Healthcare stocks have been in focus after the Donald Trump administration proposed a near-zero increase in Medicare Advantage payments, catching Wall Street off guard and wiping approximately $90 billion in market value from the sector.<\/p>\n
The Centers for Medicare and Medicaid Services (CMS) proposed a net average payment increase of just 0.09% for 2027\u2014a figure analysts described as \u201cbasically nothing\u201d compared to the 4% to 6% hike investors had anticipated.<\/p>\n
\u201cThis is just a shock to the system,\u201d said Jared Holz, Healthcare Equity Strategist at Mizuho, to CNBC<\/a>, noting that the severity of the proposal \u201cdelayed that dream\u201d of a 2026 recovery.<\/p>\n Don’t Miss:<\/p>\n Major insurers saw double-digit declines, with UnitedHealth Group Inc. (NYSE:<\/a>UNH<\/a>) and Humana Inc. (NYSE:<\/a>HUM<\/a>) now down 12.60% and 26.64% year-to-date, respectively, marking the sector’s worst performance in over a decade.<\/p>\n The disconnect between rising medical costs and flat funding has raised concerns about profitability.<\/p>\n In a conversation with Schwab Network<\/a>, David Toung, Senior Analyst at Argus Research, warned that if the proposed rates are finalized without adjustment, insurers could face a \u201c15-20% decrease in earnings\u201d from their Medicare Advantage business.<\/p>\n \u201cIt was a big surprise,\u201d Toung noted. \u201cThese insurers have been coping with rising medical costs and rising utilization\u2026 they really wanted those rising costs to be baked into the new rates. And so far, they\u2019re not there.\u201d<\/p>\n Trending: It\u2019s no wonder Jeff Bezos holds over $250 million in art \u2014 this alternative asset has outpaced the S&P 500 since 1995, delivering an average annual return of 11.4%. Here\u2019s how everyday investors are getting started.<\/a><\/p>\n