Humana (NYSE:HUM) shares suffered their worst rout in years Tuesday, plunging 20.6% after the Trump administration proposed a nearly flat reimbursement rate for Medicare Advantage plans in 2027, a move that blindsided Wall Street and cast a shadow over the industry’s profit outlook.
The Centers for Medicare & Medicaid Services (CMS), led by Administrator Dr. Mehmet Oz, proposed a net average payment increase of just 0.09% for 2027.
The figure fell dramatically short of the 4% to 6% hike analysts had projected.
The proposal represents a sharp deceleration from the 5.06% increase finalized for 2026 and would result in a relatively modest $700 million increase in total payments to the industry.
The news triggered a sector-wide exodus.
UnitedHealth Group, the industry bellwether, saw its shares tumble as much as 19%—its steepest one-day decline since 1989—following the rate news and a disappointing earnings report.
CVS Health and Elevance Health also saw double-digit declines as investors recalibrated for a period of tightening margins and rising medical utilization costs.