The Trump administration on Monday raised the amount it will pay private insurers to run Medicare health plans for seniors, setting rates well above a proposal that had unsettled markets earlier this year.
The Centers for Medicare & Medicaid Services set the payment increase at a net average of 2.48%, adding more than $13 billion in payments to Medicare Advantage plans in 2027. That was far above the 0.09% increase the agency had floated in January, which had pushed insurer stocks lower.
Stocks Surge After The Bell
Markets responded swiftly. Shares of UnitedHealth Group Inc. (NYSE:UNH) and CVS Health Corp. (NYSE:CVS) each climbed more than 9% in after-hours trading on Monday. Humana Inc. (NYSE:HUM) surged about 12%. Elevance Health Inc. (NYSE:ELV) rose nearly 6%.
The January proposal had sent those same stocks sharply lower, with analysts having forecast a 2027 rate increase of between 4% and 6%.
Oz Defends The Decision
CMS Administrator Dr. Mehmet Oz framed the finalized rate as a patient-first decision. “Medicare Advantage and Part D should work for the people who rely on them,” Oz said. “These updates keep coverage affordable and ensure patients get real value from their plans.”
The payment rate influences insurer revenue, premiums and plan benefits.
Broader Policy Context
Annual Medicare premiums are projected to rise from roughly $2,440 per person today to nearly $5,000 by 2035, with an estimated $450 of that increase tied to Medicare Advantage overpayments alone.
A separate CMS rule finalized in March is projected to save taxpayers $782 million annually by replacing fax machines and paper mail with standardized electronic claims transactions, with full compliance required by May 2026.
Healthcare has reclaimed its place as Americans’ top domestic concern, with 61% of adults saying they worry “a great deal” about its affordability, according to a recent Gallup poll.
CMS said the 2027 update also incorporates 2026 Star Ratings for quality bonus payments and risk adjustment refinements.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
Recent Comments