The Centers for Medicare and Medicaid Services on Monday finalized a 5.06% increase in Medicare Advantage insurer payment rates for 2026, more than doubling the 2.23% hike initially proposed by the Biden administration in January. The updated figure, which was reported by the Wall Street Journal, is expected to add more than $25 billion in revenue across the Medicare Advantage industry.
The change is due to rising medical costs and shows that Medicare Advantage will get more government support during President Donald J. Trump's second term. The program, which lets private insurers handle payments for disabled and older Americans, is becoming a bigger and bigger part of the healthcare system.
The government decided to keep a rule from Biden's time that caps some billing practices. This could still lead to more money going to insurance. Calls to extend the rule's phase-in, which is set to end in 2026, were turned down, though.
The decision came after a plan to cover obesity drugs under Medicare was shelved. This was seen as a way to ease the strain on healthcare budgets while increasing insurance profits.
After the news came out, shares of big insurance companies went through the roof. The stock prices of Humana (HUM, Financials), UnitedHealth Group (UNH, Financials), CVS Health (CVS, Financials), and Elevance Health (ELV, Financials) all went up. Those gains added up to almost 10%.
Analysts say that the new rates and clearer rules could help Medicare Advantage providers' profit margins after a rough patch, allowing the sector some breathing room going into 2026.
