On Monday, the Trump administration confirmed an increase in payment rates for privately managed Medicare plans for 2027 that exceeded earlier estimates, benefiting health insurance stocks.
The average payments for Medicare Advantage are set to rise by 2.48%, translating to over $13 billion, in 2027, as reported by the Centers for Medicare & Medicaid Services. Back in January, the Trump administration suggested a minor payment rate rise of 0.09%, leading to a drop in insurer shares managing those plans.
Stocks of UnitedHealth and CVS Health surged over 9% in after-hours trading on Monday. Meanwhile, Humana‘s shares rose by approximately 12%.
“Medicare Advantage and Part D must be beneficial for those who depend on them,” stated CMS Administrator Dr. Mehmet Oz in a statement. “These revisions make coverage more affordable and guarantee that patients derive genuine value from their policies.”
The closely monitored government payment rate specifies how much insurers are allowed to charge for monthly premiums and the benefits included in their plans, and ultimately, it influences their profitability.
Medicare Advantage is a privately managed health insurance program contracted through Medicare. Over half of Medicare beneficiaries are enrolled in such programs, attracted by reduced monthly premiums and additional benefits that traditional Medicare does not cover, according to the health policy research organization KFF.
