Zhi Tong Cai Jing·2026-01-27 01:49Core Viewpoint - The proposed maintenance of the Medicare Advantage payment rates at current levels for next year has disappointed investors, leading to significant stock declines for major insurance companies [1]. Group 1: Payment Rate Impact - The Centers for Medicare & Medicaid Services (CMS) announced that the payment rate for Medicare Advantage plans is expected to increase by only 0.09% in 2027, far below analysts' expectations of a 6% increase [1][2]. - The total payment increase for Medicare Advantage plans in 2027 is projected to be just $700 million, which is minimal compared to the typical payment growth in the tens of billions [2]. - Payment rates are crucial for large insurers like UnitedHealth, CVS Health, and Humana, as the Medicare Advantage program has been a significant growth driver for the insurance industry over the past decade [1][3]. Group 2: Industry Challenges - The profitability of Medicare Advantage plans has been declining due to rising medical costs and insufficient government funding, leading to pressure on insurers [1][3]. - The insurance industry has expressed concerns that the government's payment levels have not kept pace with rising costs, impacting their profit margins [3]. - Analysts had previously predicted a payment increase of 5% to 6% for 2027, and a lower increase could significantly pressure insurance company stock prices [3].