Humana Medicare Advantage Crisis: Ratings Meltdown Puts Senior Healthcare at Risk

Humana, one of America's biggest Medicare Advantage insurers, is under fire after a stunning ratings downgrade that could shake up senior healthcare nationwide.

A federal judge rejected Humana's lawsuit against the US Centers for Medicare & Medicaid Services (CMS) on Tuesday, leaving the company to face the fallout from its lower 2025 star ratings.

The setback has rattled investors and policyholders alike, with experts warning that millions of older Americans could feel the impact as Humana's performance slips behind top competitors.

The ruling also raises new doubts about the stability of the insurer's Medicare Advantage plans heading into 2026 and beyond.

Court Ruling Deals a Heavy Blow to Humana's Medicare Reputation

The court's decision marked a pivotal moment for Humana's Medicare Advantage business. The insurer had sued the Centres for Medicare & Medicaid Services (CMS), alleging its quality ratings were unfairly lowered in customer service and care access categories.

The judge dismissed the case, ruling CMS's process was lawful and objective.

According to Modern Healthcare, Humana also challenged the metrics used to assess customer service scores for members with limited English proficiency. The CMS star ratings, which evaluate care quality and chronic disease management, directly affect government bonus payments—meaning a downgrade can cost billions.

Analysts say the ruling reaffirms CMS's authority over a programme that impacts about 33 million Americans.

The Numbers Behind the Ratings Meltdown

The scale of Humana's ratings decline has alarmed both investors and policy experts. According to newly released CMS data, only about 20% of Humana's Medicare Advantage members are enrolled in plans rated four stars or higher for 2026.

By contrast, rival insurers such as CVS Health's Aetna division have more than 81% of their members in top-tier plans, while UnitedHealth Group stands at approximately 78%.

This drop not only undermines Humana's competitiveness but also limits its access to performance bonuses that reward insurers offering higher-quality care.

Analysts warn that the lower ratings could reduce Humana's annual revenue and weaken its ability to expand coverage in key states during the 2026 open-enrolment season.

Impact on Seniors and the Broader Insurance Market

For millions of seniors, Humana's ratings decline may lead to significant coverage changes. Lower-rated Medicare Advantage plans often provide fewer benefits or impose higher costs on members.

In response to financial pressures, Humana has announced plans to scale back its Medicare Advantage and Part D prescription drug offerings in 2026, focusing only on the most profitable regions.

Experts caution that this retrenchment could limit plan choices for retirees in smaller markets and rural areas.

Consumer advocates have expressed concern that older Americans may face disruptions when switching to alternative insurers during open enrolment, especially in regions where Humana previously held a strong presence.

Financial Strain and Strategic Realignment

Humana's star ratings setback comes amid a broader financial squeeze. The insurer recently issued a $1.25 billion (£936.55 million) debt offering and lowered its earnings guidance for 2026, citing the impact of reduced Medicare payments.

Earlier this year, Humana also agreed to pay $90 million (£67.43 million) to settle a whistle-blower lawsuit alleging improper Medicare Part D bids between 2011 and 2017.

In response, the company is attempting to reposition itself through its CentreWell division, which focuses on value-based care and primary health services. Humana has expanded partnerships with Vori Health, HOPCo, and TailorCare to improve care coordination for patients with chronic and musculoskeletal conditions.

These efforts aim to strengthen its long-term strategy while restoring trust among regulators and policyholders.

A Test Case for the Future of Medicare Advantage Insurance

Humana's crisis highlights the growing importance of CMS quality measures in shaping the Medicare Advantage insurance market.

As federal oversight tightens and reimbursement models evolve, insurers with weaker performance ratings face rising pressure to prove their value to both regulators and consumers.

How Humana responds to its ratings meltdown will serve as a critical indicator of whether large insurers can adapt to a more competitive and transparent Medicare environment.