On Tuesday, shares of health insurance companies opened trading with collective gains. Humana (HUM.US) rose more than 9%, UnitedHealth (UNH.US) climbed over 8%, CVS Health (CVS.US) advanced more than 5%, and Centene (CNC.US) increased over 2%.
The movement follows an announcement from the U.S. government indicating plans to raise payment rates for the Medicare Advantage program in 2027 by a margin that significantly exceeds market expectations. The Centers for Medicare & Medicaid Services (CMS) stated late Monday that it would increase average payments to private insurers offering Medicare Advantage plans for seniors by an average of 2.48% for 2027. This adjustment is notably higher than the 0.09% increase proposed in January.
CMS indicated that this change would provide over $13 billion in additional payments to the Medicare Advantage program in 2027. An analyst team from RBC Capital Markets noted in a recent report that this increase is substantially higher than their most optimistic forecast of 1% to 1.5%.
A Medicare official involved with agency operations mentioned during a call with reporters that insurers are also expected to receive an additional positive adjustment of approximately 2.5% due to changes in the risk assessment payment model tied to health status. This brings the total estimated increase to around 5%.
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