April 7 (Reuters) – Shares of U.S. health insurers climbed in premarket trading on Tuesday after the government said ‌it plans a larger-than-expected increase in 2027 payment rates ‌for Medicare Advantage plans.

Insurance giant UnitedHealth jumped 6.9%, while CVS Health, Elevance Health, ​Centene and Molina Healthcare climbed between 3.6% and 6%.

Medicare-focused insurer Humana surged 10.7% and was the best-performing stock among the S&P 500 early on.

The Centers for Medicare & Medicaid Services said late on ‌Monday it would raise ⁠payments to private insurers offering Medicare Advantage plans to older adults in 2027 by 2.48% on ⁠average, higher than the 0.09% increase it proposed in January.

RBC Capital Markets analysts said the rise is meaningfully above their expectations of ​1% to ​1.5%.

“We view the revision more ​as righting an actuarial ‌wrong, not CMS backing off its disciplinarian attitude towards MA,” Jefferies analysts said in a note.

A Medicare agency official said on a call with reporters that insurers would also get a 2.5% benefit from a change to risk assessment payments related to ‌health status, for a total increase ​of about 5%.

CMS said the increase ​would result in more ​than $13 billion in additional payments to Medicare Advantage ‌plans in 2027.

The government payment rate ​affects how ​much insurers charge for monthly premiums, which plan benefits they offer and, ultimately, how much they can profit and ​is used by insurers ‌to prepare bids for contracts for Medicare Advantage plans ​they will sell in 2027.

(Reporting by Shashwat Chauhan in ​Bengaluru; Editing by Sahal Muhsmmed)