US health insurers have seen a significant boost in their profits as the government announced a 5.06% average increase in reimbursement rates for 2026 Medicare Advantage plans, exceeding expectations. The rate hike is more than double the initial proposal of 2.2% made by the Centers for Medicare and Medicaid Services (CMS) earlier this year.
The increased payments will benefit large health insurers like UnitedHealth Group, Humana, and CVS Health, which have struggled with high medical costs related to government-backed plans. The companies’ stocks saw significant gains after hours trading, with shares of UnitedHealth rising 6% and CVS Health adding 6.7%.
Industry analysts say the rate increase indicates support from the Trump administration for the Medicare Advantage program. “Visible evidence of Trump administration’s support for MA program,” said Bernstein analyst Lance Wilkes.
The CMS cited additional data on cost increases for insurers, including fourth-quarter 2024 payment data, as the primary factor behind the rate change. The government had previously announced a 0.2% decline in reimbursement rates for 2025.
Industry groups, including America’s Health Insurance Plans, welcomed the news, stating that they will focus on helping seniors stay healthy and addressing gaps in care.
Source: https://www.reuters.com/business/healthcare-pharmaceuticals/us-releases-final-medicare-payment-rates-2026-2025-04-07