Shares of several large health insurance companies tanked on Tuesday after the Trump administration proposed keeping Medicare Advantage reimbursement rates roughly the same through 2027.
Stock prices for Humana and UnitedHealth Group dropped roughly 20% in early trading on Tuesday morning following the Medicare Advantage reimbursement rate news. CVS Health fell 10%, Elevance plummeted more than 11%, and Centene Corp dropped 9%.
Medicare Advantage insurance plans are offered to seniors over age 65 as an alternative to traditional fee-for-service Medicare. Both Medicare tracks are overseen by the Centers for Medicare and Medicaid Services, headed by President Donald Trump’s appointee, Dr. Mehmet Oz.
CMS’s proposal, published Monday, entails a virtually flat payment increase of 0.09% for Medicare Advantage providers in 2027, a steep decline from the 5% reimbursement bump insurance companies got for their 2026 plans.
The agency typically finalizes Medicare Advantage rates in early April. If the flat rate proposal comes to fruition, it would result in just a $700 million increase in payments to Medicare Advantage plans in 2027, according to CMS’s estimates.
CMS said in its announcement of the new proposal that the 2027 reimbursement rate increase is intended to incentivize companies to maintain greater payment accuracy and to promote program stability in the long term.
More than half of Medicare beneficiaries are enrolled in a Medicare Advantage plan, enticed by lower monthly premiums than traditional Medicare as well as other benefits, such as hearing, dental, and vision.
Oz said in the statement that reining in reimbursement for insurance companies is “about making sure Medicare Advantage works better for the people it serves.
“By strengthening payment accuracy and modernizing risk adjustment, CMS is helping ensure beneficiaries continue to have affordable plan choices and reliable benefits, while protecting taxpayers from unnecessary spending that is not oriented towards addressing real health needs,” said Oz.
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Chris Bond, a spokesman for the trade group America’s Health Insurance Plans, said in a statement that keeping the reimbursement rate roughly flat “could result in benefit cuts and higher costs for 35 million seniors and people with disabilities when they renew their Medicare Advantage coverage in October 2026.”
“Health plans welcome reforms to strengthen Medicare Advantage. However, flat program funding at a time of sharply rising medical costs and high utilization of care will impact seniors’ coverage,” said Bond.
