The stocks of American health insurers such as Humana (HUM) and UnitedHealth Group (UNH) are higher on news that the U.S. government has increased Medicare payment rates by an estimated $25 billion U.S. starting in 2026.
Both Humana and UnitedHealth offer Medicare Advantage plans to American seniors. Humana’s
stock rose 13% on the news while UnitedHealth Group’s share price rose nearly 6%.
The increased payment rates from the government are higher than had been expected and account for higher projected costs in the program, according to data from the U.S. Centers for Medicare and Medicaid Services.
In a news release, the government agency said that it “is ensuring that Medicare Advantage continues to offer access to critical services in an efficient, accountable manner, further strengthening the program’s ability to serve beneficiaries.”
For Humana and UnitedHealth, the increased government payments is good news for the companies and the customers they serve.
Each insurers stock has slumped over the past year due largely to worries over potential cuts to Medicare, as well as the costs for the companies to administer the programs.
Humana’s stock is down 20% over the last 12 months and trading at $254.71 U.S. per share.
UnitedHealth Group’s stock has fallen 10% in the past six months to trade at $524.70 U.S. a share.