UNH, HUM, Other Health Insurer Stocks Could Take Time To Recover From Medicare Rate Shock: Cantor Fitzgerald

CMS’s plan to keep Medicare Advantage payments nearly flat for 2027 blindsided investors and sparked a sharp selloff across U.S. health insurers.

• CMS said on Monday that the proposed policies are projected to result in a net average year-over-year payment increase of 0.09% for Medicare Advantage plans in the calendar year 2027.
• Cantor Fitzgerald said that it was unlikely that stocks in the space would see a quick recovery, as the rates indicate the entrance of a more political influence than seen in past rates.
• According to CMS, Medicare plans will be paid just $700 million more in 2027 compared to this year.

Major U.S. health insurer stocks fell sharply during overnight trading ahead of Tuesday’s open amid plans to keep Medicare payments flat next year, with Cantor Fitzgerald noting these stocks should see a materially negative reaction following the Centers for Medicare & Medicaid Services (CMS) announcement.

CMS said on Monday that the proposed policies are projected to result in a net average year-over-year payment increase of 0.09% for Medicare Advantage plans in the calendar year 2027.

Shares of CVS Health tumbled over 8%, Centene Corp was down 3.5%, Cigna stock fell marginally, and Elevance Health fell 6%. Humana stock declined 13%, and UnitedHealth tumbled 9% in overnight trading, according to Yahoo Finance.

Wall Street View

Cantor Fitzgerald said that healthcare insurance names should see a materially negative stock reaction after CMS’s 2027 Medicare Advantage Advance Notice Rate is expected to be around 0.09% on average vs. the investor base case expectations of 5%.

The firm said that it was unlikely that stocks in the space will see a quick recovery, as the rates indicate a greater political influence than seen in past rates. According to CMS, Medicare plans will be paid just $700 million more in 2027 compared to this year.

How Are Stocktwits Users Reacting?

Retail sentiment on CVS jumped to ‘extremely bullish’ from ‘neutral’ a day ago, while on Humana, sentiment improved to ‘extremely bullish’ from ‘bullish’ for the same period.

Sentiment on UnitedHealth was in the ‘extremely bullish’ from ‘bullish’ a day ago, and on Centene Corp, retail sentiment remained unchanged in the ‘bearish’ territory.

In the last 24 hours, the retail message volumes on CVS jumped 1,366% and on UnitedHealth increased 4,468%. Humana saw message volumes on Stocktwits soar by 9,000%.

Shares of CVS Health jumped over 46% in the last 12 months, while UnitedHealth tumbled 35% and Humana declined 13% during the same period.

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