Humana Inc. shares experienced a sharp decline of over 13% in premarket trading on Tuesday, January 27, 2026, following a recent proposal from the Trump administration concerning Medicare Advantage payment rates for the year 2027. The stock price fell to $228.00, reflecting a 13.49% decrease from its previous close of $263.63.
The proposed increase of just 0.09% in net average payments was far below Wall Street”s anticipated rate hike of 4% to 6%. This unexpected announcement sent ripples through the health insurance sector, particularly impacting insurers who depend heavily on Medicare Advantage plans.
The Centers for Medicare & Medicaid Services (CMS) revealed on Monday that the plans would only see a modest increase amounting to approximately $700 million across the industry. This contrasts sharply with the 5.06% increase that insurers enjoyed for the year 2026. Dr. Mehmet Oz, the CMS Administrator, stated that the proposal aims at enhancing payment accuracy and modernizing risk adjustments while also safeguarding taxpayer interests.
As a major provider of Medicare Advantage plans, Humana is significantly affected by these proposed rates, which dictate the monthly premiums insurers can charge, the benefits they can offer, and their profit margins. Given that Medicare Advantage constitutes a crucial segment of Humana”s business, the company is particularly sensitive to such regulatory changes compared to its more diversified competitors.
Following the CMS announcement, Humana”s stock was not the only one to suffer; other health insurers also saw notable declines. CVS Health fell 9.72%, UnitedHealth Group decreased by 9.01%, and Elevance Health dropped 6.90% in after-hours trading. Analysts have expressed that the proposed changes could also eliminate various billing practices that have historically generated profits for insurers, further heightening investor concerns.
Humana”s market capitalization now stands at $31.71 billion, with its stock trading closer to its 52-week low. The stock”s year-to-date return is currently at 2.93%, while its performance over the past year indicates a decline of 9.27%. With analyst price targets ranging from $215 to $353, and an average target set at $288.29, Humana”s current premarket price suggests strong downward pressure following the regulatory announcement.
This latest development underscores the sensitivity of health insurers to governmental policy changes, particularly in the healthcare sector where regulatory frameworks can significantly influence business operations and profitability.
