Medicare Payments Shock Sends Health Insurance Stocks Diving

Summary

WSJ What’s News – PM Edition

Episode: Medicare Payments Shock Sends Health Insurance Stocks Diving

Date: January 27, 2026
Host: Alex Osola
Featured Guest: Ana Wieldy Matthews (WSJ Health Insurance Reporter), UnitedHealth Executive, Richard Rubin (WSJ Tax Policy Reporter)

---

Episode Overview

This episode covers the dramatic market impact after the Trump administration announced Medicare payments to insurers would remain flat next year—far below Wall Street expectations. The discussion explores the resulting stock plunge for major insurers, details on what the administration is proposing, how insurers and seniors could be affected, and the industry’s strategy to push back on the government’s decision. Additional business headlines include earnings reports from GM, Boeing, UPS, and updates on Amazon’s physical retail strategy, U.S. population trends, and tax policy in an election year.

---

Key Discussion Points

1. Medicare Payments Proposal and Market Reaction

• Flat Reimbursement Rates:
  The Trump administration's proposal keeps Medicare Advantage reimbursement rates nearly flat for 2027, rising by only 0.09%.

  • Timestamps: [00:48], [01:40]

• Market Fallout:
  Insurer stocks, especially UnitedHealth Group and Humana, plummeted by over 14% after the news, dragging down the Dow.

  • Timestamps: [00:48], [04:17]

• Industry Expectations:
  Wall Street had anticipated a 4-6% rate increase, reflecting rising healthcare costs and insurer expectations for continued growth.

2. Administration’s Reasoning and Policy Shifts

• Methodology and Transparency:
  • Actuaries at the Medicare agency project only slight increases in health costs.
  • The administration is shifting policy to make payments more “transparent, accurate, and to sustain the program,” and to “crimp some industry billing practices.”
  • Quote (Ana Wieldy Matthews, 01:40):
    “They say that the goal here is to make Medicare payment transparent, accurate, and also to sustain the program.”

3. Insurer Concerns and Potential Impact on Seniors

• Insurer Warnings:
  An executive from UnitedHealth warned flat rates could “profoundly” impact seniors’ benefits and access.

  • Quote (UnitedHealth Executive, 02:27):
    “We will continue to work with CMS to ensure an appropriate final growth rate calculation to avoid a profoundly negative impact on seniors benefits and access to care.”

• Impact on Offerings:

  • Insurers may cut extra benefits for seniors (like dental), reduce plan choices, limit geographic coverage, or impose more restrictions (e.g., requiring referrals for specialists) to maintain margins.
  • Quote (Ana Wieldy Matthews, 02:44):
    “One thing they tend to do when they're concerned about their margins is to reduce their offerings of extra benefits that beneficiaries often like—things like dental care. ...they may offer plans that have more restrictions, like going to your primary care doctor to get a referral…”

4. The Industry’s Pushback and What’s Next

• Lobbying Blitz:
  Insurers are set for a significant lobbying and advertising campaign to sway the final payment rates before they’re finalized in early April.

  • Quote (Ana Wieldy Matthews, 03:45):
    “Absolutely, and that is definitely already underway...you’ll likely see advertising campaigns, you’ll likely see a lot of lobbying of members of Congress. The final rates tend to come out in early April.”

• Process Timeline:

  • The proposed rates are subject to change following the industry’s pressure campaign.
  • Early April is the critical point when finalized government rates are expected.

---

Other Headlines & Notable Business News

Stock Market Summary

• Health Insurers:
  Humana, UnitedHealth, and CVS “led market losses today, sinking 14% or more.”
• Indexes:
  • Dow fell 0.8%
  • Nasdaq gained 0.9%, uplifted by chip stocks
  • S&P 500 closed at a new high, up 0.4%
    [04:17]

Earnings Roundup

• GM:
  Despite a $3.3 billion loss (mainly from electric vehicle business), stock surged 8.8% due to strong cash flow outlook and investor-friendly moves.
• Boeing:
  Turned a profit and saw increased deliveries, but shares slipped 1.6%.
• UPS:
  Announced 30,000 job cuts while reporting stronger profits; shares up 0.2%. [04:17]

