UnitedHealth’s Medicare Advantage Ratio Rises to 89.1% as CMS Raises Rates 2.48%
UnitedHealth’s medical care ratio climbed from 83.2% in 2023 to 89.1% in 2025, squeezing Medicare Advantage margins despite 7.6% membership growth last year. CMS finalized a 2.48% average rate increase for 2027, unlocking over $13 billion in additional MA payments to stabilize near-term profitability.
1. Rising Medicare Advantage Cost Pressures
UnitedHealth’s medical care ratio rose to 89.1% in 2025 from 83.2% in 2023 and 85.5% in 2024 as higher utilization from delayed care drove claims, reducing premium revenue available for margins.
2. CMS 2027 Rate Increase Provides Relief
The Centers for Medicare and Medicaid Services approved a 2.48% average payment rate increase for Medicare Advantage in 2027—up from a 0.09% proposal—unlocking over $13 billion in additional payments to plans and buffering near-term profitability.
3. Membership Growth and Competitive Position
UNH’s Medicare Advantage membership climbed 7.6% year-over-year in 2025, and the more predictable reimbursement framework should support competitive benefit offerings, member retention, and margin stabilization in a high cost environment.
4. Valuation and Market Performance
Shares of UnitedHealth declined 48.8% in the past year versus a 43.5% industry drop, while the forward price-to-earnings ratio stands at 16.8 versus a 14.3 industry average, with 2026 EPS estimates pegged at $17.66 (8% growth).