【Epoch Times News – January 29, 2026】
According to The Wall Street Journal’s exclusive report, the 2027 insurance rates proposed by the Federal Medicare Management Agency are significantly lower than analysts’ expectations. The news has caused a sharp drop in the stock prices of major health insurance companies.
UnitedHealth’s stock plummeted nearly 20% on Tuesday, January 27th; Humana saw a 21% decline; CVS Health and Elevance Health both fell by 14%.
The combined market value of these large companies evaporated by a total of $96 billion on Tuesday.
Wall Street investors had initially expected the Trump administration to introduce more generous policies for federal health insurance companies. However, investors now believe that the industry is entering a challenging period.
John Gorman, a senior healthcare industry consultant, stated, “These companies have undoubtedly suffered a severe impact, and what I’ve heard mostly are sounds of shock and dismay.”
The government’s proposal may deal a heavy blow to health insurance companies, as these enterprises have long heavily relied on government subsidies for their financial core and growth.
The Medicare Advantage plan, established by the federal government for elderly and disabled Americans, brought in approximately $500 billion in revenue for the entire industry in 2025.
For example, in the case of UnitedHealth, its overall revenue from federal Medicare insurance business is more than twice that of its private insurance business.
Such income has long been a key driver of growth and profits, despite the Biden administration’s policies cutting back on certain lucrative billing practices and reducing subsidy levels.
Analyst John Ransom of Raymond James estimated that if the 2027 proposal rates are ultimately passed by Congress, UnitedHealth’s profits could decline by 18.6%, CVS Holdings by 12%, and Humana might plummet by 75%.
As a result, the industry may resort to strategies adopted in 2026 to boost profit margins, including cutting service items, reducing additional benefits (such as medical spending cash cards), and implementing stricter insurance cost control plans, such as limiting physician and hospital networks.
The rates are expected to increase payment by approximately 0.09% in 2027, whereas analysts had initially anticipated a rise close to 5%. The 2026 rates were already higher than expected.
The final rates will be announced in April, and the industry has already begun preparing lobbying efforts to fight back.
Insurance companies may mobilize a large number of vocal seniors in protest while launching massive advertising campaigns, including airing commercials during the Super Bowl.
Some analysts suggest that the Trump administration’s reduction of government Medicare subsidies in an election year may alienate participants in federal health insurance, which could disadvantage Republicans in the midterm elections. An analyst at Jefferies stated in a report that the 2027 subsidy policy implies that the “midterm election outcome is already determined.”
Gorman pointed out, “The next 90 days will be a critical period for the industry’s typical lobbying efforts against federal health insurance.”
Chris Klomp, Deputy Administrator of the Centers for Medicare & Medicaid Services (CMS), stated in an interview on Monday that the agency aims to improve payment accuracy, provide stable reimbursement for federal Medicare underwriters, and enhance system simplification and competition mechanisms.
He further commented on Tuesday that CMS aims to “ensure the long-term sustainability of Medicare Advantage plans” and allow beneficiaries to continue to have comprehensive Medicare Advantage plan options in 2027 and beyond.
Actuaries at the CMS have calculated an expected growth rate for healthcare costs, which is lower than most analysts’ forecasts. Additionally, the Trump administration’s acceptance level of insurance industry appeals may be lower than what Wall Street had anticipated.
The Trump administration has been committed to reducing federal government expenditures.
Meanwhile, insurance companies are facing scrutiny. Two recent House committee hearings have summoned top corporate executives to testify on issues such as denial of patient treatment, business structure, and profit concerns. President Trump has also expressed his intention to meet with top insurance company executives to pressure them to lower premiums.
【Reference: The Wall Street Journal】