Humana stock jumped Friday because the company placed more clients into Medicare plans with high star ratings. The star rating system. Medicare has a star rating system.
Picture a 68-year-old sitting at a kitchen table comparing Medicare plans like they're shopping for a dishwasher on Amazon. Five stars means the insurance company returns your calls. Four stars means they'll deny your claim politely. Three stars means f*ck you, pay me.
Humana beat expectations by convincing more seniors to pick the plans that Medicare decided were good. Not the plans that actually cover anything useful. The plans with stars next to them. Gold stars for health insurance companies who followed the rules set by the government that reimburses them. It's a closed loop of bureaucratic backpatting that somehow moves stock prices.
Retail traders saw the headline and bought shares because ratings went up. They think ratings matter. They think a government agency scoring insurance companies on customer service metrics predicts future cash flows. These are the same people who buy stocks because the logo looks cool.
The technical analysis says none of this matters. The chart was going to do what the chart was going to do whether Humana got four stars or five stars or a f*cking participant trophy. Price makes news. News doesn't make price. But every moron with a Robinhood account thinks they cracked the code because they read a headline about Medicareζ ratings before the algos did.
Humana now has bragging rights for being best in class at gaming a regulatory scorecard designed by bureaucrats who've never run a business. The stock surged. Shareholders celebrated. Somewhere a retiree is still on hold waiting for prior authorization on a prescription that costs eleven dollars.
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