Humana's Medicare Ratings Drop, Impacting Future Earnings
The decline in quality ratings for Humana's Medicare plans may lead to reduced bonus payments and affect 2026 earnings.
- The U.S. government released the 2025 quality ratings for Medicare health and prescription drug plans, affecting major insurers including Humana.
- Only 25% of Humana's members are enrolled in plans rated four stars or higher for 2025, a significant drop from 94% the previous year.
- The decrease is largely due to a key Humana contract's rating being lowered from 4.5 to 3.5 stars, impacting nearly half of its Medicare Advantage customers.
- Analysts estimate that the ratings decline could pose a significant headwind to Humana's 2026 earnings, though it won't affect 2024 or 2025 financial results.
- CVS Health, in contrast, reported that 88% of its Medicare Advantage members are in plans rated four stars or higher, potentially gaining members from Humana.
