Humana Shares Jump After Medicare Advantage Ratings Improve
Humana said 95% of its Medicare Advantage members will be in plans rated four stars or higher for 2027, up from 20% a year earlier. The ratings can lead to government bonus payments, but those payments apply to 2028 rather than 2027. The stock rose about 15%, while UnitedHealth and CVS are expected to see lower four-star shares.
Humana’s stock climbed roughly 15% to around $447 after it projected that 95% of its Medicare Advantage members would sit in plans rated four stars or better for 2027, versus 20% a year earlier. That beat J.P. Morgan’s 60%–70% estimate by 25 percentage points and exceeded the roughly 71% industry average.
The higher ratings can unlock larger government payment benchmarks, though they determine bonuses for 2028, not 2027. Humana’s EBIT margin has narrowed from 4.3% in 2023 to 2.3% lately, and management targets at least a 3% individual Medicare Advantage pretax margin in 2028. UnitedHealth and CVS are expected to have smaller four-star shares.
Humana’s improved ratings could affect Medicare Advantage members if they help stabilize plan choices or benefits, though the linked bonus payments apply to 2028, not 2027. Investors may gain from the share jump, while members of competing insurers could see changes if those plans’ star scores decline. Broader effects may depend on whether higher government payments support enrollee benefits or mainly insurer margins.