UnitedHealth Says Trump's 2027 Medicare Rates 'Profoundly Negative' For Seniors

Erica KollmannWed, January 28, 2026 at 7:31 PM UTC

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UnitedHealth Group, Inc. (NYSE:UNH) experienced a historic market rout on Tuesday, with its stock plunging 20% in a single day.

The catalyst was a double whammy: a disappointing fourth-quarter earnings report coupled with a shockingly low 2027 rate proposal from the Centers for Medicare & Medicaid Services (CMS).

CMS Rate Shock

The primary driver of the sell-off was the CMS 2027 Advance Notice, which proposed a net payment increase of just 0.09%.

The basically flat rate figure was a staggering miss compared to analyst expectations of 4% to 6%. In the health care insurance world, where medical inflation is currently running between 7% and 10%, a flat rate is effectively a massive budget cut.

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UnitedHealth's leadership did not mince words during the insurer's fourth quarter earnings call on Tuesday morning.

UnitedHealthcare Unit CEO Timothy Noel labeled the CMS notice as a failure to reflect the “reality of medical utilization and cost trends.”

"We will continue to work with CMS to ensure an appropriate final growth rate calculation to avoid a profoundly negative impact on seniors’ benefits and access to care," Noel said on the call.

"That would be a deeply unfortunate result for a program that is already under funding pressure from the previous administration despite its track record of success serving seniors and taxpayers,” he added.

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Financial & Operational Strain

The earnings call also laid bare the internal pressures facing the company:

Medical Care Ratio (MCR): UNH's MCR surged toward 90%, meaning almost 90 cents of every dollar in premiums is being spent on medical claims. This is driven by high utilization in behavioral health and specialty drugs.

Earnings Collapse: While adjusted earnings met targets, GAAP earnings for fourth quarter 2025 plummeted by nearly 100% to just one cent per share, largely due to restructuring charges and persistent costs from the 2024 cyberattack.

Membership Loss: The company confirmed it expects to lose up to 1.4 million Medicare Advantage members in 2026 as it prioritizes profit margins over growth.

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The Bottom Line

UnitedHeath CEO Stephen Hemsley addressed the underwhelming CMS rate proposal, stating that it "will mean very meaningful benefit reductions" across the industry, not just within UNH.

"Therefore seniors kind of across the sector are going to experience these implications of reduced choice, reduced access and affordability challenges," Hemsley said.

Health insurers’ stocks were down broadly on Tuesday, with CVS Health Corp. (NYSE:CVS) and Humana, Inc. (NYSE:HUM) down by 14% and 19%, respectively.

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