Most people hate health insurance. And yet, historically, it has been one of the most profitable sectors to invest in, thanks to the durable nature of industry spending and the overall growth in healthcare expenditures in the United States. As the population ages, this will only become more prevalent.
In the last two years, investors have become hesitant to invest in health insurance stocks due to shifting political rhetoric and unexpected increases in claims costs. Bellwethers in the industry, like UnitedHealth Group(NYSE: UNH), are down 50% from their highs, and sentiment couldn’t be worse for the sector.
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That is an opportunity for investors focused on buying stocks for the long haul. Here’s why investors should buy health insurance stocks before they come back in style in 2026.
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The aforementioned UnitedHealth Group is the largest health insurance company by revenue, reporting $448 billion in 2025. Operating as a vertically integrated player that offers health insurance and its own healthcare clinics through Optum, it also has its own pharmacy benefit manager arm. Some argue this could put the business at risk due to antitrust claims, but it has historically been quite profitable, with net income growing steadily each year until 2024.
In the last few years, UnitedHealth’s earnings have been hurt by cyberattacks, lower rate adjustments for items such as Medicare Advantage, rising utilization rates, and its own decision to write down asset values.
Most important to UnitedHealth is its ability to manage health insurance pricing relative to industry-estimated costs. It has gotten some good news recently, with Medicare Advantage regulators allowing for higher rate increases in 2027 than previously expected. Everything comes back to UnitedHealth Group’s medical loss ratio, an industry term that determines how much of insurance premiums are paid out as claims in a period.
Last year, UnitedHealth’s medical loss ratio was 88.9%, up from 85.5% in 2024, which is why earnings fell 41% year over year to $19 billion. The stock still trades at a below-market price-to-earnings (P/E) ratio of 23.5, but this should decline quickly if the medical loss ratio improves in 2026 and beyond, making UnitedHealth Group a good stock to buy amid this market craziness.
If you’d rather skip the incumbents in favor of the disruptors, Oscar Health(NYSE: OSCR) may be more of your interest at these prices. It is a health insurer also down big like UnitedHealth Group, but it is attacking the market from an entirely different angle.
Oscar Health targets individual health insurance payers, meaning people who use the Affordable Care Act (ACA) marketplace. On top of this focus, Oscar Health uses modern technology to make the customer experience as enjoyable as possible when dealing with a healthcare issue. For example, it offers telehealth services to all members for no additional charge.
At the beginning of 2026, Oscar Health reported that 3.4 million people enrolled in its health insurance products during open enrollment. It had under 1 million members at the end of 2021. This is phenomenal growth during a time of major uncertainty for the ACA marketplace, as subsidies became a political football in the last year.
The medical loss ratio is also a problem for Oscar Health’s profitability, hitting 87.4% in 2025 due to unexpected healthcare claims. However, as the company normalizes pricing in 2026 and gains greater scale, it expects to generate operating income of $250 million to $450 million this year. That looks like a low price for a stock with a market cap of $4.3 billion as of this writing.
Health insurance is a great industry to examine because healthcare costs generally rise due to advances in medical care, economic growth, and the aging U.S. population. In 1970, $74 billion was spent on healthcare every year in the United States. By 2024, that had grown to $5.3 trillion, and shows no signs of slowing down.
Most of this spending will flow through the various health insurance ecosystems. As long as these businesses can manage their costs well, they should be profitable stocks to buy and hold for the long haul.
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