Amazon's Retail Shift

• Closing 72 Amazon Go and Amazon Fresh stores.
• Committing to expand Whole Foods and planning a new Amazon “big box” store in Illinois. [04:48]

Other Segments

Population Growth & Immigration Policy

• New census data: US population grew by 1.8 million (0.5% increase), slowest pace since COVID-19, reflecting impacts from restrictive immigration policies.
  [07:24]

Tax Refunds as Election Strategy

• Discussion with WSJ tax policy reporter Richard Rubin on how larger, more visible tax refunds are engineered this year to benefit Republicans in the midterms.
  • Quote (Richard Rubin, 08:53):
    "The real political challenge here is to keep it in the forefront for people...for the people who get much bigger refunds, they're going to be easier to see."
  • IRS staff cuts could slow down processing of complicated returns, but most electronic refunds will not be delayed. [08:53]

Legal Challenge to US Anti-Drug Operations

• Families of two Trinidad men sue US over a deadly anti-drug boat strike, alleging murder; the White House defends the strike as targeting narco-terrorists.
  [10:36]

Yale Tuition Update

• Yale to offer tuition-free attendance for families earning up to $200,000, mirroring policies by other elite universities.
  [10:36]

---

Memorable Quotes & Timestamps

• Ana Wieldy Matthews (on policy intent):
  “The goal here is to make Medicare payment transparent, accurate, and also to sustain the program.” [01:40]

• UnitedHealth Executive (on risk to benefits):
  “We will continue to work with CMS to ensure an appropriate final growth rate calculation to avoid a profoundly negative impact on seniors’ benefits and access to care.” [02:27]

• Ana Wieldy Matthews (on industry pushback):
  “You’ll likely see advertising campaigns, you’ll likely see a lot of lobbying of members of Congress.” [03:45]

• Richard Rubin (on tax refunds):
  “The real political challenge here is to keep it in the forefront for people...for the people who get much bigger refunds, they're going to be easier to see.” [08:53]

---

Episode Flow & Tone

The episode follows a brisk, news-focused format, tackling headline business news with concise, knowledgeable insights from reporters and key industry voices. The tone remains factual and analytical, with occasional pointed quotes from industry and government actors. Alex Osola’s questions keep the conversation moving and prompt clear, detailed commentary from the guests.

---

Key Segments & Timestamps

• [00:48] – Explanation of the Medicare payment proposals and market impact
• [01:40] – Administration policy reasoning (Ana Wieldy Matthews)
• [02:27] – UnitedHealth response and insurer concerns
• [02:44] – Potential effects on seniors and benefits (Matthews)
• [03:45] – Outlook and industry lobbying campaign
• [04:17] – Stock market and company earnings roundup
• [04:48] – Update on Amazon’s retail pivot
• [07:24] – U.S. population growth slowdown and immigration policy
• [08:53] – Tax refunds, politics, and IRS capacity (Richard Rubin)
• [10:36] – Lawsuit over US anti-drug operations and Yale tuition news

---

Summary for Non-Listeners

If you missed this episode, here are the essentials:
The Trump administration’s flat Medicare payment proposal shocked health insurer stocks, threatening coverage options and supplemental benefits for seniors if not reversed. The insurance industry is set for a lobbying blitz before the April decision. Meanwhile, robust earnings news, shifting Amazon retail plans, slow US population growth, and a politically charged tax refund strategy rounded out a packed news day. The episode offers fast, well-explained stories on all these fronts—with expert voiceovers from WSJ’s deep bench of reporters.

Transcript

[Jessica Mendoza]

Hey, this is Jessica Mendoza, host of the Journal Podcast, our show about money, business and power. If you're looking for more deeply reported stories like we share every day, consider becoming a subscriber to the Wall Street Journal. Visit subscribe.WSJ.com TheJournal all lowercase to subscribe now.

[Alex Osola]

It's the thick of earnings season. We'll bring you the latest updates from GM and other big US Companies, plus, what's next for health insurers after the Trump administration administration's position on Medicare payments shocked the industry.

[Ana Wieldy Matthews]

You'll likely see advertising campaigns, you'll likely see a lot of lobbying of members of Congress. The final rates tend to come out in early April, so we've got a window here when the industry can try to change the direction.

