NEW YORK, Jan 27, 2026, 20:02 (ET) — Market closed.
- Shares of Elevance Health dropped roughly 14% Tuesday following a fresh Medicare Advantage rate proposal that unsettled insurers.
- The company is set to report results on Wednesday, as investors focus on any hints about pricing and costs.
- CMS will hit its upcoming policy milestones in late February and then again in early April.
Elevance Health, Inc. shares plunged Tuesday, ending down 14.3% at $322.92 after hours. The drop came as investors dumped U.S. health insurers following a Medicare Advantage rate proposal that missed Wall Street’s forecasts by a wide margin.
The timing is crucial. The rate notice arrives right as managed-care firms enter earnings season, pushing investors to reevaluate 2027 revenue forecasts amid ongoing uncertainty about the pace of medical cost declines.
It brings back a familiar concern for the group: policy risk. Medicare Advantage — private plans handling Medicare benefits for seniors and certain disabled individuals — represents a crucial profit source for major insurers, and even minor changes in federal payments can significantly affect their margins.
The Centers for Medicare & Medicaid Services announced its Calendar Year 2027 “Advance Notice,” projecting a net average payment increase of just 0.09%. It also detailed tweaks to the risk-adjustment model—the system that pays plans more for sicker enrollees—introducing caps related to diagnoses from “unlinked” chart reviews. Including the risk-score trend, CMS said the expected average boost would be 2.54%, though the headline number still unsettled traders. 1
Analysts caution the numbers leave little wiggle room if costs remain high. “Simply put, the potential rates compared to the cost trend will likely be insufficient,” said Baird analyst Michael Ha, warning that plans might have to cut benefits or drop some offerings if the proposal goes through. Bernstein’s Lance Wilkes added that a persistently low-rate environment could keep membership growth subdued as plans tighten their networks. 2
A separate Reuters story quoted CMS Administrator Mehmet Oz saying the proposal aims to boost payment accuracy and safeguard taxpayers. But investors and the industry worry about the potential squeeze. “People were ballparking this flat rate to be closer to 4 to 5%,” Kevin Gade, chief operating officer at Bahl & Gaynor, said, noting this would hit 2027 margin and earnings forecasts. Chris Bond, spokesperson for America’s Health Insurance Plans, warned that if finalized, the proposal could lead to benefit cuts and higher costs for millions when plans renew coverage in late 2026. 3
The selloff extended beyond Elevance. UnitedHealth, Humana, and CVS Health also dropped on the Medicare news, dragging the managed-care sector down as traders reevaluated the group’s earnings recovery story.
Elevance is gearing up for its earnings report on Wednesday. The 2025 fourth-quarter call is set for 8:30 a.m. ET. 4
Investors are keen to hear how management plans to approach Medicare Advantage pricing for the upcoming bid cycle, what their outlook is on medical cost trends, and how much room they have to counter a stricter reimbursement environment without cutting too deeply into benefits.
A clear “but” looms over the trade. The CMS notice is just a proposal, and final figures can shift — sometimes significantly — before they’re finalized, potentially easing (or worsening) Tuesday’s move. Meanwhile, if medical utilization remains high, even a small upward adjustment might not be enough to ease the margin squeeze investors worry about.
Coming up next: Elevance’s earnings and guidance on Wednesday morning, followed by the policy calendar. CMS is accepting comments until Feb. 25 and plans to release final 2027 Medicare Advantage rates by April 6. These deadlines are set to keep insurer stocks on edge well past the next trading session.
