Humana disclosed that just 20% of its Medicare Advantage members will be enrolled in plans rated 4 stars or above for 2026, a modest decline from 2025 and broadly in line with the company’s own expectations. That shift catches attention because Humana is one of the largest players in the Medicare Advantage market and investors watch these ratings closely. The move signals a tougher road ahead for the insurer as it works to stabilize quality scores and financial returns.
The company also reported an improvement in the share of members in plans rated 4.5 stars or higher, jumping to 14% for 2026 from 3% in 2025. Despite that gain, Humana’s average star rating sits at 3.61, essentially flat year over year, and the insurer described the results as unsatisfying. Markets reacted mildly, with Humana’s stock rising roughly 3% on the day of the disclosure.
Dive Brief and Context
This disclosure followed a chaotic release of CMS materials, when regulators published detailed Medicare Advantage plan information for 2026 and inadvertently exposed some star ratings data. That accidental publication prompted Humana to file its own public disclosure to make the numbers clear to investors. It’s a reminder that reporting season for insurers can be as much about managing information flow as it is about operational fixes.
To put these figures in sharper relief, the percentage of Humana members in plans rated 4 stars or higher fell from 25% this year to 20% for 2026, and that decline is even starker when compared with 2024. In 2024, an astonishing 94% of Humana’s members were in plans rated at least 4 stars, a benchmark the company once consistently met. Losing that status has material financial consequences that the company and investors cannot ignore.
Why does the 4-star threshold matter so much? Plans that score 4 or higher qualify for higher bonus payments from CMS, and higher star scores also produce larger rebates when plans bid below the agency benchmark. Those bonus structures are central to the profitability math of Medicare Advantage, especially as medical costs for seniors have been rising faster than expected.
Humana has warned that the drop in star ratings cost it billions of dollars in revenue between 2024 and 2025, and another slide for 2026 would only deepen that pain. Insurance companies price plans and plan networks with these ratings and the associated payments in mind, so a ratings downgrade ripples through revenue forecasts and margins. For Humana, the stakes are not abstract—this affects how competitively it can bid and how much it can invest in benefits or provider relationships.
“While the Company is not satisfied with its 2026 Star Ratings, it is pleased with the tactical operational improvements made during the final months of the 2026 measurement period, creating a solid foundation for the Company’s expected return to Top Quartile results for the 2027 Star Ratings,” Humana said in its securities filing.
Beyond words, Humana has taken multiple tactical steps to lift quality and return to top-tier performance. The company has ramped up efforts to close gaps in care, increased member outreach and invested in technology aimed at improving measures that feed into the star system. Executives say these moves laid groundwork during the latter part of the measurement window that should help in 2027.
Humana has also pursued contract diversification as a strategic lever, since CMS calculates stars at the contract level rather than at the individual plan level. One contract can cover several plan variants, and by shifting enrollment and attribution across contracts, Humana can concentrate more members under higher-rated contract umbrellas. That approach is technical but legal, and insurers view it as a way to secure better per-member payouts when done within the rules.
Another blunt tool has been changes to broker commissions: Humana reportedly stopped paying commissions to brokers for about a third of its products. Cutting commission payments is an industry tactic to steer enrollment flows toward plans the insurer prefers, which can include those tied to higher-rated contracts or those that better manage risk. Critics worry such moves can complicate seniors’ shopping experiences, but insurers defend them as necessary adjustments in a tougher margin environment.
Humana predicts that the percentage of members in plans rated at least 4 stars will be “meaningfully higher” than 20% in 2027, reflecting confidence that recent operational changes will produce measurable improvements. Whether those gains materialize depends on execution and on how CMS updates measurement methods or policies. The next rating cycle will be the clearest test of whether Humana’s tactical shift was enough.
Across the industry, the three largest Medicare Advantage carriers trimmed the number of states and counties they serve for 2026 as they recalibrated product footprints and sought to limit exposure in high-cost areas. Humana, by contrast, kept plan benefits relatively stable, a choice that some investors worry could attract members with heavier healthcare needs. That tradeoff highlights the tension between growth, market share and margin control facing major payers.
Finally, Humana expects to double its pre-tax margin in individual MA plans next year excluding the impact of star ratings, signaling management’s aim to strengthen profitability even if quality scores lag temporarily. UnitedHealthcare, for comparison, disclosed it would have roughly 78% of its MA enrollees in plans rated 4 stars or higher, a far stronger position that has remained largely flat. Watchers will be focused on whether Humana can close that gap without sacrificing its competitive position or member experience.
For investors, regulators and members, the key items to watch are Humana’s execution on care gaps and outreach, the 2027 star ratings, and whether CMS policy shifts alter how scores translate into payments. The next year will reveal whether Humana’s recent operational fixes and strategic moves can rebuild the star performance that once defined the company’s Medicare Advantage success. Until then, the ratings slide is a cautionary tale about how quickly market dynamics can change in privatized Medicare.
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h/t: Yahoo Finance
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