The Trump administration sets the payment rate for Medicare Advantage
Mehmet Oz, Administrator of the Centers for Medicare & Medicaid Services, speaks during an event sponsored by the Action for Progress Coalition at the National Press Club in Washington, DC, USA, February 2, 2026.
Al Drago | Reuters
The Trump administration on Monday approved a far larger increase in payment rates for privately run Medicare plans through 2027 than originally proposed, giving a boost to stocks of health insurers and seniors whose deductibles could end up lower than feared.
The government will increase average Medicare Advantage payments by 2.48%, or more than $13 billion, in 2027, according to a release from the Centers for Medicare & Medicaid Services. The Trump administration proposed a 0.09% increase in payment rates in January, dragging down shares of insurers that run the plans.
Shares of UnitedHealth And CVS Health rose more than 9% in after-hours trading on Monday. In the meantime, HumanaThe stock rose about 12%.
The closely watched government payment rate determines how much insurers can charge for the monthly premiums and plan benefits they offer, and ultimately their profits.
The final plan can help insurers stabilize their business by allowing higher payments to offset rising medical costs. The insurance industry has been burdened by, among other things, the influx of care seekers, delayed post-pandemic deliveries and expensive specialty drugs such as GLP-1.
But sufficient government payments also enable plans to keep premiums low for seniors and reduce co-pays for patients, attracting and retaining members.
“Medicare Advantage and Part D should work for the people who rely on it,” said CMS Administrator Dr. Mehmet Oz in a press release. “These updates keep insurance coverage affordable and ensure patients get real value from their plans.”
Medicare Advantage has long been a major source of growth and profit for the insurance industry, driven by annual increases in government payment rates and opaque policies that have allowed insurers to make patients appear sicker than they are and maximize those payments.
The tariff increase is “not that great in a vacuum, but certainly better” than the Trump administration’s original proposal, Jared Holz, a health care expert at Mizuho, said in a note to clients late Monday. He said the boost could help companies boost margins in 2027 as they continue to reduce benefits and manage expenses.
More than half of Medicare beneficiaries are enrolled in Advantage They are lured by lower monthly premiums and additional benefits not covered by traditional Medicare, according to health research firm KFF.
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