Key Takeaways
\nShares 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.<\/p>\n
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.\n<\/p>\n
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<\/a>.\n<\/p>\n The proposal also includes modifications to rules about diagnosing patients, amid a Department of Justice investigation<\/a> and Journal reports last year<\/a> that claimed UnitedHealth Group (UNH<\/a>) trained its doctors to diagnose Medicare Advantage<\/a> patients with specific conditions that could result in higher payouts for the insurer, which the company has denied.\n<\/p>\n UnitedHealth shares sank nearly 20% in early trading Tuesday following the news. Rivals Humana (HUM<\/a>) and Aetna owner CVS Health (CVS<\/a>) fell 21% and 11%, respectively.\n<\/p>\n Why This Matters to Investors<\/p>\n 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.<\/p>\n 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.\n<\/p>\n