The stock prices of major players in the Medicare Advantage market, including UnitedHealth and Humana, fell on Monday. This was due to the announcement from the Biden Administration that there would be no changes in the final Medicare Advantage rates for 2025 from the initial plans in January.
The Centers for Medicare and Medicaid Services announced that private Medicare Advantage rates will see an average increase of 3.7% in 2025, which aligns with the proposal made in January. This is a usual course of action where the regulator increases rates with the final plan.
Humana is heavily dependent on Medicare as it accounts for a significant portion of its total revenue, leading to a 9.6% decline in stock value after-hours trading, putting it on the brink of a four-year low. UnitedHealth’s stock also sank by 4.8%. Similarly, CVS Health experienced a 5.1% decline in stock value overnight due to its significant exposure to the Medicare Advantage market. However, Cigna saw a modest decrease of only 1.3%, as it has lower exposure to this sector compared to other insurers like Humana and UnitedHealth.
Smaller insurers like Centene and Molina Healthcare also took a hit due to this news, with Centene seeing a decline of 2.9% and Molina experiencing a drop of 2.3%. Elevance Health also saw its stock value drop by 4.1%, threatening to fall below its recent high and line on IBD Digital’s analysis tool.
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