The U.S. government announced on Monday that it would increase payments to private insurers offering Medicare Advantage plans to older adults in 2027 by an average of 2.48%, a change from the nearly flat proposal in January, resulting in a significant rise in insurer stocks.
According to a Medicare agency official, insurers will also receive a 2.5% boost through adjustments to risk assessment payments tied to health status, resulting in a total increase of about 5%.
Shares of UnitedHealth, Humana, and CVS rose by 8% to 14% on extended trading, with investors relieved by the final proposal, in contrast to drops after the government’s January proposal, which only foresaw a 0.09% increase for 2027.
Centers for Medicare & Medicaid Services stated that the increase would translate to over $13 billion in additional payments to Medicare Advantage plans in 2027.
Analyst Julie Utterback from Morningstar said the payment rate was welcomed by investors and provided insurers with a more favorable model for predicting medical costs in 2027.
Kevin Gade, director general of investment firm Bahl and Gaynor, mentioned that major health insurers would benefit from a pause in changes to how Medicare agency models risks for health insurers.
The Medicare agency officials stated that the pause in the risk policy change aimed to allow insurers and providers time to adapt to longer-term structural payment changes. Insurers had argued that the January proposal did not reflect the realities of rising medical costs.
The U.S. government had set the final Medicare Advantage reimbursement rate for 2026 at an average increase of 5.06%, after initially proposing a 2.2% increase.
:quality(80)/outremer%2F2026%2F04%2F06%2F69d3e69a200ba562397394.jpg "The Martinican Audrey Pulvar is rising in the French capital… I will have the honor of being the face of Paris internationally")
