Topline
Shares of top health insurance firms fell sharply in premarket trading Tuesday morning, after the Trump administration proposed keeping Medicare payment rates flat in 2027, falling short of Wall Street expectations.
Centers for Medicare & Medicaid Services outlined a proposal to raise Medicare Advantage payment rates by only 0.09% in 2027.
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Key Facts
In premarket trading, UnitedHealth Group’s shares fell nearly 9% to $317.51, while CVS Health’s stock price dropped 9.38% to $76.
Centene’s stock price fell to $44.26, down 4.36% from Monday’s close, while Elevance Health’s shares dropped nearly 7% to $350.93.
Humana’s shares were the hardest hit, as they fell to $229, down more than 13.1% from Monday’s closing.
The slump in health insurers’ share prices came even as key U.S. futures indexes remained flat or inched up slightly.
What Do We Know About The Medicare Payment Rate Proposal?
On Monday night, the Centers for Medicare & Medicaid Services outlined a proposal to raise Medicare Advantage payment rates by 0.09% in 2027. This is well below analysts’ expectations of between a 4-6% increase, according to the Wall Street Journal. Last year, the Trump administration announced a 5.06% increase that will go into effect this year, beating forecasts. The lower than expected increase comes on the back of President Donald Trump’s public criticism of insurance companies, saying he wants them to “make less, a lot less” as they are “making so much money.”
Crucial Quote
“These proposed payment policies are about making sure Medicare Advantage works better for the people it serves,” CMS Administrator Dr. Mehmet Oz said in a statement accompanying the proposal.
Further Reading
Trump Administration Proposes Keeping Steady the Rates Medicare Pays Insurers (Wall Street Journal)