The stocks of leading American health insurers Humana (HUM) and UnitedHealth Group (UNH) are soaring on news that the U.S. government has increased Medicare payment rates by an estimated $25 billion starting in 2026.
Both Humana and UnitedHealth offer Medicare Advantage plans to American senior citizens. HUM stock rose 10% on news of the payment rate increase while UNH shares rose 6%. The increased payment rates from the government are higher than had been expected and account for higher projected costs in the Medicare program, according to the U.S. Centers for Medicare and Medicaid Services.
In a news release, the government agency said that it “is ensuring that Medicare Advantage continues to offer access to critical services in an efficient, accountable manner, further strengthening the program’s ability to serve beneficiaries.” Medicare is a federal health insurance program in the U.S. for people age 65 or older and younger people with disabilities. The program began in 1965.
Worries of Potential Cuts
For Humana and UnitedHealth, the increased government payments are good news for the companies and the elderly customers they serve. Each insurers’ stock has slumped over the last year due to worries over potential cuts to Medicare, as well as the costs for the companies to administer the programs.
Humana’s stock is down 20% over the last 12 months while UnitedHealth Group’s stock has fallen 10% in the past six months. News of the increase to Medicare payment rates also comes on a day when the stock market stages a recovery from the tariff-induced selloff.
Is HUM Stock a Buy?
The stock of Humana, one of the largest U.S. health insurers, has a consensus Moderate Buy rating among 14 Wall Street analysts. That rating is based on four Buy and 10 Hold recommendations issued in the past three months. The average HUM price target of $290 implies 3.54% upside from current levels.
