New York, January 28, 2026, 12:35 (EST) — Regular session
- Humana shares dropped roughly 6% by midday, deepening a two-day slide in managed-care stocks
- The U.S. Medicare agency’s proposal suggests a modest 0.09% net average payment increase for 2027, factoring in adjustments to the risk model
- Investors are now eyeing CMS’s April rate decision alongside Humana’s February 11 earnings for fresh profit insights
Shares of Humana Inc dropped roughly 6% on Wednesday, extending the insurer’s struggles following a steep two-day selloff in Medicare Advantage-related health plans. The stock slipped to $195.31, down 6.1%, after starting the day at $206.51.
This matters because Humana ranks among the insurers most tied to Medicare Advantage, the private-plan option for older and disabled Americans instead of traditional Medicare. Even a slight tweak in Washington’s payments to these plans can swiftly shift investor expectations on margins.
On Monday, the Centers for Medicare & Medicaid Services floated a modest 0.09% average payment hike for 2027. They also outlined tweaks to risk adjustment—the method that boosts insurer payments when patients are sicker. CMS suggested removing diagnoses from “unlinked” chart review records in calculating risk scores. Comments are due by Feb. 25, with final rates expected by April 6. (Centers for Medicare & Medicaid Services)
Risk adjustment can be wonky, but it’s straightforward in practice: diagnoses determine the score, and that score determines the payout. If some diagnosis sources drop out, revenue can decline—even if membership stays steady.
Humana plunged nearly 19% on Tuesday, wiping out roughly $80 billion in total market value for U.S. health insurers, Reuters reported. Baird’s Michael Ha noted the proposed rates versus cost trends will likely trigger “significant benefit reductions or plan exits” to manage 2027 margin pressure. Bernstein’s Lance Wilkes added that if rates remain “in this range,” plans will have to slash benefits and tighten networks. (Reuters)
Some investors were caught off guard by just how low the starting point was. “People were ballparking this flat rate to be closer to 4 to 5%,” said Kevin Gade, chief operating officer at Bahl & Gaynor. Morningstar analyst Julie Utterback noted the market will be watching closely to see if CMS tweaks its assumptions before the final notice. America’s Health Insurance Plans warned that flat funding, despite rising medical costs, could force benefit cuts and higher expenses for roughly 35 million seniors and people with disabilities when coverage renews in October 2026. (Reuters)
The Medicare rate shock is colliding with earnings season as insurers recalibrate 2026 forecasts. On Wednesday, Elevance Health projected adjusted profits for 2026 below Wall Street’s expectations, citing ongoing cost pressures in government-backed plans. CEO Gail Boudreaux described 2026 as a year focused on “execution and repositioning.” J.P. Morgan analyst Lisa Gill called the company’s outlook an “achievable baseline.” (Reuters)
CMS put the effective growth rate for benchmarks at 4.97% in its technical breakdown but flagged that revisions to the risk model and a proposed tweak to diagnosis sources would weigh on payments. The agency projected an average payment change of 2.54%, factoring in risk-score trends linked to coding and population shifts. (Centers for Medicare & Medicaid Services)
Humana will release its fourth-quarter results on Feb. 11 and expects to provide earnings guidance for 2026. Investors will focus on the company’s take on pricing and medical-cost trends, especially following the CMS notice and recent sector sell-off. (Humana Health Policy Center)
The proposal isn’t set in stone. A higher final rate in April might ease some pressure on the group; if funding remains nearly flat while costs climb, options could be limited to cutting benefits, tightening networks, or scaling back in select markets.
Humana’s next key dates are Feb. 11, when results drop, and April 6, the Medicare Advantage rate announcement. These two dates are shaping up to be more pivotal than any single trading session.
