Major US health insurer stocks suffered a massive decline in late January 2026 after the Centers for Medicare & Medicaid Services (CMS) proposed a minimal 0.09% increase in Medicare Advantage (MA) payments for 2027. This decision, widely attributed to the Trump administration, dramatically fell short of the 4–6% increase analysts had forecast and the 5.06% uplift insurers received in 2026. The severe shockwave saw UnitedHealth Group’s shares plummet by nearly 20% and Humana’s stock drop over 19%. Other major firms like CVS Health, Elevance Health, and Centene also experienced significant losses, collectively wiping out tens of billions of dollars in market value and dragging down the Dow Jones Industrial Average.
The proposed near-zero increase for 2027 has severely unsettled investors due to the looming threat to profitability. Medicare Advantage plans, which cover over 30 million seniors and disabled Americans, rely on robust federal payment rates to sustain their high valuations. With underlying healthcare costs, including rising provider fees and increased utilisation by an ageing population, continuing to climb, a flat reimbursement rate threatens to compress insurer profit margins. This forced analysts to immediately revise downwards revenue and profitability forecasts for key MA players like UnitedHealth and Humana. Furthermore, the CMS proposal introduced financial uncertainty with changes to risk adjustment calculations, such as eliminating certain diagnosis payments not tied to specific clinical encounters.
Industry groups have warned that if the proposal is finalised, millions of Medicare Advantage enrolees could face reduced benefits or higher costs in the autumn 2026 coverage renewals. The payment proposal is part of a broader push by the CMS and the US administration to control spiralling healthcare costs and enhance payment accuracy, a critical political and fiscal issue. This divergence between government cost-control measures and insurer financial expectations highlights deep tensions in public-private healthcare partnerships. While insurers argue that payment constraints undermine their ability to invest in innovation and manage risk, policymakers must balance fiscal restraint with the need to offer adequate incentives for private plans serving a vast and often high-need patient demographic. The industry’s next steps, including lobbying and Congressional debate, await the final Medicare Advantage payment rule scheduled for publication by 6 April 2026.
