Health Insurer Stocks Flatline on Medicare Rates, UNH Example Trade

• Health insurers like UnitedHealth (UNH), Humana (HUM), CVS Health (CVS), Elevance Health (ELV), and Centene (CNC) are down significantly (10-19%).
• The decline is attributed to the Trump administration's proposal for a less than 1% increase in Medicare Advantage rates for 2027, which is substantially lower than the street's expectation of 4-6%.
• UnitedHealth's positive Q4 earnings were overshadowed by this policy announcement, which is seen as a potential major hit to profits for these companies.
• An options strategist suggests a 'guardedly bullish' call calendar trade on UnitedHealth, anticipating a potential retracement towards the $300 resistance level.

The health insurance sector is experiencing significant declines (10-19%) after the Trump administration proposed keeping Medicare Advantage rates relatively flat for 2027, far below the expected 4-6%. This news is overshadowing individual company earnings, such as UnitedHealth's beat, leading to a major hit to insurer profits.