Just minutes after the New York Stock Exchange closed yesterday afternoon, the Trump administration announced that it will pay private Medicare Advantage insurers billions of dollars more next year than it had suggested just a few months ago.
Trump’s Centers for Medicare and Medicaid Services had to wait until after the market closed at 4 p.m. yesterday because it knew its announcement would be “material to earnings” for Big Insurance. And it certainly was. The share prices of UnitedHealth Group, Humana, CVS/Aetna and Elevance (Anthem) soared with all of them briefly gaining more than $20 a share almost immediately.
The industry’s months-long, highly visible pressure campaign in Washington paid off for investors like billionaire hedge fund manager Ken Griffin, who reportedly owns about 3.4 million shares of UnitedHealth stock. At the close of the market yesterday, that would have put the value of his holdings at $967 billion. Within minutes after the rate increase announcement, Griffin likely made more than $76 million.
Griffin’s Citadel fund had unloaded nearly 800,000 of UnitedHealth’s stock after the company’s disastrous first quarter 2025 earnings announcement, but in recent months, clearly confident that the Trump administration would bend to the industry’s lobbying, Citadel decided to boost its position in UnitedHealth, the biggest Medicare Advantage company by far, by roughly $2.8 billion. Griffin is one of the Republican Party’s biggest donors, giving $100 million to conservative candidates in the 2024 election cycle (although in the past he has also given money to Barack Obama, John Kerry and some other Democrats).
What CMS did was to assure Medicare Advantage companies that they will get $13 billion more in payments from the federal government than it had signaled in January, when it proposed a 2027 pay bump of .09%. That was what is known as CMS’s advanced rate notice, and it is always subject to change, based on additional data the agency compiles in subsequent months, the comments it gets from industry players, consumer advocates and policy experts – and, of course, industry lobbying. CMS said it got a record 47,000 comments after the advance rate notice. As we recently reported, thousands of those comments were identical and generated by industry trade and front groups like America’s Health Insurance Plans and the Better Medicare Alliance.
That .09% proposed increase jumped to 2.48% yesterday afternoon, which was higher than even some Wall Street financial analysts had expected.
Being the nerd I am, I started watching how investors reacted to the news as the market opened at 9:30 this morning. As I expected, investors are rushing to buy Big Insurance shares. Here’s how the stock prices stood at approximately 9:33 a.m.:
- UnitedHealth Group: $309.71, up from $281.36 (+9.6%)
- Humana: $200.32, up from $182.65 (+9.52%)
- CVS/Aetna: 77.52, up from $73.28 (+5.5%)
- Elevance: $315.19, up from $302.61 (+4.16%)
UnitedHealth and Humana are the two biggest Medicare Advantage companies. Humana executives were so confident that the federal government would continue pumping money into Medicare Advantage that it got completely out of the commercial insurance market last year. Over the past several months, however, investors dumped millions of shares in the companies as the big MA players reported rising medical expenses. The big companies bailed out of hundreds of markets that were not as profitable as C-Suite executives had hoped, cutting approximately three million Medicare beneficiaries adrift at the beginning of 2026 to boost their profits.
In addition to the big rate increase, CMS also made it far easier for health insurers to increase their star ratings, which will trigger even more payments in bonuses for MA plans next year. CMS eliminated 11 star rating metrics and said it would not implement a new health equity award that had been put in place by the Biden administration and scheduled to go into effect in 2027.
Meanwhile, big MA plans continue to benefit from massive overpayments every year because of the way they have manipulated the program to get more of our tax dollars from CMS by claiming that their MA enrollees are sicker than they really are. MedPAC, the independent agency established to advise Congress on issues affecting the Medicare program, estimated last month that the overpayments will total $76 billion this year.
Here’s more from Just Care:
- 2026: Big changes in Medicare Advantage
- Overpayments in Medicare Advantage drive up Part B premiums
- 2026: What are your Medicare premiums and out-of-pocket costs?
- Adding an out-of-pocket cap to Traditional Medicare should be Congress’ top Medicare priority
- John Oliver explains Medicare and the dangers of Medicare Advantage
