Three health insurance stocks poised to benefit from Medicare payment-rate increase in 2027

Medicare’s April 6 announcement that insurer payment rates are projected to rise by 2.48%—or more than $13 billion—in 2027 has sparked optimism across the health insurance industry. Investors have focused on the potential for a broader payment lift, with risk adjustment changes contributing to an estimated total payment increase of roughly 5%.

Following the announcement, the S&P 500 Health Care Index rose 2% in the immediate aftermath of the Medicare pricing update, even though the index remains down 3.37% year-to-date. Experts said the move could mark the start of a longer rally for parts of the sector.

Medicare’s pricing update and what it includes

Medicare said the expected increase reflects multiple factors that affect Medicare Advantage (MA) payments, including growth rates of underlying costs, 2026 Star Ratings for 2027 quality bonus payments, and risk adjustment updates.

Sector context: healthcare has lagged

The Medicare pricing upgrade arrives after the broader healthcare sector has underperformed other major indexes in recent years. The U.S. healthcare market, which represents 10% of the S&P 500’s total value, finished down 0.3% in 2023, down 0.9% in 2024, and up 12.5% in 2025.

Supporters of the latest change argue it should provide a longer-term benefit to U.S. healthcare insurers, with the impact varying across companies depending on their business mix and exposure to Medicare Advantage.

Stocks viewed as best positioned to benefit

UnitedHealth Group

UnitedHealth is seen as a direct beneficiary of the Medicare update due to its large exposure to Medicare Advantage and its ability to convert higher reimbursement rates into earnings growth. Analysts often describe UnitedHealth as a “bellwether” for the U.S. managed care market, and the policy shift is viewed as improving earnings visibility heading into 2027.

On April 6, Bernstein’s Lance Wilkes raised its price target on UnitedHealth Group to $405, citing a more robust Medicare Advantage rate and stronger margin visibility. The change was described as implying a 32% share price upgrade. Earlier in April, Goldman Sachs analyst Scott Fidel increased his UnitedHealth price target to $400, implying a 30% boost.

Humana Inc.

Humana’s revenue is heavily tied to Medicare Advantage, with more than 50% of annual revenue linked to the program. With a more favorable reimbursement structure, the company is expected to benefit from stronger cost predictability, improved margins, and reduced risk tied to insurance policy changes.

Humana shares rose 8% after the Medicare pricing news. Oppenheimer analyst Michael Wiederhorn set a $250 price target, representing a 26% share price upside.

Oscar Health

Oscar Health, with a $4.35 billion market cap, is smaller than many peers but saw a sharp reaction to the Medicare announcement. Trading at $14 per share and flat year-to-date, Oscar’s shares jumped 20.2% this week following the pricing update.

Wall Street commentary cited accelerated share growth and an estimated valuation at 10 times its 2026 earnings guidance. The company also received attention from investors after SEC Form 4 filings on April 6 showed CEO Mark Bertolini buying 1 million shares at $11.90 per share.

Oscar’s outlook also reflects ongoing uncertainty tied to the end of Affordable Care Act tax subsidies, with no agreement in place to renew them. Despite that, the article noted Oscar increased insurance enrollment roles from 2 million in 2025 to 3.4 million in 2026. It projected about $19 billion in revenue for this year and operating income of $450 million, with operating income expected to expand over time.

Analysts cited a consensus view from three sector analysts tracked by Benzinga, projecting Oscar shares at $17.3% higher, or a 20.4% share price upside.