Health insurance stocks: UnitedHealth Group, CVS, and Humana are rising on Medicare Advantage news

It’s a good day for America’s largest health insurance stocks.

The biggest players in America’s private, for-profit health insurance system, including UnitedHealth Group Incorporated (NYSE: UNH), Humana Inc. (NYSE: HUM), and CVS Health Corporation (NYSE: CVS), are all seeing their share prices rise after the Trump administration announced it will backtrack on earlier proposals and increase Medicare insurer payments significantly more than expected.

Here’s what you need to know.

What’s happened?

On Monday, the Centers for Medicare & Medicaid Services (CMS), the federal agency that manages America’s government-funded health programs, including Medicare, announced that it would increase payments to Medicare insurers by a net average of 2.48% in 2027. 

This increase is significantly more than the original 0.9% increase that the CMS said it would implement in 2027, and comes after intense lobbying and pushback from the private insurance industry when that sum was announced in January.

The revised Medicare Advantage payment rate announcement sent health insurance stocks surging, and means that an additional $13 billion in Medicare Advantage will be made to private health insurers in 2027.

As noted by Reuters, a Medicare agency official also confirmed that private insurers would get an additional 2.5% benefit in 2027.

This is due to “a change to risk assessment payments related to health status,” the news outlet reported. That means insurers will ultimately see up to a 5% payment bump in 2027.

Private health insurance stocks jump

After the CMS announced its revised 2027 Medicare Advantage payment rates, the stock prices of America’s major health insurers soared.

And the reason why is clear: an extra $13 billion funneled into their coffers means the companies will have a year of financial growth.

As of the time of this writing, investors continue to reward health insurance stocks on the news. All of the following companies are currently up in premarket trading:

• UnitedHealth Group Incorporated (NYSE: UNH): up 5.4% to $296.83
• Humana Inc. (NYSE: HUM): up 9.1% to $199.50
• CVS Health Corporation (NYSE: CVS): up 6.2% to $77.82
• Centene Corporation (NYSE: CNC): up 3.9% to $36.79
• Elevance Health, Inc. (NYSE: ELV): up 4.9% to $317.47
• Molina Healthcare, Inc. (NYSE: MOH)L up 3.6% to $148.45

Today’s rise in health insurance stocks goes a long way toward correcting an earlier sector-wide bloodbath, which followed the CMS’s announcement in January that it intended to raise 2027 Medicare insurer payments by just 0.9%.

At the time of that announcement, around $100 billion was wiped off the market caps of America’s largest health insurance companies, notes the Wall Street Journal.

What does the 2027 Medicare insurer payment rate mean for patients?

While America’s largest for-profit health insurers are the biggest beneficiaries of the revised Medicare insurer payment rates for 2027, the increased rates do help the millions of Americans who rely on Medicare.

The increased payments make health insurance companies less likely to change plan terms, which could have negatively affected a person’s health insurance benefits.

That means most monthly premiums should remain stable, while extra benefits like dental and vision should stay the same as well. (Insurers had warned that these could be eliminated if rates did not rise.)

As for why the Trump administration acquiesced to the health insurers’ demands, the upcoming midterm elections likely played a role. 

Had the administration not increased payments, insurers might have started warning Medicare recipients later this year that their 2027 plans could change.

And with Americans already feeling the pain in their wallets from the never-ending rising costs of living, enrollees likely would not have taken kindly to seeing their Medicare benefits diminish as they head to the polls this November.