As a result of lower-than-expected Medicare Advantage plan payments for 2025, healthcare stocks are under pressure on Tuesday. According to TD Cowen Senior Equity Research Analyst Gary Taylor, this situation is an annual political dance between the industry and Centers for Medicare & Medicaid Services (CMS).
In an interview with Yahoo Finance Live, Taylor explains that when a proposed rule like the 2025 Medicare Advantage (MA) proposed rule is released, the industry typically lobbies for higher proposed rates. However, this time, CMS did not make any adjustments to the rates in the final notice.
The potential fallout from this decision could lead to healthcare businesses reducing the benefits they offer to seniors next year. This could ultimately improve their margins and drive higher earnings growth in the industry.
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