UnitedHealth Group Inc. is seeing a positive reaction in the market following the announcement of a proposed increase in Medicare Advantage payments. The Centers for Medicare and Medicaid Services (CMS) unveiled a proposal on January 10th to raise payments to private Medicare Advantage plans by an average of 4.3% for 2026. This marks a significant shift from the previous years' cuts and is expected to bolster revenue for major health insurers, including UnitedHealth. The proposal, which comes as the Trump administration prepares to take office, could lead to an additional $21 billion in payments over expected 2025 levels if adopted.
The proposed rate hike is particularly noteworthy as it follows a period of constrained payments under the Biden administration, which had attempted to limit increases to address concerns over wasteful spending in the Medicare Advantage program. Analysts, such as JPMorgan's Lisa Gill, have expressed optimism that the incoming administration might further enhance the policy's favorability towards insurers. The news has been well-received by the market, with UnitedHealth shares rising 3.9% in after-hours trading.
UnitedHealth's stock closed at $520.69 on January 10th, down 0.73% from the previous day, but surged 2.75% in after-market trading to reach $535.