Over the past week, health insurers have drawn the ire of lawmakers on both sides of the aisle and seen their collective stock prices drop by nearly $100 billion following unfavorable Medicare Advantage news from CMS.
All this while millions of Americans face rising marketplace premiums after the expiration of enhanced ACA subsidies, and employers face sticker shock as the average cost to offer health benefits has risen by as much as 10%.
The week began with nine hours of back-to-back congressional hearings on Jan. 22, during which the CEOs of UnitedHealth Group, CVS Health, Elevance Health, Cigna and Blue Shield of California parent company Ascendiun faced pointed questions about claims denials, prior authorization practices and executive compensation.
Lawmakers zeroed in on the growth of vertically integrated health conglomerates that own insurance companies, pharmacy benefit managers, physician practices and pharmacies under one umbrella.
“Whether you’re a blue-blooded capitalist or a card-carrying democratic socialist, I think corporate monopolies are a problem, and this vertical integration is destroying people’s ability to access care,” Rep. Alexandria Ocasio-Cortez, D-N.Y., said during the hearing.
Rep. Gregory Murphy, R-N.C., MD, was even more direct: “If it were up to me, I would throw out all for-profit systems in this country and turn everybody into nonprofit. If I had my way, I’d turn all of you guys into dust.”
Then CMS proposed nearly flat MA payments for 2027 on Jan. 26, putting forth a 0.09% increase that was far below what Wall Street analysts had expected, and much less than the $25 billion boost for 2026. And on Jan. 27, UnitedHealth, often viewed as a bellwether for the broader industry, forecast its first revenue decline in more than three decades.
Elevance CEO Gail Boudreaux framed 2026 as “a year of execution and repositioning,” during the company’s year-end earnings call with investors on Jan. 28, projecting operating revenue to decline in the low single-digit percent range due to membership losses across Medicare Advantage, Medicaid and commercial risk-based plans.
The resulting stock selloff in health insurers that provide MA plans wiped out nearly $100 billion in market value on Jan. 27, according to Bloomberg. Shares of UnitedHealth and Humana fell about 20%, while CVS Health and Elevance Health decreased more than 12%.
In its proposed rate notice, CMS also said it’s looking to shake up how MA patient risk scores are calculated, which could further squeeze insurer margins. The agency pitched excluding diagnosis information from “unlinked chart review records,” which are diagnoses not associated with a specific beneficiary encounter, from risk score calculations starting in 2027. Under MA’s risk adjustment system, plans receive higher payments for sicker patients, creating a financial incentive to document as many diagnoses as possible. That system has been at the center of policy controversy for years, with federal audits and investigations finding that some insurers have inflated patient risk scores to boost payments beyond what traditional Medicare would have paid for the same beneficiaries.
CMS Administrator Mehmet Oz, MD, said the policies are “about making sure Medicare Advantage works better for the people it serves” while “protecting taxpayers from unnecessary spending.” Industry groups were less enthusiastic: AHIP warned that flat funding “at a time of sharply rising medical costs” could lead to benefit cuts and higher costs for enrollees, while the Alliance of Community Health Plans called the proposal “disappointing and wholly unrealistic.”
In its year-end earnings report, UnitedHealthcare added that it expects to lose up to 1.4 million MA members in 2026. CEO Tim Noel said the company may pull back further in the segment from a benefits and geography perspective if the rates are finalized as proposed.
The comment period on the proposed 2027 MA rates closes Feb. 25, with the final rate announcement expected by April 6. Insurers are likely to lobby heavily for higher payments before rates are finalized.
In the ACA marketplace, enhanced premium subsidies expired at the end of 2025 after Congress failed to extend them. Enrollees with subsidized coverage are projected to face a 114% rise in premiums, from an average of $888 a year in 2025 to $1,904 in 2026, according to KFF.
Even a positive public relations effort by UnitedHealth at the start of the week fell flat by the end of it. The company said Jan. 21 it would rebate exchange profits back to consumers in 2026 following the expiration of the enhanced subsidies. But by Jan. 27, company leadership told investors those profits were never substantial to begin with.
“Over the course of the decade-plus in which we have operated in [the exchange] market, it has never been a significant contributor of earnings for us,” UnitedHealthcare commercial CEO Dan Kueter said. The company expects exchange margins to land around 1% in 2026 after repricing efforts.
And in Medicaid, state funding shortfalls continue to squeeze insurers. UnitedHealthcare said it has received some rate increases but that payments still do not match the acuity of its membership. The insurer expects Medicaid membership to contract by 565,000 to 715,000 this year.
Employers, meanwhile, are experiencing the steepest rise in costs for health benefits in more than a decade, with some estimates putting average increases near 10% nationally. Multiple surveys have attributed rising costs to the coverage of chronic and high-cost conditions, more stop-loss claims, and greater care utilization and drug spending, particularly on GLP-1 medications.
For the rest of 2026, Fitch projects commercial group medical costs will climb nearly 9%. MA margins will remain under pressure as utilization continues to climb, and Medicaid faces enrollment losses of nearly 10 million people over the next decade amid looming stricter eligibility requirements and work requirements next year.
