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UnitedHealth has warned its revenues will fall for the first time in at least three decades, as the US insurer faces the prospect of a squeeze on government funding for elderly Americans.
The company said on Tuesday that its revenues would fall 2 per cent to $439bn this year, a day after the Trump administration announced a smaller than expected increase in payments to insurers that offer coverage to users of government-backed Medicare.
UnitedHealth is particularly exposed to certain plans within Medicare, a scheme used by 34mn elderly Americans and people with disabilities. The company provided cover for 9.9mn people on Medicare Advantage plans last year, according to KFF, a non-profit health policy research group.
UnitedHealth shares slumped 19 per cent on Tuesday. Shares in rival US insurer Humana fell 21 per cent, CVS and Elevance also dropped more than 10 per cent.
Under the funding plan for next year, federal payments to insurers will rise 0.09 per cent, or about $700mn. The proposal marks a steep decline from 2025, when payments climbed 5 per cent, or $25bn. Analysts had earmarked a similar-sized increase for this year.
“The insurers are facing a tough political climate, which is atypical of a Republican regime,” noted analysts at Oppenheimer. “Inflation has been trending above historical levels for multiple years, and the [Medicare] rate updates have significantly lagged that trend.”
The proposal from the Centers for Medicare and Medicaid Services is the latest in a string of blows to UnitedHealth.
Last May, the company removed chief executive Andrew Witty and brought back its longtime CEO Stephen Hemsley. in a bid to revive its fortunes.
The company also acknowledged a justice department criminal investigation related to its Medicare billing programme. In December 2024, company executive Brian Thompson was shot dead in a targeted killing. The suspect, Luigi Mangione, is expected to go on trial later this year.
On Tuesday, UnitedHealth also reported its profits dropped 41 per cent to $19bn last year, after its bottom line was hit by $1.6bn in restructuring costs tied to a cyber attack.
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