Shares of US health insurers rose on Tuesday after the government set higher-than-expected Medicare Advantage payment rates, which will result in more than $13 billion in additional payments in 2027. Insurers lost billions in market value with the Trump administration’s lower-than-expected January financial proposal. stress

Shares of UnitedHealth rose 10%, CVS Health nearly 7%, while shares of Humana rose 8% and Allevan Health rose 3%. The Centers for Medicare and Medicaid Services said late Monday that it would increase payments to private insurers offering Medicare Advantage plans to older adults by an average of 2.48% in 2027, much higher than the smaller-than-expected 0.09% rate increase proposed in January.

“This improvement should allow the industry to increase margins in 2027 when leverage declines,” said Mizuho analyst Ann Hynes.

Better rates than fear

Wall Street analysts had previously said investors had expected a rate increase of at least 1%.

“This adds to the case for margin growth in 2026 and reduces the growing perception that CMS’s tough policy stance on the group is worsening,” Leerink analyst Whit Mayo said.

“At the very least, the sector will be considered more investable.”

Health insurers argued that the disappointing rates proposed in January did not reflect the reality of rising medical costs, which have been squeezing industry margins for nearly three years.

“The industry continues to face a tough environment, but on the heels of this more favorable release, we may be seeing the tide turn,” said Oppenheimer analyst Michael Wiederhorn.

Insurers will also get a 2.5% benefit from the change in health condition risk assessment payments, bringing the total to a 5% increase, a Medicare agency official said in a media interaction on Monday.