UnitedHealth Group stock shoots up on elevated Medicare Advantage rate hike proposal
- UNH stock rose more than 7% on Tuesday.
- CMS raised its proposed Medicare Advantage rate by more than 5%.
- UnitedHealth is the largest administer of Medicare Advantage plans.
- Dow Jones, other indices rise 3% on hints of tariff negotiations.
UnitedHealth Group (UNH) stock shot up 7% on Tuesday after the US Centers for Medicare & Medicaid Services (CMS) finalized a significant increase in 2026 Medicare Advantage payments. CMS, the agency run by Robert F. Kennedy Jr., confirmed a rate hike more than double the level initially proposed.
The 5.06% average rate hike is much higher than the 2.23% initially proposed and could mean an additional $25 billion in funding to US health insurers. Likewise, competitors like Humana (HUM) and CVS Health (CVS) saw their stock prices soar.
The broader market is undergoing a volatile upswing on Tuesday as well due to the belief that US President Donald Trump might be more open to negotiations than previously thought. The Dow Jones Industrial Index (DJIA), which includes UnitedHealth, rose nearly 3%, and both the S&P 500 and NASDAQ have topped that figure in the morning session.
“Admittedly, Trump did sound open to reaching deals with other countries, saying in his message on China tariffs that 'Negotiations with other countries, which have also requested meetings, will begin taking place immediately,’” said Deutsche Bank’s Henry Allen.
Vietnam has requested a 45-day stay on Trump’s 46% tariff as it negotiates with the administration, while political advisor and Tesla (TSLA) CEO Elon Musk has appealed directly to the President to end his controversial tariff policy.
UnitedHealth stock news
Back in January, the outgoing Biden administration had suggested a 2.23% rate increase for 2025 for the private-sector handled Medicare plans called Medicare Advantage. These health insurance plans are for US retirees, typically 65 and older.
Despite the Trump administration’s drastic cuts to most other parts of the US federal government via Musk’s Department of Government Efficiency (DOGE), the unexpected hike of Medicare Advantage payments signals that certain parts of the government will see major increases in funding under his term of office. This coincides with annual military spending seeing a proposed increase to above $1 trillion, announced earlier this week.
The healthcare policy organization KFF reports that 54% of Medicare enrollees in 2024 had signed up for Medicare Advantage plans, contributing to about $84 billion in additional government spending compared with traditional Medicare plans.
Based on 2023 data, UnitedHealth administers about 29% of the Medicare Advantage pool and has the largest market share. Humana is close with 18% of plans, while CVS Health has 11%.
UnitedHealth stock chart
UNH stock has been trending higher since its lows on February 21, but Tuesday's large upswing might mean it's time to take profit. The first observation is that UNH stock skyrocketed to an intraday high above $585. However, UNH has been trending down throughout the first three hours of trading and now hovers near $560.
Second, the Relative Strength Index (RSI) trades at 71 on Tuesday, meaning that UNH is overbought at this juncture. If the market experiences another sell-off, this trend might continue back to former resistance levels in the $540s. That region acted as resistance last week and earlier in January and February of this year.
Over the longer term, a break above the former resistance point at $608 will be a majorly bullish sign.
UNH daily stock chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
