Shares of healthcare companies including UnitedHealth Group (NYSE:UNH), CVS (NYSE:CVS), and Humana (NYSE:HUM) dropped in pre-market trading after the Centers for Medicare and Medicaid Services announced an increase in the reimbursement rate by 3.7% on average for Medicare Advantage plans in 2025. This reimbursement rate was below investors’ expectations.
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This reimbursement rate affects health insurers like UnitedHealth, CVS, and Humana, who are providers of Medicare Advantage health plans.
Medicare Advantage represents a healthcare option provided by private companies approved by Medicare, that must follow rules set by the Medicare program. Excluding some items, the reimbursement rate implies a drop of 0.16%, according to a Reuters report. The report cited Evercore analysts stating that this reimbursement rate was a setback for businesses engaged in the Medicare Advantage sector and could potentially pressure the profit margins for these companies.
Is IXJ a Good Investment?
Analysts remain cautiously optimistic about the iShares Global Healthcare ETF (IXJ) with a Moderate Buy consensus rating based on 74 Buys, 38 Holds, and three Sells. Over the past year, IXJ has gained by more than 10% and the average IXJ price target of $100.80 implies an upside potential of 9.2% at current levels.
