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Shares of two of the US’s largest health insurers fell more than 10 per cent in after-hours trading on Monday as the Trump administration proposed slashing the annual increase in federal payments to Medicare by billions of dollars.
Shares of UnitedHealth and Humana dropped 10 per cent and 13 per cent respectively, after the government moved to increase certain payments to insurers that provide coverage for seniors and people with disabilities by only 0.09 per cent next year — or about $700mn.
The federal payments to companies that run coverage for the US Medicare Advantage healthcare scheme, which covers more than 34mn Americans, had increased by 5 per cent, or $25bn, for 2026. Wall Street analysts had expected a further rate increase for 2027.
UnitedHealth and Humana were the largest Medicare Advantage providers in 2025, according to KFF, a non-profit health policy research group. Neither company immediately responded to requests for comment.
Shares of insurers CVS and Elevance also dropped by more than 5 per cent.
The 2027 rate change proposed by the Centers for Medicare & Medicaid Services could be altered before it is finalised later this year.
It is unclear how the federal rate changes would ultimately affect patient costs and coverage for 2027, but insurance companies typically determine premium prices in the autumn.
America’s Health Insurance Plans, the lobbying organisation for health insurance companies, blasted Monday’s announcement, warning it will result in benefit cuts and higher costs for millions of Americans.
“If finalised, this proposal could result in benefit cuts and higher costs for 35mn seniors and people with disabilities when they renew their Medicare Advantage coverage in October 2026,” said Chris Bond, AHIP spokesperson.
The Trump administration has taken an increasingly hard line against health insurers as he seeks to limit cost increases for Americans ahead of the midterm elections in November. Health insurance premiums for many Americans are estimated to shoot up by 6.5 per cent this year, the most in 15 years.
Earlier this month, the White House published a healthcare plan that would require insurers to publish how much they pay for insurance claims versus their overhead costs.
Separately, the chief executives from UnitedHealth, CVS and others were called last week to testify before House of Representatives to answer questions about healthcare costs.
“Three of the largest health insurance empires rake in nearly $1tn in annual revenue, pocketing tens of billions of dollars in profit,” Republican Jason Smith, head of the House tax-writing committee, said on Thursday. “For this their executives are rewarded with tens of millions in bonuses.”
UnitedHealth reports quarterly earnings on Tuesday.
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