UnitedHealth Group is the company best positioned to navigate the challenging Medicare Advantage rate environment, according to Piper Sandler Senior Research Analyst Jessica Tassan.
Her assessment comes after the Centers for Medicare and Medicaid Services published its 2027 advance rate notice, revealing a near-flat 0.09% expected average change in revenue—a dramatic decline from approximately 5% in 2026.
“These rates are nowhere near sufficient to cover what are rising cost trends,” she said during an interview with CNBC, noting that utilization and unit costs are growing at high single-digit to potentially double-digit rates year over year.
This creates what Tassan describes as “a widening spread between what you’re paid and what ultimately you have to reimburse as a payer.”
Despite these headwinds, Tassan emphasized that UnitedHealth (UNH) is not exiting the Medicare business, which represents approximately two-thirds of the company’s premium revenue across Medicare Advantage, DSNP, standalone Part D, and MedSup products.
“If anything, given their scale, infrastructure, and resources, they’re kind of best equipped to weather the challenging rate environment,” she said.
The analyst specifically highlighted UnitedHealth’s (UNH) infrastructure advantages, particularly its significant value-based care business. “United’s scale infrastructure, infrastructure meaning their significant value-based care business, put them in a better position to endure a challenging rate environment than most other MAOs (Medical Advantage organizations).”
While Tassan described Medicare Advantage as “a very noble business” chosen by 34 million seniors in 2025, she acknowledged the broader risks. The challenging rates represent “a risk to the entire industry and ultimately for beneficiaries,” rather than specifically to UnitedHealth (UNH), given the program’s track record of improving outcomes and democratizing access to care.
Looking ahead, Tassan identified a potential opportunity for rate improvement when final rates are announced in April, based on more recent claims data. However, if rates remain insufficient, she expects MAOs to continue paring back benefits and pulling out of certain geographies—marking the second consecutive year of such industry-wide contraction.