Why Shares of UnitedHealth Group, CVS Health, and Humana Fell Today
Shares of several leading health insurance managed care stocks plunged today after the federally run Centers for Medicare and Medicaid Services (CMS) finalized a lower-than-expected 3.7% payment rate increase for the 2025 calendar year. When all was said and done at close of Tuesday's trading, shares of Humana (NYSE: HUM) were down 13.4%, CVS Health (NYSE: CVS) had fallen 7.2%, and UnitedHealth Group (NYSE: UNH) plunged 6.4%.
In a press release late yesterday, the CMS -- the federal agency operating within the U.S. Department of Health and Human Services that administers the Medicare program -- announced that payments from the government to Medicare Advantage (MA) plans are expected to increase by 3.7% once they're risk-adjusted to account for the health of covered customers. That equates to a more than $16 billion year-over-year increase in payments to MA plans for 2025. The federal government is projected to pay between $500 billion and $600 billion in Medicare Advantage payments to private health plans next year.
CMS is also finalizing changes to the structure of the Medicare Part D drug benefit for calendar year 2025, capping annual out-of-pocket costs at $2,000 for prescription drugs for people with Medicare Part D next year.
Source Fool.com
