Humana Shares Surge 15% as Medicare Advantage Star Ratings Leap from 20% to 95% Coverage at Four Stars or Higher

Humana Inc. shares surged as much as 16% in premarket trading on October 9 after the health insurer announced a dramatic improvement in its Medicare Advantage plan quality ratings for 2027. The company said 95% of its members will be enrolled in plans rated four stars or higher, up sharply from just 20% in 2026, far exceeding J.P. Morgan analyst expectations of 60% to 70%.

The improvement translates directly into billions of dollars in government bonus payments from the Centers for Medicare and Medicaid Services, which rates Medicare Advantage and prescription drug plans on a one-to-five-star scale. Humana secured four-star status for its pivotal 2.4 million-member Medicare Advantage contract, restoring its eligibility for CMS bonus payments in 2028. The company gained 11 additional Medicare Advantage contracts rated at least four stars compared with the prior year, bringing its total to 18 contracts at that threshold, including six rated 4.5 stars. Its prescription drug plan contract also received a 4.5-star rating.

The ratings improvement puts Humana well ahead of larger rivals. J.P. Morgan estimates UnitedHealth Group's share of enrollments in four-star-or-higher plans will fall to roughly 67% from 81%, and CVS Health's to approximately 70% from 84%, making Humana the standout beneficiary of the 2027 cycle. Baird upgraded Humana to Outperform from Neutral on October 9, setting a price target of $596, citing the ratings turnaround as a fundamental positive for the company heading into the Medicare annual enrollment period.