UnitedHealth Group (UNH) stock surged over 4% on Monday, fueled by news that the US government plans to increase payments for privately managed health insurance plans for retirees by 4.33%. This announcement reversed a recent downtrend triggered by negative headlines surrounding the shooting of UnitedHealthcare CEO Brian Johnson.
UnitedHealth Group (UNH) stock experienced a significant surge on Monday, advancing over 4% by the afternoon, driven by news that the US government plans to increase payments for privately managed health insurance plans for retirees by 4.33%. This announcement, released after market hours last Friday, sparked buying interest across the healthcare insurance sector. Besides UNH, other prominent players like CVS Health (CVS) rose 6.6%, and Humana (HUM) jumped 7.3%.
UnitedHealth Group, the second-largest holding in the Dow Jones Industrial Average (DJIA), defied the broader market trend as the DJIA rose 0.6% while the NASDAQ declined 0.8%. This rally for UNH marks a rebound following a challenging period marked by negative headlines stemming from the shooting of UnitedHealthcare CEO Brian Johnson outside an investor meeting in December. The incident triggered a weeklong manhunt and shed light on UnitedHealth's history of denying health claims and unfavorable public perception.Adding to the pressure, the Interfaith Center on Corporate Responsibility (ICCR), representing $4 trillion in assets under management from 300 institutional investors, called for a report on UnitedHealth's business practices concerning claim denials and limitations. The recent announcement by the US Centers for Medicare & Medicaid Services (CMS) regarding a 4.33% increase in Medicare Advantage reimbursement rates was met with enthusiasm by UNH shareholders. The CMS projects a $21 billion increase in payments to Medicare Advantage plans in 2026 compared to this year. The agency intends to seek public comment until February 10th, before the Trump administration takes office. President-elect Trump has appointed celebrity heart surgeon Dr. Mehmet Oz to lead the CMS, with a pledge to curb waste and fraud within the agency. The Biden administration's move could be seen as an attempt to preempt the incoming administration's focus on healthcare spending cuts, as Medicare Advantage plans have gained significant popularity.UnitedHealth managed 29% of all Medicare Advantage plans in 2024, while Humana managed 18% and CVS managed 12%. From a technical standpoint, UNH stock has breached its 200-day Simple Moving Average (SMA) for the first time since December 11th, signaling a potential end to the downtrend. The Moving Average Convergence Divergence (MACD) indicator, while below the zero threshold, is showing a bullish crossover, suggesting further upside momentum. Following a 20% correction between December 4th and December 17th, UNH stock has recovered nearly half of its losses. The next resistance levels are the 50-day SMA near $557 and the 100-day SMA near $570. Consolidation at these levels is possible before a potential run towards the $600s. Long-term support remains in the $465 to $480 range
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