Shares of major health insurers jumped early Tuesday after the federal government announced a better-than-expected 2026 payment increase for Medicare Advantage plans.
The Centers for Medicare and Medicaid Services said Monday after markets closed that final rates are expected to increase more than 5% in 2026.
That wound up well above expectations, Leerink Partners analyst Whit Mayo said in a research note.
BTIG analyst David Larsen said separately that the final increase more than doubled what was initially proposed in January. He added that it likely accounts for higher care use that the program has seen recently.
Larsen also credited the new administration of President Donald Trump.
“The higher overall final rate is in line with our view that Republican administrations are generally more (Medicare Advantage)-friendly,” Larsen wrote. “While fraud, waste, and abuse are certainly a focus of the new administration, we view the final rate notice as a positive surprise.”
Medicare Advantage plans are privately-run versions of the government-funded Medicare program mostly for people who are 65 and older.
Shares of the two largest Medicare Advantage plan providers, UnitedHealth Group Inc. and Humana Inc., climbed more than 7% and 14%, respectively, before markets opened Tuesday. Other insurance stocks like Elevance Health Inc. and Centene Corp. also jumped.
The health sector was among the biggest gainers in a broader market rebound early Tuesday.
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