[Alex Osola]

And for Amazon Fresh and Go, stores are out, but Whole Foods is in. It's Tuesday, January 27th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world. Shares of Medicare insurers like UnitedHealth Group and Humana dove today why the Trump administration's proposing that the rates the government pays to reimburse insurers for Medicare plans would stay roughly flat next year, rising by an estimated 0.09% on average. That's well short of the 4 to 6% that Wall street expected and affects a business that's central to insurers, finances and hopes for growth. Ana Wieldy Matthews, who covers health insurance for the Journal, is here to discuss. Ana, what is the administration's reasoning behind keeping this rate essentially flat?

[Ana Wieldy Matthews]

Well, it's definitely a surprise for investors, as you can see with what's going on with the stocks today. The reasoning for the proposal being roughly flat. There are a lot of different things involved, but one of the main ones is just determinations made by actuaries at the Medicare agency who are estimating how much they think health costs are going to go up. But another reason is that the Trump administration is proposing a change in policy that could crimp some industry billing practices and perhaps limit how much money they get. They say that the goal here is to make Medicare payment transparent, accurate, and also to sustain the program.

[Alex Osola]

The insurance companies obviously don't like this development, and on the UnitedHealth earnings call today, an executive warned that its policyholders would be hurt.

[UnitedHealth Executive]

We will continue to work with CMS to ensure an appropriate final growth rate calculation to avoid a profoundly negative impact on seniors benefits and access to care.

[Alex Osola]

Ana, what's the relationship between the rate insurers are getting and health care for people on Medicare.

[Ana Wieldy Matthews]

What insurers are saying is that enrollees, seniors, Medicare beneficiaries will be squeezed down the line if insurers don't get payments that they consider adequate. Insurers want to make a margin. They have shareholders. So when the government pays them rates that they consider short of what they should be given, the likely costs of the health care that these plans cover, they make other tweaks, maybe make things a little skinnier. One thing they tend to do when they're concerned about their margins is to reduce their offerings of extra benefits that beneficiaries often like things like dental care. Another thing is they may not offer as many plans or plans in as many places, or they may offer plans that have more restrictions, like going to your primary care doctor to get a referral if you want to see a specialist.

[Alex Osola]

These rates are still in the proposal phase. What happens next? Can we expect a big lobbying push from these insurers to try to change the rate that gets finalized?

[Ana Wieldy Matthews]

Absolutely, and that is definitely already underway. Industry observers expect a huge lobbying push, and frankly, this tends to happen every year, but particularly when the industry feels like the rates are not as high as they expected. So you'll likely see advertising campaigns, you'll likely see a lot of lobbying of members of Congress. The final rates tend to come out in early April. So we've got a window here when the industry can try to change the direction.

[Alex Osola]

That was WSJ reporter Ana. We'll do Matthews. Thanks, Ana.

[Ana Wieldy Matthews]

Thanks.

[Alex Osola]

Shares in Humana, UnitedHealth and CVS led market losses today, sinking 14% or more. That dragged down the Dow, which fell 0.8%. But the Nasdaq rose 0.9%, boosted by an uptick in chip stocks. And The S&P 500 added 0.4%, closing at its first new high in two weeks. And three big companies reported today. First up is General Motors, which posted a $3.3 billion loss, mostly related to its struggling EV business. But shares jumped 8.8% today as GM predicted higher than expected cash flows this year and promised to return more cash to investors. Meanwhile, Boeing swung to a fourth quarter profit and its revenue surged as it made more planes and shipped more of them to customers. Deliveries of commercial aircraft hit their highest point since 2018, but the stock slipped 1.6%. And UPS says it's cutting 30,000 jobs in operations, part of an ongoing cost cutting push that the company says is paying off. Its profit grew in the fourth quarter. And for this year, UPS expects revenue will grow slightly. Shares closed up 0.2%. And the federal Reserve also kicked off its latest meeting today. You'll hear more about that from us tomorrow when officials announce their decision. They're expected to hold rates steady after making cuts at three meetings in a row. TikTok has settled a lawsuit in California over teenagers and mental health, a growing issue in the courts. The lawsuit said that social media companies designed their products to addict young people. There are about 3,000 similar claims in California pending against social media companies, including Meta, YouTube, Snap and TikTok. The companies say that they invest in online safety measures and that the lawsuits are misleading. And the 72Amazon go and Amazon Fresh stores are closing. It's the latest turn in Amazon's efforts to break into physical retail. The online shopping giant says it does plan to open more than 100 new Whole Foods stores. And a big box Amazon store is also in the works in Illinois, where the company plans to sell groceries and general merchandise. Coming up, why the US Population is growing more slowly and why the Trump administration is betting on bigger tax refunds this year. That's after the break.

