Trump Administration to Increase Medicare Advantage Payments by $13 Billion in 2027

The Trump administration has finalized the 2027 payment rate for Medicare Advantage, announcing a net average increase of 2.48% for privately run Medicare plans. This decision, released by the Centers for Medicare & Medicaid Services (CMS), represents an infusion of more than $13 billion in additional payments to plans for Calendar Year 2027.

The finalized rate is significantly higher than the 0.09% increase the government had proposed in January 2026. The discrepancy between the initial proposal and the final decision led to immediate volatility in the health insurance sector, with shares of major providers climbing following the announcement on April 6, 2026.

Financial Impact and Market Reaction

The government payment rate is a critical metric for the health insurance industry because it determines how much insurers can charge for monthly premiums and the level of plan benefits they can offer, which directly influences corporate profits.

Following the announcement on April 6, 2026, several major health insurance companies saw their stock prices rise in after-hours trading:

• Humana’s stock increased by approximately 12%.
• UnitedHealth and CVS Health both saw shares rise by more than 9%.

These gains follow a period of instability in January 2026, when the proposed 0.09% hike had negatively impacted the shares of insurers that operate these plans.

CMS Policy Objectives and Implementation

CMS Administrator Dr. Mehmet Oz stated that the updates are intended to ensure patients receive real value from their plans while keeping coverage affordable.

Medicare Advantage and Part D should work for the people who rely on them. These updates keep coverage affordable and ensure patients get real value from their plans.

Dr. Mehmet Oz, CMS Administrator

According to the CMS Rate Announcement, the projected 2.48% increase accounts for several variables, including the growth rates of underlying costs, risk adjustment updates, and the 2026 Star Ratings which determine quality bonus payments for 2027.

Chris Klomp, Director of Medicare and Chief Counselor of the U.S. Department of Health and Human Services, noted that the announcement aims to strengthen competition based on quality rather than coding practices.

The Rate Announcement improves payment accuracy and strengthens competition based on quality—not on coding practices—helping put the program on a more sustainable path for the long term.

Chris Klomp, Director of Medicare

Context of Medicare Advantage

Medicare Advantage consists of privately run health insurance plans contracted by Medicare. According to data from the health policy research firm KFF, more than half of all Medicare beneficiaries are enrolled in these plans, often drawn by extra benefits not covered by traditional Medicare and lower monthly premiums.

The CMS vision for the program is to maintain a sustainable and stable system that provides choices to beneficiaries while acting as a responsible steward of taxpayer funds.