Stocks of leading healthcare companies jumped more than 10% on April 6 after the Centers for Medicare and Medicaid Services announced a 2.48% rate increase for private insurers in 2027.
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Other stocks that are up 10% or more on news of the new Medicare rate increase include UnitedHealth Group (UNH), CVS Health (CVS) and Elevance Health (ELV). The final rate represents a meaningful improvement over the initial rates the agency proposed in January of this year.
The U.S. Medicare program’s rate decision affects payments to private insurers that offer Medicare Advantage plans to eligible beneficiaries. Many insurers and other healthcare stocks declined after there was no meaningful Medicare rate increase for 2026.
Initial 2027 Medicare Outlook
Shares of big insurers plunged after the Medicare agency earlier this year initially proposed 2027 Medicare insurer rates well below analysts’ expectations. Health insurance companies lobbied hard for a rise in Medicare rates that are central to their finances and future growth.
Medicare Advantage, the private-insurer version of the federal program for older and disabled Americans, generated an estimated $500 billion in revenue for the industry in 2025. Such revenue has long been a key driver of growth and profits for the industry.
Comparing Healthcare Stocks
The chart below compares the stocks of UNH, HUM and CVS. As one can see below, each stock has a price target that is significantly above where it currently trades.
