Lower Medicare Advantage Reimbursements Send Healthcare Stocks Tumbling

Healthcare stocks like UnitedHealth, CVS, and Humana dropped due to lower-than-expected Medicare Advantage reimbursement rate increase announced for 2025.

The 3.7% reimbursement rate increase was below investor expectations, negatively impacting health insurers providing Medicare Advantage plans.

Medicare Advantage is a healthcare option from private companies approved by Medicare that must follow Medicare program rules.

The reimbursement rate implies a 0.16% drop excluding some items, potentially pressuring profits of Medicare Advantage companies per analysts.

Analysts have a cautiously optimistic outlook on the iShares Global Healthcare ETF, with a Moderate Buy consensus rating based on more Buys than Sells.