Healthcare stocks sink after Trump admin proposes flat rates for Medicare insurers
Major health insurers and healthcare companies are under pressure in early trading on Tuesday after the Trump administration proposed roughly flat rates for Medicare insurers next year.
The Centers for Medicare and Medicaid Services announced after the bell on Monday that payments to the plan will increase by just 0.09% in 2027, less than the 4% to 6% analysts expected. CMS also plans to crack down on inaccurate overbilling by changing how “risk score,” which pays more for sicker patients, is calculated.
Private Medicare plans, or Medicare Advantage, is a core business for insurers including UnitedHealth, CVS Health, and Humana, which all fell double digits in premarket trading on Tuesday. Even insurers less dependent on Medicare specifically, like Elevance Health, Centene, and Molina Healthcare dropped more than 5%.
Among the healthcare giants, UnitedHealth is the biggest loser this morning, with its shares down 14% after its woes were compounded by a lackluster full-year forecast. The company expects a decline in yearly revenue for 2026 — which would be its first annual revenue decrease in more than three decades. The company has also been under investigation by the Department of Justice for its Medicare billing practices.
The announcement comes after a difficult year for insurers, particularly those that offer government-sponsored plans. Insurers are likely to lobby for higher payments before the rate is finalized in April. If it goes through unchanged, plans will likely slash coverage and raise premiums to protect margins, according to analysts at Deutsche Bank.
“The industry was in the earliest stages of a multi-year margin recovery cycle which will now be in question,” the analysts wrote in a Tuesday morning note.
Private Medicare plans, or Medicare Advantage, is a core business for insurers including UnitedHealth, CVS Health, and Humana, which all fell double digits in premarket trading on Tuesday. Even insurers less dependent on Medicare specifically, like Elevance Health, Centene, and Molina Healthcare dropped more than 5%.
Among the healthcare giants, UnitedHealth is the biggest loser this morning, with its shares down 14% after its woes were compounded by a lackluster full-year forecast. The company expects a decline in yearly revenue for 2026 — which would be its first annual revenue decrease in more than three decades. The company has also been under investigation by the Department of Justice for its Medicare billing practices.
The announcement comes after a difficult year for insurers, particularly those that offer government-sponsored plans. Insurers are likely to lobby for higher payments before the rate is finalized in April. If it goes through unchanged, plans will likely slash coverage and raise premiums to protect margins, according to analysts at Deutsche Bank.
“The industry was in the earliest stages of a multi-year margin recovery cycle which will now be in question,” the analysts wrote in a Tuesday morning note.
