Health insurer stocks fell sharply in after-hours trading on Monday after new Medicare pricing plans disappointed investors. The slide followed a proposal from the Centers for Medicare & Medicaid Services (CMS) to raise Medicare Advantage payments by just 0.09% in 2027, well below market expectations.
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UnitedHealth Group (UNH) dropped about 9% after the announcement. Humana (HUM) slid 12%, while CVS Health (CVS) fell nearly 10%, putting the managed care sector under broad pressure late in the session.
Medicare Pricing Weighs on Insurers
Medicare Advantage is a key revenue driver for large health insurers, so even small changes in payment rates can have a big impact on profits. The near-flat increase raised concerns that insurers may struggle to offset rising medical and labor costs in the years ahead.
As a result, the CMS plan suggests slow payment growth in 2027, weighing on the sector. That uncertainty has added to worries about margin pressure, especially for insurers with heavy exposure to Medicare Advantage plans.
What Lies Ahead for Investors?
Looking ahead, insurer stocks could remain volatile as investors wait for more clarity on final Medicare rates and how companies plan to manage costs. Any sign of higher medical expenses or weaker guidance could keep pressure on the group.
UnitedHealth is set to report fourth-quarter 2025 earnings before the market opens on January 27. The stock is down about 34% over the past year, weighed down by higher medical costs in its Medicare Advantage business and an ongoing DOJ investigation into billing practices.
That said, analysts will be watching earnings calls closely, as management updates could help restore confidence.
Which Health Insurer Stock Looks Most Attractive, According to Analysts?
Using TipRanks’ Stock Comparison Tool, we compared the three health insurer stocks mentioned above. Wall Street is most bullish on UnitedHealth and CVS Health, with both stocks carrying Strong Buy ratings. Analysts see upside of about 14% for $UNH and 15% for $CVS from current levels. Humana, meanwhile, has a Moderate Buy rating, with analysts pointing to nearly 10% upside.
Investors can dig deeper to decide which stock best fits their strategy. Below is a screenshot for reference.
