Health Insurers Surge After Medicare Agency Increases Payment Rates

Health insurer stocks are trading higher after the market close on Monday following a report indicating the Trump administration will increase payment rates for Medicare insurers.

What Happened: The Centers for Medicare and Medicaid Services (CMS) announced Monday that it will increase payment rates for Medicare insurers to 5.06%. The rate is well above the 2.23% proposed by the Biden administration and above all prior analyst expectations, according to the Wall Street Journal.

The report indicates that investors are expected to view the increase as a show of support from the Trump administration for Medicare Advantage, under which private companies can offer Medicare-approved insurance plans.

“By finalizing these payment policies, CMS is ensuring that Medicare Advantage continues to offer access to critical services in an efficient, accountable manner, further strengthening the program's ability to serve beneficiaries,” the Medicare agency said in a press release.

The new head of CMS Mehmet Oz has long been a supporter of private insurance plans in Medicare, according to the Wall Street Journal. CMS reportedly said the payment rate increase reflects higher medical costs.

“The actions taken by CMS help protect beneficiaries and taxpayers from waste, fraud, and abuse, while also driving access to high-quality, affordable healthcare through Medicare Advantage,” CMS said.

Here’s a look at some of the health insurer stocks making big moves following the announcement:

• CVS Health Corp (NYSE:CVS) up 6.50% at $68

• UnitedHealth Group Inc (NYSE:UNH) up 5.77% at $555

• Humana Inc (NYSE:HUM) up 12.08% at $285.49

• Elevance Health Inc (NYSE:ELV) up 6.35% at $450

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