Humana surges after topping 2027 Medicare Advantage star ratings

Humana shares surged up to 15% on October 9, 2026, after the insurer engineered a dramatic turnaround in its 2027 Medicare Advantage star ratings. Humana announced that 95% of its members will be in plans rated four stars or higher, up from just 20% in 2026, potentially netting the company billions in federal bonus payments. Conversely, rivals like UnitedHealth and CVS expect rating declines, while Alignment Healthcare shares plummeted over 20% after its largest contract fell below the four-star threshold.

Financial impact of Humana's recovery

• ▪Humana's stock rose 15% on Friday, October 9, 2026, following the release of the 2027 Medicare Advantage star ratings, after having surged nearly 13% in postmarket trading the previous day
• ▪TD Cowen analyst Ryan Langston estimated that Humana's star ratings recovery could net the insurer $3 billion or more in extra revenue in 2028, while Evercore ISI analyst Elizabeth Anderson estimated the bonus payments could reach $4.8 billion

Humana's 2027 star ratings recovery

• ▪Humana secured ratings of at least four stars for 18 of its Medicare Advantage contracts from the Centers for Medicare and Medicaid Services for 2027, up from seven contracts a year earlier
• ▪Humana announced that 95% of its Medicare Advantage members will be enrolled in plans rated four stars or higher in 2027, representing a sharp recovery from 20% in 2026

Humana's historical ratings collapse

• ▪Humana's historical ratings collapse began with a steep drop in its 2025 Medicare Advantage star ratings, and the insurer subsequently lost a lawsuit challenging how those 2025 Medicare Advantage star ratings were calculated in October 2025
• ▪Humana's percentage of members in plans rated at least 4 stars had collapsed from 94% in 2024 to 25% in 2025, and dropped further to 20% in 2026

Impact on Alignment Healthcare

• ▪Shares in Alignment Healthcare fell more than 20% following the 2027 Medicare Advantage star ratings release, which TD Cowen analyst Ryan Langston estimated could cost the insurer over $170 million in revenue in 2028
• ▪Alignment Healthcare president Dawn Maroney stated that the insurer intends to pursue administrative remedies and litigate the measures and methodologies used by the Centers for Medicare and Medicaid Services to calculate the 2027 Medicare Advantage star ratings
• ▪Alignment Healthcare's largest contract slipped below 4 stars for 2027, meaning only 25% of its members will be in plans rated above that threshold, down from 98% currently

Overall ratings decline

• ▪About 37% of Medicare Advantage plans with drug coverage earned four stars or above for 2027, down from 44% in 2026, according to the Centers for Medicare and Medicaid Services
• ▪The Centers for Medicare and Medicaid Services tweaked its methodology for the 2027 Medicare Advantage star ratings by adding new measures, adjusting weights, and raising thresholds, which contributed to a decline in the average star rating from 4.01 to 3.99

Star ratings overview

• ▪Medicare Advantage star ratings are directly tied to lucrative government bonus payments and larger rebates if plans submit bids below the Centers for Medicare and Medicaid Services' benchmark
• ▪The U.S. health department announced on Thursday, October 8, 2026, that about 71% of Medicare Advantage prescription drug plan enrollees are in contracts rated four stars or higher for 2027

Debatable claims

• ▪Insurers are justified in cutting senior benefits when Medicare star ratings drop
• ▪The CMS Medicare Advantage star rating methodology unfairly penalizes health insurers
• ▪Humana's star rating recovery reflects a genuine improvement in plan quality
• ▪The federal government should stop tying Medicare Advantage bonuses to star ratings