UNH vs. HUM: Which Insurance Stock Offers Greater Potential Following CMS's Reversal of Wall Street's Major Medicare Rate Concern?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 07 2026
0mins
Source: stocktwits
Medicare Advantage Funding Increase: A revised policy is set to add over $13 billion in funding to Medicare Advantage plans, following a previous proposal that significantly impacted insurers' market value.
Stock Performance: Shares of UnitedHealth (UNH) rose by 8% and Humana (HUM) gained 11% after the announcement, although both stocks have seen declines of approximately 45% and 27% respectively over the past year.
Payment Rate Adjustments: The Centers for Medicare & Medicaid Services (CMS) finalized a 2.48% increase in Medicare Advantage payment rates for 2027, reversing earlier proposals that kept rates flat.
Market Sentiment: Retail sentiment for UNH and HUM remains bullish, with analysts providing a range of ratings, indicating a strong outlook for UnitedHealth's expanding AI strategy and potential revenue relief amidst rising medical costs.
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Analyst Views on UNH
Wall Street analysts forecast UNH stock price to rise
19 Analyst Rating
16 Buy
3 Hold
0 Sell
Strong Buy
Current: 313.000
Low
330.00
Averages
397.82
High
444.00
Current: 313.000
Low
330.00
Averages
397.82
High
444.00
About UNH
UnitedHealth Group Incorporated is a healthcare and well-being company. Its segments include Optum Health, Optum Insight, Optum Rx, and UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement and UnitedHealthcare Community & State. Optum Health provides comprehensive and patient-centered care, addressing the physical, mental, and social well-being. Optum Health delivers primary, specialty and surgical care and helps patients and providers navigate and address complex, chronic and behavioral health needs. Optum Insight connects the healthcare system with services, analytics and platforms that make clinical, administrative and financial processes simpler and more efficient for all participants in the healthcare system. Optum Rx offers a range of pharmacy care services through retail pharmacies, through home delivery, specialty and community health pharmacies and the provision of in-home and community-based infusion services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Upgraded Earnings Expectations: Analysts project CVS's earnings per share to reach between $7 and $7.20 in 2026, with the increase in Medicare payments likely enhancing CVS's profitability and boosting market confidence.
- Stock Valuation Potential: Currently trading at around 11 times forward earnings, CVS could see its stock price rise to $90 or $100 if it narrows the valuation gap with competitors like UnitedHealth Group, offering substantial investment returns.
- Stable Dividend Yield: With a forward dividend yield of 3.4%, CVS not only provides steady income but also attracts long-term investors, further supporting the upward momentum of its stock price.
See More
CVS Health Stock Rebounds on Improved Medicare Payment Rates
- Medicare Rate Increase: The Centers for Medicare & Medicaid Services (CMS) finalized a 2.5% increase in Medicare payment rates, significantly better than the previously proposed 0.09%, which is expected to enhance CVS Health's profitability outlook and boost investor confidence.
- Earnings Forecast Adjustment: Analysts project CVS Health's earnings per share (EPS) to reach between $7 and $7.20 in 2026, with the increased Medicare payments potentially driving double-digit earnings growth in 2027, further propelling the stock price upward.
- Valuation Gap: CVS Health's current stock price trades at about 11 times forward earnings, while peers like UnitedHealth Group trade at 15 to 20 times; if CVS can partially close this valuation gap, its stock price could reasonably rise to $90 or $100, offering substantial investment returns.
- Stable Dividend Yield: With a forward dividend yield of 3.4%, CVS Health not only provides steady returns but, combined with the positive changes in Medicare policy, presents an attractive investment opportunity.
See More
Investment Opportunities in Health Insurance Sector
- Industry Profitability Potential: The health insurance sector presents long-term investment appeal due to the continuous rise in healthcare spending, which reached $5.3 trillion in the U.S. by 2024, indicating the industry's durability and profitability.
- UnitedHealth Group Performance: As the largest health insurer, UnitedHealth Group reported $448 billion in revenue for 2025, and despite challenges like cyberattacks and rising healthcare costs, its net income has been steadily growing, showcasing its resilience in market leadership.
- Oscar Health's Rapid Growth: Oscar Health added 3.4 million members during the 2026 open enrollment period, up from under 1 million at the end of 2021, indicating strong growth potential in the ACA market, despite a medical loss ratio of 87.4%.
- Optimistic Market Outlook: With the aging U.S. population and advancements in medical technology, healthcare costs are expected to continue rising, prompting investors to focus on companies that can effectively manage costs for long-term profitability.
See More
Investment Opportunities in Healthcare Stocks
- Market Recovery Potential: Despite healthcare stocks like UnitedHealth Group experiencing a 50% drop from their highs, they are expected to rebound in 2026, reflecting the durable value of the industry and the trend of increasing healthcare expenditures.
- Profitability Analysis: UnitedHealth Group reported $448 billion in revenue for 2025, and although net income fell 41% year-over-year due to cyberattacks and rising medical costs, its price-to-earnings ratio of 23.5 indicates potential for future improvement.
- Innovative Business Model: Oscar Health saw enrollment surge to 3.4 million in 2026, up from under 1 million in 2021, demonstrating that its disruptive business model is gaining traction in the ACA marketplace.
- Industry Spending Trends: U.S. healthcare spending has skyrocketed from $74 billion in 1970 to $5.3 trillion in 2024, and this trend is expected to continue, suggesting that as long as insurance companies manage costs effectively, they can achieve long-term profitability.
See More
UnitedHealth Group Receives Positive Catalyst for Recovery
- Stock Decline Reasons: UnitedHealth Group's stock has fallen 41% over the past year primarily due to missing analysts' earnings estimates for the first time since the 2008-09 financial crisis and being forced to lower its full-year guidance, indicating significant cost pressures.
- Medicare Advantage Adjustments: The company plans to scale back its Medicare Advantage plans in 16 states to address current challenges, despite facing the resignation of its CEO and other high-profile incidents, demonstrating its commitment to future restructuring.
- Government Payment Rate Increase: The Trump administration's approval of a 2.48% increase in Medicare Advantage payment rates will significantly enhance UnitedHealth Group's profitability and encourage the expansion of related business lines.
- Optimistic Future Outlook: Management projects revenue of at least $439 billion for 2026, a substantial increase from $337.6 billion in 2025, and if the next earnings report mentions re-entering markets, it will be seen as a strong signal of the company's recovery.
See More
UnitedHealth Group Plans to Scale Back Medicare Advantage Plans
- Medicare Advantage Adjustment: UnitedHealth Group has announced plans to scale back its Medicare Advantage programs in 16 states in response to significant adjustments in federal reimbursements, which are expected to impact the company's profitability and market share.
- Earnings Guidance Downgrade: The company missed analysts' earnings estimates for the first time since the 2008-09 financial crisis due to higher-than-anticipated member costs, leading to a lowered full-year guidance, with projected revenues of $439 billion in 2026 compared to $337.6 billion in 2025.
- Government Payment Rate Increase: The Trump administration approved a 2.48% increase in payment rates for Medicare Advantage plans for 2027, a significant improvement over the previously proposed 0.09%, which will encourage UnitedHealth Group to expand its Medicare Advantage offerings and enhance profit margins.
- Market Focus on Future Performance: With the payment rate increase, the market will closely watch UnitedHealth Group's next earnings report on April 21, and if management discusses re-entering markets from which it had previously withdrawn, it will be seen as a strong signal of the company's recovery.
See More
