The Trump administration is proposing a .09% increase in Medicare Advantage payment rates for 2027.
This proposed rate increase is significantly lower than Wall Street's expectation of a 4-6% rise.
Health insurance stocks experienced a significant sell-off following the announcement.
UnitedHealth (UNH) stock fell by over 19%, Humana (HUM) by over 18%, CVS Health (CVS) by over 14%, Centene (CNC) by over 10%, and Elevance Health (ELV) by over 12%.
These companies are heavily reliant on Medicare Advantage payments, making them vulnerable to rate changes.
The news creates uncertainty for the health insurance sector, impacting investor sentiment.
The market is reacting negatively to the prospect of slower revenue growth for these insurers.
The proposed rates are still subject to negotiation and finalization.