Shares in big US health insurance companies rallied on Monday after the Trump administration increased government spending for a healthcare programme for older Americans.
The administration said certain Medicare payments to insurance companies would increase by 2.5 per cent, or more than $13bn in 2027, sending shares in Humana and UnitedHealth up 11 per cent and 8 per cent respectively in after-market trading.
The decision marks a victory for insurance companies that had lobbied the administration to increase the payments for Medicare Advantage schemes.
Health insurance stocks had fallen in January when the administration initially proposed an increase of only 0.09 per cent — or about $700mn.
The share prices of UnitedHealth and Humana — which are the largest providers of government-subsidised insurance plans popular with older Americans, known as Medicare Advantage schemes — dropped by about 20 per cent after the January announcement.
A Washington lobbying group representing UnitedHealth, Humana and other insurers said tens of millions of people could face higher costs if the government did not increase its rates.
“At a time of sharply rising medical costs and high utilisation of medical services, the combined effect of the proposed policy changes and growth rates will not keep pace with the cost of caring for seniors in 2027,” the industry group America’s Health Insurance Plans said in a February letter to the Centers for Medicare & Medicaid Services (CMS).
The group spent a record $17.2mn on lobbying in 2025.
“CMS has given the Medicare Advantage industry a big reprieve,” analysts at Oppenheimer said on Monday. The health insurance industry had faced a tough environment in recent months, it said, “but on the heels of this more favourable release, we might be seeing the tide changing”.
Medicare Advantage is lucrative for insurers, who were paid nearly $540bn in total by the US government in 2025 to run the subsidised insurance plans, according to a congressional report.
The final decision by CMS has been anxiously anticipated by investors, and delivered a larger increase from its initial proposal than in recent years.
On average over the past decade, CMS had increased the payments by about one percentage point between the initial notice and its final decision, Morgan Stanley said in a March report.
Un saludo.
