Health insurers offering Medicare Advantage plans could see a significant payment increase in 2026 under a proposal released Friday, ahead of the incoming Trump administration. The Centers for Medicare and Medicaid Services (CMS) proposed a 4.3% average rise in payments, with a 2.2% increase excluding risk score adjustments.
The proposal, the largest boost since 2023, could deliver $21 billion more to insurers in 2026 compared to 2025 payments. This benefits major companies like UnitedHealth, Humana, and CVS Health, whose shares surged—Humana rose 7%, UnitedHealth 3.9%, and CVS 2.7% in after-hours trading.
Insurers have criticized past payment rates for failing to cover rising medical costs. During the Biden administration, payment cuts were implemented, citing concerns about overspending due to alleged over-reporting of patient illnesses by insurers.
JPMorgan analyst Lisa Gill noted optimism about more favorable rates under Trump’s leadership. CMS will continue phasing in risk coding policy changes, despite industry pushback.
Medicare Advantage plans, which covered over half of Medicare beneficiaries in 2023, cost $455 billion, excluding drug plan payments. The program is projected to cost $9.2 trillion over the next decade, with Medicare Advantage costing $83 billion more in 2024 compared to traditional Medicare due to plan structures and member selection.
Democratic lawmakers have urged stricter regulation, arguing insurers overcharge by inflating patient illness severity. Similar proposals have been issued by outgoing administrations in the past, such as Trump’s 2021 rate plan days before Biden’s inauguration.
