Trump administration finalizes better-than-feared Medicare Advantage payment rate in boost to health insurers

The Trump administration on Monday finalized a 2027 payment rate increase to privately run Medicare plans that was far bigger than initially proposed, a boost to health insurer stocks.

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 in January proposed a payment rate hike of 0.09%, which pummeled shares of insurers that run those plans.

Shares of UnitedHealth and CVS Health rose more than 9% in after-hours trading on Monday. Meanwhile, Humana's stock jumped around 12%.

"Medicare Advantage and Part D should work for the people who rely on them," said CMS Administrator Dr. Mehmet Oz in a release. "These updates keep coverage affordable and ensure patients get real value from their plans." 

The closely watched government payment rate determines how much insurers can charge for monthly premiums and plan benefits they offer and, ultimately, their profits.

Medicare Advantage is a privately run health insurance plan contracted by Medicare. More than half of Medicare beneficiaries are enrolled in such plans, enticed by lower monthly premiums and extra benefits not covered by traditional Medicare, according to health policy research firm KFF.