Atlanta, GA – Health insurance stocks experienced a significant drop overnight following the Biden Administration’s announcement regarding Medicare Advantage rates in 2025. Companies like UnitedHealth, Humana, CVS Health, and Cigna saw declines in their stock prices as the final rates for Medicare Advantage plans are expected to remain unchanged from the initial proposal in January.
The Centers for Medicare and Medicaid Services revealed that private Medicare Advantage rates are set to increase by an average of 3.7% in 2025, aligning with what was initially proposed. This decision comes as a surprise to many, as typically the regulator adjusts rates before finalizing the plan.
UnitedHealth and Humana, key players in the Medicare Advantage market, experienced the biggest impact from the announcement. Humana, heavily reliant on Medicare for a significant portion of its revenue, saw a drastic 11.3% drop in premarket trading, putting its stock at risk of hitting a four-year low. UnitedHealth’s stock also took a hit, plummeting by 5.15%.
Other major health insurers, such as CVS Health and Cigna, also saw declines in their stock prices. CVS Health, a prominent player in the Medicare Advantage sector, witnessed a 7% decrease overnight, while Cigna’s stock dipped by 1.9% early Tuesday.
Smaller players in the market, like Centene and Molina Healthcare, known for their focus on Medicaid insurance, also experienced negative impacts. Centene’s stock declined by 3.2% early Tuesday, and Molina Healthcare saw a 2.3% decrease late Monday.
Elevance Health, close to reaching a 52-week high, suffered a 3.1% drop early Tuesday, causing its stock to fall below the 50-day line. The fluctuation in the stock market has raised concerns among investors and analysts about the future performance of these health insurance companies in the Medicare Advantage market.
As the industry continues to navigate these changes, investors are advised to closely monitor the market trends and stay updated on the latest developments to make informed decisions regarding their investments.