Health Committee Congressman’s Perfectly Timed Sale of Major Health Insurance Stock Revives Debate About Capitol Hill Trading

Shares of major health care companies, including UnitedHealth, Humana, and CVS Health, faced a steep sell-off on Tuesday after the Trump administration proposed nearly flat reimbursement rates for Medicare Advantage insurers for 2027.UnitedHealth Group fell more than 15 percent in early trading, while Medicare Advantage plan provider Humana sank about 16 percent. CVS Health shed more than 10 percent, with Elevance Health and Centene also posting losses of around 6 percent or 7 percent.At least one congressman, Kevin Hern, an Oklahoma Republican who serves on the House Ways and Means Subcommittee on Health, appears to have seen the plunge coming. Mr. Hern sold his entire position — up to $500,000 worth of UnitedHealth stock — on December 23. The sale was reported on Thursday.Mr. Hern’s fortuitous trade has drawn the attention of critics of congressional stock trading “He dumped his shares exactly one month before this ‘surprise’ flat rate news nuked the stock. Congressional alpha remains undefeated,” wrote one user on X.Mr. Hern’s office did not respond to a request for comment about his trading activity.In September, a bipartisan group of House members joined forces to propose a bill that would ban lawmakers from trading individual stocks. Similar efforts have been made for more than a decade, but top congressional leaders have not backed the bills.In the most recent proposal, Congressmen Chip Roy, a Texas Republican, and Seth Magaziner, Rhode Island Democrat, introduced a bill aimed at addressing calls from voters worried about insider trading.“They do not send us here to enrich ourselves while we are voting on the issues they send us here to fix and address and then have members who are trading stocks on the very issues they’re supposed to be voting on,” Mr. Roy said.The sharp decline in insurance stocks follows a Monday announcement from the Centers for Medicare and Medicaid Services proposing a net average payment increase of just 0.09 percent for Medicare Advantage plans in 2027. The proposal, which would result in roughly $700 million in additional payments, fell significantly short of Wall Street expectations. Analysts had widely anticipated a rate increase of between 4 percent and 6 percent.The proposal signals a shift toward stricter payment accuracy. CMS indicated it plans to exclude diagnoses based on home risk assessments and retrospective chart reviews starting in 2027—practices that have historically boosted reimbursement for insurers.“These proposed payment policies are about making sure Medicare Advantage works better for the people it serves,” CMS Administrator Dr. Mehmet Oz said in a statement. “By strengthening payment accuracy and modernizing risk adjustment, CMS is helping ensure beneficiaries continue to have affordable plan choices and reliable benefits, while protecting taxpayers from unnecessary spending that is not oriented towards addressing real health needs,” he said.The industry-wide shock overshadowed UnitedHealth’s fourth-quarter earnings report, which was released Tuesday morning. The company posted earnings per share of $2.11, meeting consensus estimates but marking a 69 percent drop from year-ago results as medical costs surged.CMS will accept comments on the CY 2027 advance notice through February 25, before publishing the final rate announcement in April.

Health Committee Congressman’s Perfectly Timed Sale of Major Health Insurance Stock Revives Debate About Capitol Hill Trading

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