When "Flat" Isn't Just a Description, It's a Problem

Health insurers had a rough Monday evening. The Trump administration reportedly plans to propose "roughly flat" Medicare rates for 2027, meaning payments to insurance plans would increase by approximately 0.09% next year, according to The Wall Street Journal. That's not a typo—basically zero.

The market's reaction was swift and brutal. Shares of UnitedHealth Group Inc (UNH), Humana Inc (HUM), and CVS Health Corp (CVS) all got hammered in extended trading as the news sank in.

The Numbers Tell the Story

Here's why investors are spooked. Analysts had been expecting rate increases of 4% to 6% for next year. Instead, they're getting 0.09%. To put that in perspective, a 0.09% increase would be worth just $700 million total across the entire industry. This year, health insurers received a 5.06% bump. That's quite a haircut.

The report, citing officials from the Centers for Medicare and Medicaid Services and the White House, indicates an official announcement is expected late Monday.

More Bad News on the Horizon

It gets worse. The Medicare agency also plans to push for eliminating certain billing practices that have historically been very profitable for the industry. A Medicare official reportedly said the goal is to ensure payment accuracy and proper reimbursements—which sounds reasonable unless you're an insurer who's been benefiting from those practices.

At publication Monday, UnitedHealth shares were down 8.82% at $322.09 in after-hours trading, while Humana shares plummeted 13.34% to $227.50 and CVS shares dropped 11.03% to $74.62.