The U.S. government has approved an average 2.48% increase in payments to private insurers that administer Medicare Advantage plans for 2027, the Centers for Medicare & Medicaid Services said. CMS indicated the final adjustment will translate into more than $13 billion in additional payments to Medicare Advantage plans during 2027.
Investor response was immediate. Shares of UnitedHealth, CVS and Humana climbed in extended trading, with gains reported in a range between 8% and 14% as market participants reacted to the higher-than-expected final rate. The move followed significant market losses earlier in the year after a much smaller increase was proposed.
In January, the administration proposed a near-flat increase of 0.09% for 2027 Medicare Advantage reimbursement rates. That initial proposal had triggered concern among health insurers, who had argued the figure did not account for rising medical costs. The finalized 2.48% increase is considerably higher than that early proposal and is seen by insurers as offering relief from the tighter adjustment suggested in January.
The final 2027 adjustment follows the government’s process in which proposed rates are refined before being finalized. For context provided by CMS actions in the prior year, the agency set the final 2026 Medicare Advantage reimbursement rate at an average increase of 5.06% after originally proposing a 2.2% increase.
Market observers noted differences among the major insurers. UnitedHealth and CVS operate broader, diversified business lines that can help mitigate volatility in Medicare Advantage reimbursement changes. Humana, by contrast, remains more concentrated in Medicare Advantage plans for older adults and is therefore more exposed to shifts in reimbursement policy and rate-setting.
The agency did not provide additional figures beyond the averaged percentage increase and the aggregate additional payments for 2027. Insurers that had seen market value declines following the January proposal now show notable share price recoveries after the finalized rate was announced.
Summary of key facts:
- CMS finalized a 2.48% average payment increase for 2027 Medicare Advantage plans.
- CMS said this will amount to more than $13 billion in additional payments to plans in 2027.
- Shares of UnitedHealth, CVS and Humana rose between 8% and 14% in extended trading following the announcement.
- Earlier in January, the administration had proposed a 0.09% increase for 2027; for 2026 the final rate was 5.06% after a 2.2% initial proposal.