Friday’s gain suggests investors are treating the ratings as a 2028 problem. Tuesday’s call gives management an opportunity to clarify how many members are in downgraded plans and discuss the potential financial impact. better?
UnitedHealth (UNH) shares rose about 2% on Friday to close at $379.30, even though the new 2027 Medicare Advantage star ratings point to a worse result for the insurer.
J.P. Morgan estimates the share of UnitedHealth members in plans rated four stars or higher will fall to about 67% for 2027, from about 81%. UnitedHealth said Thursday that the ratings were in line with its expectations. The enrollment estimate comes from J.P. Morgan’s analysis of the CMS ratings.
Above Average to Below It
The drop matters more because the industry moved the other way. CMS says about 71% of Medicare Advantage drug plan enrollees will be in four-star-or-better contracts for 2027, up from about 67%. UnitedHealth went from beating that average to trailing it.
CMS also changed the scoring, adding two medication-safety measures and tripling the weight of physical and mental health measures. Part of the slide may reflect new rules rather than worse care. The bonus effect lands in 2028, not 2027.
Humana (HUM) shows the other side. Humana reported 95% of its Medicare Advantage members in four-star-or-better plans for 2027, compared with the 20% initially reported for 2026. Its stock closed Friday up about 11.6%.
UnitedHealth Has More Room Than Humana
UnitedHealth’s EBIT margin fell from 8.1% in 2024 to 4.8% in 2025, then edged up to 5.3% on an LTM basis.
That’s a sharp drop, but it still leaves more than double Humana’s 2.3%. UnitedHealth also runs Optum, so Medicare Advantage is a smaller slice of the business. A smaller bonus hurts, but it isn’t the whole story here the way it is at Humana.
The Street still leans bullish. The mean target of $481 sits about 27% above Friday’s close, with 15 buys, 7 outperforms and 4 holds.
UnitedHealth’s October 13 Call Matters More Now
UnitedHealth reports third-quarter results before the market opens on Tuesday, October 13.
Tuesday’s call gives management an opportunity to clarify how many members are in downgraded plans and discuss the potential financial impact.
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