A significant selloff in health insurance companies providing Medicare Advantage plans has erased over $US90 billion in stock market value, as investors retreat from what was previously considered a defensive sector. Shares of major managed-care companies experienced sharp declines, led by UnitedHealth Group and Humana, both plummeting by 20 per cent. This downturn followed the Trump administration’s proposal to hold payment rates flat next year. Additionally, UnitedHealth forecast a revenue decrease in 2026, marking the first such decline in over three decades. UnitedHealth Group provides healthcare benefits and services, offering a spectrum of products from health plans to data analytics. Humana is a health insurance company focusing on Medicare Advantage and providing coordinated care services.
Other major players in the sector also felt the impact. CVS Health and Elevance Health both saw their shares fall by more than 13 per cent. The broader market gauge, the S&P Composite 1500 Managed Care Index, experienced a tumble of up to 17 per cent, reaching its lowest level since August. The decline represents a setback for investors who had anticipated a rebound in the insurance sector following a period of instability last year.
The losses on Tuesday eliminated approximately $US92 billion from the market values of seven major health insurance companies. UnitedHealth accounted for over $US60 billion of this loss, while CVS Health and Elevance each saw more than $US9 billion erased from their market capitalisations. According to Jared Holz of Mizuho Securities USA, the anticipated recovery trade is now expected to pause for a considerable period.
The catalyst for the selloff was the US government’s proposal late on Monday to maintain flat payments to private Medicare plans next year. This contrasted sharply with the 6 per cent increase that investors had been anticipating, triggering the widespread downturn in the health insurance sector.
