The Trump administration will substantially increase payment rates for Medicare insurers next year, generating more than $25 billion in additional revenue for the industry and doubling the boost proposed in January.
The rate increase of 5.06%, compared with 2.23% in the earlier proposal from the Biden administration, overshoots even optimistic expectations from many Wall Street analysts, and will likely lead to a rally in the shares of big Medicare insurers such as UnitedHealth Group, Humana and CVS Health, parent of Aetna.
The Centers for Medicare and Medicaid Services announced the increase for 2026 payment rates on Monday. Investors are expected to view the bump as a sign of the Trump administration’s support for Medicare Advantage, the program under which private insurers administer the benefits of the federal program for older and disabled Americans.
The Medicare agency said the increase in the planned payment rate reflected rising medical costs, and that more recent data had led to the steeper final rise compared with the January proposal.
The agency said it 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 Trump administration did stick with a Biden administration policy change that limits certain billing practices that have boosted payments to Medicare Advantage insurers. The change was being phased in over three years, to be completed in 2026, and the agency rejected suggestions from some insurers to pause the process.
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