Medicare Advantage insurers in the United States experienced a significant decline in share prices on Tuesday, with drops ranging from 6% to 12%. The cause of this decline was the release of final 2025 rates for Medicare Advantage payments by the government, which suggested a slight decrease in average payments. However, despite concerns about a margin squeeze for insurers, there was no notable increase in demand for medical care during the fourth quarter of 2023, as indicated by the final notice published by CMS.
UnitedHealth and CVS Health were among the hardest hit insurers, experiencing declines of 6.6% and 7.7%, respectively. Humana suffered the most significant drop, plunging over 12% to a nearly four-year low. The unfavorable rate updates combined with potential challenges in claims development due to a cyberattack at UnitedHealth’s tech unit have raised concerns about the future of the Medicare Advantage market.
Insurers like Humana and UnitedHealth had previously expressed concerns about high medical costs and uncertainties surrounding insurance claims processing due to the aftermath of the hack at UnitedHealth’s tech unit. The ripple effect of these losses was felt on both the blue-chip Dow index and benchmark S&P 500 in morning trading.
The proposal plays a crucial role in determining insurers’ premium rates, plan benefits, and overall profitability. High costs and low rates may compel insurers to reduce the number of benefits they offer, potentially diminishing the value of Medicare Advantage plans in the eyes of consumers.
