Diving overview:
- In 2026, the average star rating for Medicare Advantage remained relatively stable after several years of decline, which is encouraging for an industry facing concerns about quality metrics.
- The performance of leading insurance companies showed differences. UnitedHealthcare maintained a steady percentage of members in four-star or higher plans, while Humana and Aetna saw declines. Elevance and Centene, on the other hand, showed improvement among the five major publicly traded payers in the privatized Medicare sector.
- Clover Health appears to be the biggest loser, as its main policy, which encompasses nearly all MA members, is under four stars. Analysts suggest this could result in significant profit losses for Clover.
Dive Insight:
On Thursday night, the Centers for Medicare & Medicaid Services (CMS) discreetly published the much-anticipated 2026 star ratings for MA insurance companies. Typically, a press release accompanies such announcements, but none has been issued yet. There are concerns that potential government shutdowns could impact communications, as noted by HHS in its contingency plans.
The newly released 2026 data file shows a slight increase in the weighted average star rating from 3.96 to 3.98, according to TD Cowen’s estimates. Many industry experts were surprised to see these results, especially since achieving top ratings is becoming more challenging due to raised standards post-pandemic.
Higher star ratings are actively sought by insurance companies, as they link directly to bonuses and advantages in MA programs. It’s particularly crucial for MA contracts to achieve four-star ratings since it leads to greater bonus payments. Lower bids beneath the CMS benchmark mean that a higher score equates to larger rebates.
UnitedHealthcare and Humana, the largest MA insurers with 10.3 million and 5.8 million members respectively, provided early glimpses into their 2026 ratings. Overall, the final results aligned with early expectations, with UnitedHealthcare reporting that over 77% of its members are in plans rated four stars or more, similar to the previous year.
In contrast, nearly 20% of Humana members are projected to achieve at least four stars next year, a decline from 25% this year.
Aetna, the third-largest MA insurer with 4.2 million members, will have about 81% of its members enrolled in highly-rated plans, down from 89% in 2025, yet still outpacing its competitors.
Aetna’s President Steve Nelson expressed pride in these results in a statement made Thursday.
Elevance, serving around 2.2 million MA members, will see 53% of its members in four-star plans next year, up from roughly 40% this year, thanks mainly to a major contract improving from 3.5 stars to 4 stars.
Kaiser, the fifth-largest insurer in the MA market with around 2 million members, reports virtually all of its members remain in at least four-star plans. Furthermore, Centene increased its percentage of members in higher-rated plans from 1% this year to over 18% next year.
Humana and Aetna experienced a decline in enrollment in top-rated plans, while Elevance and Centene improved.
Results for other publicly traded insurers varied, with Alignment Healthcare achieving 100% of its members under four-star plans again. This company markets itself as a tech-savvy MA provider focused on quality, and had even filed a lawsuit against CMS earlier this year for score adjustments.
Conversely, Clover, which offers MA plans in several states, fell short of the four-star requirement for its largest contract, affecting 97% of its members. Analysts indicated this could wipe out Clover’s adjusted pre-tax profits. Clover publicly criticized CMS’s methodology, asserting that their star rating does not reflect the health outcomes they deliver.
Analysts found no significant surprises in the star ratings apart from Clover’s situation. The stock market’s reaction to the announcement has been modest.
Plans with downgraded ratings may experience reduced revenue from CMS, leading them to either cut supplemental benefits or increase premiums as a means to safeguard profit margins. This could negatively impact the attractiveness of MA plans in 2027, particularly as major carriers are aligning their offerings to restore profit levels.
UnitedHealthcare, Humana, and Aetna have all chosen to limit their market presence in 2026 to enhance profit margins. Major players are increasingly shifting costs to narrower networks and designs.
Insurers do have tactics to offset the impact of star ratings on business. For instance, Humana has mentioned plans to diversify contracts to guide members toward more highly-rated options, aiming to increase revenues by 2027.
