Medicare Advantage Hike – Insurers Rally Out On Increased Rates

livewell
April 9, 2025
Noah Bennett

A rapid increase prevails as shares of health insurers strike high after the federal government announced a stronger-than-expected 2026 increase in Medicare Advantage plan payments on Tuesday.

Right after the announcement Leerink Partners, a reputed Whit Mayo analyst, put forward a research note. The statement highlighted his concerns about the outcomes exceeding expectations. Furthermore, the Centers for Medicare and Medicaid Services further ascended that final rates are expected to increase by more than 5%.

Analysts and CMS on the Medicare Hike

Health insurers and BTIG analyst David Larsen showed that the final increase more than doubled according to the January proposal. In addition, his statements further included that the increase likely accounts for extended care benefits.

Larsen wrote in terms of Medicare:

“The higher overall final rate is in line with our view that Republican administrations are generally more friendly. While fraud, waste, and abuse are a focus of the new administration, the final rate notice is a positive surprise.”

CMS rate announcement now costs taxpayers an additional $25 billion next year. However, it previously proposed a 2.2% increase in 2026 payments which is evidently neglected. The agency stated it based the rate change primarily on new data.

The $1.7 trillion health department budget also goes toward Medicare Advantage Reimbursment through a jointly funded Medicaid program. The Trump administration further vows to cut that budget.

Humana and Other Medicare Providers

Private companies with health insurance stocks also run Medicare Advantage plans. To be more clear, these are versions of the government-funded Medicare program primarily serving people aged 65 and older.

On Tuesday morning, shares of the two largest Medicare providers also increased. These included UnitedHealth Group Inc. and Humana Inc., which rose by more than 7% and 12%, respectively.

Other insurance companies, including Elevance Health Inc. and Centene Corp., also experienced a visible surge in their stocks. Moreover, Humana stock led gains during the broader market rebound early Tuesday.

Magnitude of the Final Rate

The Medicare Advantage final rule signals a supportive posture by U.S. President Donald Trump. His administration’s take toward Medicare Advantage plans, according to analysts’ research notes will leave a high impact.

With shares of major providers alleviating financial pressures, medical costs are set to mark a significant shift in policy direction. As stakeholders adjust to the implications, this development underscores healthcare funding and its broader market impact.

These rate changes could lead to higher premiums or IRMAA adjustments—here’s what IRMAA means and how it’s calculated.