ELEVANCE HEALTH EXECUTIVE CLAIMS PROPOSED 2027 MEDICARE PAYMENT RATES FALL SHORT OF CURRENT MEDICAL COSTS AND USAGE TRENDS
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 28 2026
0mins
Should l Buy ELV?
Source: moomoo
Proposed Payment Rates: The Medicare Agency's proposed payment rates for 2027 are not aligned with the current trends in medical costs and utilization.
Concerns Over Sustainability: There are concerns that the proposed rates may not adequately address the rising costs of healthcare services.
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Analyst Views on ELV
Wall Street analysts forecast ELV stock price to rise
15 Analyst Rating
11 Buy
4 Hold
0 Sell
Moderate Buy
Current: 336.040
Low
320.00
Averages
392.07
High
431.00
Current: 336.040
Low
320.00
Averages
392.07
High
431.00
About ELV
Elevance Health, Inc. is a health company. It operates as a health insurer in the United States. The Company operates through four segments: Health Benefits, CarelonRx, Carelon Services and Corporate & Other. The Health Benefits segment offers a comprehensive suite of health plans and services to its Individual, Employer Group risk-based, Employer Group fee-based, BlueCard, Medicare, Medicaid and Federal Employee Program (FEP) members. The Health Benefits segment also offers health products on a full-risk basis. The CarelonRx segment includes its pharmacy services business. CarelonRx markets and offers pharmacy services to its affiliated health plan customers, as well as to external customers outside of the health plans. The Carelon Services segment integrates physical, behavioral, pharmacy, and social services by offering an array of healthcare-related services and capabilities to internal and external customers through its Carelon Health and Carelon Insights businesses.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Background of Prior Investigation: The subpoenas follow insufficient responses to a December request, highlighting ongoing regulatory scrutiny over potential fraud, which may lead to stricter oversight and compliance measures within the industry.
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- New Drug Transparency Regulation: The U.S. Department of Labor has proposed a regulation requiring Pharmacy Benefit Managers (PBMs) to fully disclose their compensation to self-insured health plans, impacting approximately 90 million Americans, aimed at eliminating hidden fees and enhancing transparency in the healthcare system.
- Targeting Hidden Fees: The regulation specifically addresses PBMs' practices such as spread pricing, rebates, and clawbacks, aiming to reduce improper profits made by PBMs in drug transactions by mandating disclosure of these fees to protect employers and patients' interests.
- Market Reaction: Following the announcement of a mere 0.09% increase in Medicare payments, the market reacted sharply, with Humana's stock dropping over 13% and UnitedHealth nearly 9%, reflecting investor concerns about the industry's outlook amidst rising costs.
- Long-term Profit Pressure: For companies like CVS, UnitedHealth, and Cigna, PBM services are a significant revenue driver; the new regulation may compress their profit margins, leading to prolonged earnings pressure for these healthcare giants.
See More
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See More
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- Earnings Risk Heightened: Analysts warn that if the proposed rates are finalized without adjustments, insurers could see a 15% to 20% decrease in earnings due to the disconnect between rising medical costs and flat funding, exacerbating profitability pressures within the industry.
- Bleak Industry Outlook: Although final rates are expected in April and historical trends suggest potential improvements, analysts predict the healthcare sector may enter a stagnation period of one to two years where earnings fail to expand as previously hoped, negatively affecting investor sentiment.
- Operational Improvements Overlooked: Despite UnitedHealth reporting quarterly improvements in profitability, the headline risk from the payment proposal continues to overshadow operational gains, with analysts noting that while progress is being made, significant recovery challenges remain.
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