US Health Insurance Stocks Soar After Boost To Medicare Reimbursement Rates

Topline

Health insurance stocks soared Tuesday morning on the first full day of trading after the U.S. government announced a more than 5% average increase in government reimbursement rates for 2026 Medicare Advantage plans run by private insurers.

Key Facts

Centers for Medicare & Medicaid Services (CMS), which oversees Medicare and Medicaid programs, said Tuesday that payments from the federal government to Medicare Advantage plans would increase by 5.06% in its 2026 calendar year, more than double what it proposed in January.

The significant increase is expected to generate $25 billion in additional revenue for the industry, the Wall Street Journal reported.

U.S. health insurance stocks rallied late Tuesday morning, with UnitedHealth Group rising 7%, CVS Health up 8%, Human jumping 10% and Elevance Health up 4%.

The rate increase finalized by the White House Monday is 2.83 percentage points higher than what the Biden administration proposed in January, with CMS attributing the jump to additional health spending data that was not available during the initial proposal.

Mehmet Oz, who hosted The Dr. Oz Show from 2008 to 2022, was confirmed by the Senate last week as CMS administrator.

Key Background

An increase in the average reimbursement rate means insurers will receive more funding per Medicare Advantage plan recipient and the insurers that offer these plans can then offer more services and bring in additional revenue. The 2026 jump in reimbursements, along with the Trump administration cutting plans to allow Medicare to cover obesity drugs, is a relief for big insurers after the industry’s core Medicare business became a drag on profits over the past year. Last year, the government proposed a 0.2% decline in the average reimbursement rate for 2025.