Shares of major U.S. health insurers plummeted on Tuesday after the Trump administration proposed keeping Medicare payment rates essentially flat for 2027, a move that significantly undershot Wall Street expectations.
The Centers for Medicare & Medicaid Services (CMS) outlined a proposal late Monday to raise Medicare Advantage payment rates by only 0.09% in 2027. The announcement sent shockwaves through the sector, as analysts had anticipated an increase of between 4% and 6%. In contrast, the administration had approved a 5.06% increase for 2026.
Humana Inc. led the industry-wide rout, with its shares closing 21.1% lower in New York. UnitedHealth Group, the nation’s largest insurer, saw its stock drop 19.6%, while Aetna owner CVS Health fell 14.2%. Other major players, including Elevance Health and Centene, also saw their shares tumble by 13% and 11%, respectively.
The proposed rate freeze comes amid public criticism from President Donald Trump, who has suggested that insurance companies are “making so much money” and should “make less, a lot less.”. CMS Administrator Dr. Mehmet Oz stated that the policies are intended to make the program work better for beneficiaries while “protecting taxpayers from unnecessary spending.”
Industry executives were quick to criticize the proposal. During an earnings call on Tuesday, UnitedHealthcare CEO Tim Noel called the CMS announcement “disappointing” and warned that, if finalized, it would result in “very meaningful benefit reductions” for seniors.
The Medicare Advantage program is a critical revenue driver for the insurance industry. In 2025, the U.S. government paid insurers nearly $540 billion to manage these subsidized plans, which provide coverage for more than 34 million elderly Americans and people with disabilities.
Analysts at Oppenheimer noted that the industry is currently facing an “atypical” political climate for a Republican administration, with reimbursement rates failing to keep pace with several years of high inflation.
The market rout added further pressure to UnitedHealth, which reported on Tuesday that its profits dropped 41% last year to $19 billion. The company has been navigating a series of setbacks, including $1.6 billion in restructuring costs related to a major cyber attack and a Justice Department criminal investigation into its Medicare billing program.
The payment rate is currently a proposal and may be adjusted before it is finalized in April.