Shares of US health insurers surged on Tuesday morning after the Trump administration announced that Medicare Advantage payments will increase more than initially projected.

The Centers for Medicare & Medicaid Services (CMS), which oversees government-funded health programs including Medicare, said it will raise payments to private Medicare insurers by a net average of 2.48% in 2027.

This represents a significant increase from the 0.9% boost originally proposed in January, which had prompted pushback from the insurance industry.

The revised payment rate is expected to add roughly $13 billion in revenue to private insurers in 2027.

A Medicare official confirmed that the increase translates to an additional 2.5% benefit for insurers participating in Medicare Advantage plans.

The higher-than-expected payments are expected to provide financial relief to insurers facing rising medical costs and may help support expanded margins in 2027, particularly in combination with planned benefit adjustments.

As such,Β Humana (NYSE:HUM) shares added 6.4% on the announcement, while UnitedHealth Group Inc (NYSE:UNH, XETRA:UNH) was up 8.8% and CVS Health Corp (NYSE:CVS) was up 6.6%.