The US government has confirmed that the rates for health insurers offering private Medicare Advantage plans will not change from the initial proposal made in January. The move affected the stock prices of health insurance companies, sending them tumbling in after-hours trading Monday.
Shares of UnitedHealth Group (NYSE:UNH) and CVS Health Corp. (NYSE:CVS) fell more than 4% and 5% respectively, while Centene Corporation (NYSE:CNC) slipped 2.2%. Humana (NYSE:HUM) stock dipped 9.5%.
According to regulators, Medicare Advantage plans are set to receive a 3.7% average payment increase in 2025, the same rate increase the U.S. government proposed earlier in the year.
Insurance companies, which make billions of dollars selling private versions of the government coverage, had been hoping for a higher increase.
After adjusting for the estimated growth in patient risk scores, the payment update will effectively result in a 0.16% decrease.
This is a standard practice among companies and analysts who often exclude this factor for a clearer analysis of the annual payment policy. This year's rate update comes after months of vigorous lobbying efforts in Washington, drawing significant attention from investors keen on assessing the future performance of health insurers.