After losing more than half their market value, the three largest US health insurers have staged a sharp recovery as medical costs stabilize and Washington eases the pressure.
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Health insurers recover 25-45% as Medicare Advantage headwinds ease
After losing more than half their market value, the three largest US health insurers have staged a sharp recovery as medical costs stabilize and Washington eases the pressure.
UnitedHealth Group, Humana and CVS Health have rebounded 25% to 45% this year as easing medical costs and a more favorable Trump administration Medicare Advantage policy reversed a multi-year downturn that wiped out more than half their market value.
"The worst is clearly behind the industry after a brutal repricing cycle," said Sam Goldstein, healthcare analyst at Edgen. "But the easy gains have been captured — further upside requires sustained cost discipline and continued government support."
Humana surged 45% year-to-date, UnitedHealth gained 25% and CVS rose 29%, recovering from peak-to-trough losses exceeding 50% over the prior two years. The rebound followed aggressive plan repricing, exits from unprofitable markets, and a Trump administration rate increase exceeding 5% for 2026 with another favorable update for 2027. Hospital operators swung the other way: HCA Healthcare fell sharply from its March high and Tenet Healthcare slumped alongside as admission and emergency-room visit growth slowed sharply in the first quarter.
The recovery has already repriced valuations. Humana trades at 31 times forward earnings, up from 14 times at its March trough, while UnitedHealth trades at 21 times versus 14 times earlier this year. CVS trades at 12.8 times, up from 10 times. Against 2029 earnings, Humana trades at roughly 12 times — a more reasonable bet on the business once the recovery has fully played out. For the rally to extend, investors need multiple quarters of tame cost trends and continued government easing. The risk-coding overhaul that would have hurt industry profits is widely seen as deferred rather than dead.
Medicare Advantage denial rates draw scrutiny
While the financial recovery has been swift, the operational practices that contributed to insurer profitability are facing renewed scrutiny. Two June reports from the HHS Office of Inspector General found that the three largest Medicare Advantage plans denied requests for long-term care hospital admissions at rates nearly double those of smaller peers. CVS Health denied 80% of such requests, Humana denied 72% and UnitedHealth denied 71%, compared with a 42% average for the other 16 plans evaluated. For inpatient rehabilitation facilities, UnitedHealth led with a 66% denial rate, followed by Humana at 54% and CVS at 51%.
The high denial rates have drawn criticism from post-acute care associations, which are calling on Congress and CMS to overhaul prior authorization practices. Of the denials that were appealed, 95% were overturned in the enrollee's favor, suggesting many requests may have been inappropriately rejected initially. The National Association of Long Term Hospitals urged action rather than further study, saying "when access to medically necessary care is delayed or denied, patients face longer recoveries and increased complications."
The seesaw swings back
The economics of US healthcare resemble a seesaw, with insurers on one side and hospitals, physicians and drugmakers on the other. After years of elevated medical utilization that crushed insurer margins, the balance has shifted. Hospital admission and emergency-room visit growth slowed sharply in the first quarter, while growth in major drug categories has cooled. The rotation within healthcare tells the story: HCA is down sharply from its March high, while Tenet has slumped alongside it.
For the millions of seniors enrolled in Medicare Advantage, the turnaround cuts both ways. The wave of plan exits that defined the past two enrollment cycles should ease. But as insurers get more disciplined, the era of ever-richer benefits that included perks such as vision and grocery allowances is over. The industry has stabilized and insurers are running leaner than before — enough to swing the seesaw back, but not enough to hold it there without sustained favorable conditions.
This article is for informational purposes only and does not constitute investment advice.
[1] The Medicare Crisis for Insurers Is Over. The Easy Gains Are Too. - WSJ[2] The Medicare crisis for insurers is over. The easy gains are too.[3] Post-acute groups decry MA prior authorization practices[4] Top Medicare Advantage plans deny up to 80% of rehab requests - TechTarget[5] Medicare Plans Compared Based on Denial Rates for Specialized Care - Newsweek