[Christopher Mims and Tim Higgins]

Hi, I'm Christopher Mims. And I'm Tim Higgins. We're the hosts of the Wall Street Journal's Bold Names podcast. On our show, we bring the Bold name companies featured in the pages of the Wall Street Journal to life through real conversations with the people that lead them. If you're looking for more news and insights that bring you inside the C Suite, consider becoming a subscriber to the Wall street journal. Visit subscribe.WSJ.com boldnames to subscribe now.

[Alex Osola]

Homeland Security Secretary Kristi Noem is facing criticism on both sides of the aisle for how she's handled the death of Alex Preddy in Minnesota. She said that he approached federal agents with a handgun and attacked them. Video footage contradicts Noem's claims. President Trump today defended Noem and said she wouldn't step down. Meanwhile, Senate Republicans and the White House are trying to broker a last minute deal with Democrats over immigration enforcement. Democrats want limits on the Department of Homeland Security passed into law. A deal is seen as necessary to stop another government shutdown. And the Trump administration's immigration restrictions have slowed U.S. population growth. New estimates from the Census Bureau found that the population grew by 1.8 million people, or half a percent, in the 12 months through June. That's the slowest pace since COVID 19 caused a certain surge in deaths and curbed border crossings. On yesterday's show, we talked about how a lot of people are probably getting bigger tax refunds this year. Having that drop into Americans bank accounts during an election year is far from a coincidence. It's engineered to improve Republicans chances with voters ahead of the midterms. But there's no guarantee that strategy will work. For more, I'm joined now by WSJ tax policy reporter Richard Rubin. So Rich, it seems like a pretty simple strategy to me. Put money in voters wallets, get rewarded at the polls. How has this kind of thing worked in the past?

[Richard Rubin]

Medium Republicans tried to cut taxes in 2017 for the 2018 year that really people didn't notice so much. And so this year they're really trying to make them very visible as these lump sum refunds and tell people who's responsible for them. The issue is twofold. One is like getting the IRS to function well and make sure that they're getting the money out. Two is there's so much happening in the world, so much happening in the country. The real political challenge here is to keep it in the forefront for people. So the average tax refund last year was a little more than $3,100 and this year it's expected to be another thousand dollars more. For the people who get much bigger refunds, they're going to be easier to see. The things like the standard DED and child credit are smaller and broader so more people will get them. But can you associate that extra 2, 3, $400 in your refund with your local Republican House member?

[Alex Osola]

I'm interested in what you were saying about making sure the IRS does this efficiently. I'm remembering to last year when the IRS saw pretty big staff cuts when the Trump administration came into office.

[Richard Rubin]

Yeah.

[Alex Osola]

Does that mean the agency is going to have a harder time getting these refunds out in a timely fashion?

[Richard Rubin]

So for the basic chunk of refunds, it should be the same like electronic filing, direct deposit, no issues on your return. It's all automated. The issue with the IRS and staffing comes down to when you have a question, when there's a problem on your return. Those things require people on the other end and that's where they may run into trouble.

[Alex Osola]

That was WSJ reporter Richard Rubin. Thanks, Richard.

[Richard Rubin]

Sure. Thanks for having me.

[Alex Osola]

The families of two men from Trinidad killed in a boat strike off the coast of Venezuela are suing the U.S. it's the first challenge in a U.S. court over the Trump administration's campaign targeting boats that they say are used in drug trafficking. The suit says the strike amounted to murder. A White House spokeswoman said the strike was against, quote, designated narco terrorists and that President Trump had the authority to order it. And Yale University said that starting this fall, students from households earning up to $200,000 can attend tuition free. A few wealthy institutions like Harvard and MIT have made similar offers to middle class families. And that's what's news for this Tuesday afternoon. Today's show is produced by Pierre Bienname with supervising producer Tali Arbel. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.