The U.S. government has finalized a 2.48% average increase in payments to private insurers offering Medicare Advantage plans to older adults in 2027, a much steeper rise than the near-flat increase it proposed in January.

Shares of UnitedHealth, CVS and Humana rose between 8% and 14% in extended trading, as investors cheered the final rate increase, which the Centers for Medicare & Medicaid Services said would result in more than $13 billion in additional payments to Medicare Advantage plans in 2027.

The rate increase is expected to offer some relief for insurers, including UnitedHealth, Humana and CVS, which had lost billions in market value after the Trump administration proposed a much smaller-than-expected rate increase of 0.09% for 2027 Medicare Advantage plans in January.

Health insurers had argued that the January proposal did not reflect the realities of rising medical costs.

UnitedHealth and CVS have broader business lines that can help buffer Medicare Advantage volatility, while Humana remains more concentrated in the plans for older adults.

The U.S. government had set the final 2026 Medicare Advantage reimbursement rate at an average increase of 5.06%, after initially proposing a 2.2% increase.

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(Reporting by Sriparna Roy and Christy Santhosh in Bengaluru; Editing by Sriraj Kalluvila and Anil D’Silva)