UnitedHealth Anticipates Strong Medicare Advantage Performance for 2026

UnitedHealth Group, the healthcare behemoth, has disclosed positive expectations for its Medicare Advantage (MA) plans in the upcoming year, signaling potential stability in the volatile MA market. This development comes amid industry-wide concerns over stricter quality metrics and margin pressures.

Medicare Advantage Star Ratings Hold Steady

UnitedHealth expects approximately 78% of its Medicare Advantage enrollees to be in plans rated four stars or higher for 2026, according to a recent securities filing. This figure remains largely consistent with the company's 2025 performance, defying industry fears of a significant downturn due to more stringent Centers for Medicare & Medicaid Services (CMS) rating criteria.

The stability in UnitedHealth's star ratings is particularly noteworthy given the challenges faced by insurers in meeting the CMS's enhanced quality thresholds. Last year, changes to the star ratings methodology led to lower average scores across the industry for 2025, prompting legal actions from multiple insurers seeking recalculation of their ratings.

Market Reaction and Industry Implications

The news of UnitedHealth's star ratings projection was met with enthusiasm on Wall Street, with the company's stock rising approximately 9% following the disclosure. This positive reception underscores the critical importance of star ratings in the MA market, where higher scores translate directly to increased government payments and enhanced market competitiveness.

Analyst Lisa Gill of J.P. Morgan noted, "Our biggest takeaway is that we aren't seeing a material upward shift in stars similar to last year." This observation suggests that the CMS may not have further tightened the four-star threshold for 2026, alleviating some concerns within the industry.

Broader Industry Trends and Challenges

While UnitedHealth's star ratings outlook appears stable, the MA market continues to face significant challenges. Insurers, including UnitedHealth, are grappling with higher medical utilization among seniors and unfavorable policy changes that have squeezed once-comfortable profit margins.

In response to these pressures, many insurers are taking strategic actions. UnitedHealth's insurance division, UnitedHealthcare, is among those culling unprofitable plans, a move expected to result in the loss of approximately 600,000 enrollees. This trend of plan consolidation and market exits is likely to continue as insurers seek to improve their MA business margins.

Despite these challenges, the MA market remains a key focus for major health insurers. Companies such as Humana, Elevance Health, and Centene have expressed optimism about their star ratings for 2026, though most are withholding detailed comments until the official release of CMS ratings in October.

As the industry awaits further clarity on star ratings and navigates the complex landscape of Medicare Advantage, UnitedHealth's early disclosure provides a glimmer of stability in an otherwise uncertain market. The coming months will be crucial as other insurers reveal their ratings and the full impact of recent policy changes becomes clearer.