Shares of top health insurers, including CVS Health (CVS), UnitedHealth Group (UNH), and Humana (HUM), jumped after the Trump administration announced higher payment rates for Medicare plans, boosting investor confidence in future profits. Consequently, UNH gained nearly 6%, CVS climbed 6.5%, and HUM was up over 11% in after-market trading on Monday.
CMS Unveils Major Boost to Medicare Rates
On Monday, the Centers for Medicare and Medicaid Services (CMS) said it will raise payment rates for Medicare plans by 5.06% in 2026. This is more than double the 2.23% increase suggested by the Biden administration. The change is expected to bring in over $25 billion more for health insurers. The higher rate is due to rising medical costs and new data that support a bigger increase.
Meanwhile, the Trump government kept a rule from the Biden administration that limits some billing methods. This change could result in higher payments for private insurers offering Medicare Advantage plans. Overall, the move shows strong backing from the Trump administration for Medicare Advantage, where private firms manage health plans for older and disabled Americans.
This update is good news for health insurance companies, which have been struggling with lower profits and falling stock prices due to Medicare changes. Recently, the government also decided not to move forward with a rule that would have required insurers to cover obesity drugs, which was another win for these companies.
Which Healthcare Stock is a Strong Buy, According to Analysts?
Using the TipRanks Stock Comparison tool, we compared these healthcare stocks. Among these companies, UNH stands out with a price target of $524.70, implying a potential upside of 20%. Both UNH and CVS have Strong Buy ratings from analysts. On the other hand, HUM stock has a Moderate Buy rating from analysts with a projected growth rate of nearly 14%.
