the insurer, which the company has denied.
UnitedHealth shares sank nearly 20% in early trading Tuesday following the news. Rivals Humana (HUM) and Aetna owner CVS Health (CVS) fell 21% and 11%, respectively.
Why This Matters to Investors
Changes to Medicare payment rates have a substantial impact on the finances of health insurance companies. CMS said its 0.09% increase would be worth about $700 million to the industry.
UnitedHealth also reported fourth-quarter results Tuesday morning, with adjusted earnings per share of $2.11 on $113.22 billion in revenue, roughly in line with estimates compiled by Visible Alpha. The insurance giant’s 2026 revenue forecast, however, was lower than expected at $439 billion, compared to the analyst consensus of $455.5 billion.
With Tuesday’s losses, UnitedHealth shares have lost nearly half their value over the last 12 months. The stock was pressured for much of 2025 by reports about the DOJ probe and profits that were dragged lower by higher-than-expected claims activity for Medicare Advantage patients.
