What Happened?
Shares of health insurance company Humana (NYSE:HUM) fell 20.6% in the afternoon session after the Centers for Medicare & Medicaid Services (CMS) proposed a much smaller-than-expected payment rate increase for Medicare Advantage plans.
The agency suggested a net average payment increase of just 0.09% for 2027, which fell significantly short of what analysts had predicted. Expectations were for a rate hike between 4% and 6%. This surprising news triggered a sharp sell-off across the health insurance sector. The proposal raised concerns about future profitability for companies that rely on Medicare Advantage plans. As a result, other major health insurers also saw their stocks fall, with UnitedHealth Group and CVS Health experiencing significant declines.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Humana? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Humana’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Humana and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock dropped 15.3% on the news that peer UnitedHealth reported underwhelming first-quarter 2025 results as its sales and profits fell below Wall Street expectations. Guidance was the biggest concern. The new full-year earnings forecast came in well below what analysts had been expecting, mainly because the company saw its care (medical costs in its privately run Medicare plans) and funding issues lasting longer. The news cast a shadow over other health insurers with similar offerings, hinting at tighter margins and more uncertainty ahead.
Humana is down 20.6% since the beginning of the year, and at $209.94 per share, it is trading 32.7% below its 52-week high of $312 from September 2025. Investors who bought $1,000 worth of Humana’s shares 5 years ago would now be looking at an investment worth $555.52.
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