Humana is dropping 600,000 customers. The stock hit a 52-week high.

Humana is dropping about 600,000 Medicare customers next year.
The stock closed at a 52-week high, up 70% this year.

Here is how a health insurer wins by getting smaller.

Medicare Advantage plans are paid partly on star ratings. Four stars or better earns bonus payments from the government. On Friday Humana reported that 95% of its members will sit in plans rated four stars or above for 2027, beating its own target. The stock rose 12%.

The same week its non-renewals, the plans it is walking away from, were put at roughly 600,000 members. Centene is doing the same. The medical care ratio, the share of premium spent on care, fell to 86.7% from 89.4%.

Fewer members, more of them in bonus-rated plans, less of each premium going out the door. That is not a quality story. It is a revenue story with a quality label.

Clargus asked what Humana is connected to in the last 30 days. Every edge ran to the same place: star ratings, non-renewals, and the 2.48% rate increase the regulator finalised for 2027.

Medicare open enrollment starts October 15. The 600,000 people being dropped choose a new plan in the next eight weeks.

My read: the market has priced the bonus revenue and not the enrollment risk. A plan that cuts members on purpose can also lose the ones it wanted to keep.

What proves this wrong: 2027 enrollment holds and the care ratio stays under 87%. Then Humana fixed its ratings problem and the 70% was right.

The question for every insurer this quarter: how much of a smaller book is already in the price.