Humana stock soars after big jump in Medicare star ratings
Humana shares jumped about 15% Friday after new government ratings put 95% of its Medicare Advantage members in plans rated four stars or higher for 2027. That is up from 20% this year. High ratings can bring insurers billions of dollars in bonus payments.
Health insurer Humana got a big win from the federal government's new Medicare ratings.
Humana said 95% of its Medicare Advantage members will be in plans rated four stars or higher in 2027, CNBC reported. That is up from just 20% in 2026. Its shares rose about 15% in Friday trading and closed up about 11.6%, Reuters said.
Medicare Advantage plans are private insurance plans for people 65 and older and some people with disabilities. The government grades them from one to five stars. Plans with four stars or more earn bonus payments, so the ratings are worth a lot of money.
Humana had a rough two years. Its 2025 ratings dropped sharply, which threatened its bonuses. It lost a lawsuit over how those ratings were figured, and in February it forecast 2026 profit below Wall Street's hopes.
Now it is ahead of bigger rivals. J.P. Morgan estimates UnitedHealth's share of members in plans with four stars or more will fall to about 67% from 81%, and CVS Health's to about 70% from 84%, CNBC reported.
Analysts are now trying to put a price on the gain. Evercore ISI analyst Elizabeth Anderson said Humana could get $4.8 billion in bonus payments in 2028. Healthcare Dive reported a wider range of estimates, starting near $3 billion.
Baird analysts warned the profit boost will depend on how much Humana spends on member benefits and deals with doctors.
Across all plans, about 71% of Medicare Advantage drug plan members are in contracts rated four stars or higher for 2027, the health department said.
What we know: Humana's share of members in top-rated plans jumped to 95%.
What we don't: how much of the bonus money will reach Humana's profits.
Where outlets agree CNBC and Healthcare Dive both report that 95% of Humana's Medicare Advantage members will be in plans rated four stars or higher for 2027.
Where they differ CNBC cites an Evercore estimate of $4.8 billion in 2028 bonus payments, while Healthcare Dive reports analyst estimates starting near $3 billion.