I realize how crazy this sounds.
While Nvidia has soared more than 50% in 2025 alone after climbing over 180% in 2024, while Microsoft spent $485,000 on Nvidia GPUs in a single year, while the entire tech sector added trillions in market value on the back of artificial intelligence…
I’m about to tell you that health insurance – yes, health insurance – could deliver superior returns in 2026.
The very sector most Americans love to hate. The industry that routinely appears in headlines for denying claims, raising premiums, and squeezing patients. The business that seems fundamentally opposed to innovation and built entirely on bureaucratic inefficiency.
That sector is positioned to dramatically outperform the AI boom next year.
And I can prove it.
When the Math Stops Working, Follow the Money
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Let me start with something concrete. In 2024, Nvidia’s stock climbed 182% as the company’s market capitalization surged past $4 trillion, making it the most valuable company in the world at one point. Microsoft purchased 485,000 of Nvidia’s Hopper GPUs in that same year – more than tripling its investment from 2023. The AI infrastructure buildout has been nothing short of staggering, with Big Tech alone spending over $236 billion in capital expenditures in 2024, a 52% increase year-over-year.
The numbers are dizzying. And for good reason – artificial intelligence represents a genuine technological revolution.
But here’s what nobody’s talking about: the math on AI spending is starting to crack.
Tech companies are pouring unprecedented sums into infrastructure with uncertain returns. The Magnificent Seven stocks lost nearly $1.57 trillion of market capitalization in early 2025. Questions about whether this spending can be justified have moved from the fringes to the mainstream of financial analysis. Even Cathie Wood – hardly a skeptic – warned of a potential “reality check” on AI valuations, though she maintains we’re at the beginning of the revolution.
Meanwhile, something entirely different is happening in health insurance.
The Premium Surge Nobody’s Paying Attention To
Health insurance premiums are exploding across America. And I don’t mean the usual 3% to 4% annual increases we’ve grown accustomed to.
For 2025, ACA Marketplace insurers proposed a median premium increase of 7%, similar to the 6% increase in 2024. But these figures barely scratch the surface of what’s coming.
Private health insurance plans now cost an average of $621 per month, or $7,452 per year – a 7% increase from 2024. That marks four consecutive years of rate increases, resulting in a 15% cumulative increase in health insurance premiums since 2022.
Eight states are seeing insurance rates increase by more than 10%. Vermont faces a staggering 27% rate increase, pushing annual health insurance costs in that state to a record $13,884 per year.
For 2026, the situation accelerates dramatically. The median proposed premium increase is 18% nationally – more than twice the increase insurers proposed for 2025 and triple the change for 2024. States including Arkansas, Illinois, Indiana, and Washington have already finalized rates for 2026 with increases exceeding 20%.
In New Jersey, premiums are set to soar more than 174% on average. In Colorado, premiums are projected to increase 101%.
Let me be very clear about what this means: health insurance companies are raising prices at rates not seen since the early days of the Affordable Care Act. They’re doing this in an environment where they have pricing power, regulatory support, and captive customers who quite literally cannot live without their product.
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The Drivers Are Accelerating, Not Slowing
What’s causing these increases? Multiple structural factors that aren’t going away:
Medical inflation is running significantly above general inflation. While overall inflation has cooled to around 3%, medical cost trends for group insurance are projected at 8.5% for 2026, with pharmacy costs running 2.5 percentage points higher than medical trend.
Hospital systems are demanding reimbursement increases of 200 to 250 basis points during contract renewals to offset recent cost inflation. Workforce shortages and hospital market consolidation are putting additional upward pressure on costs.
GLP-1 drugs for weight loss and diabetes – medications like Ozempic and Wegovy – are creating explosive growth in prescription drug spending. These drugs cost thousands of dollars per patient per year, and demand is soaring.
The aging of the baby boomer generation is accelerating utilization. Medicare Advantage medical cost trends are expected to run at approximately 7.5% in 2025, compared to pricing expectations of just over 5% when plans were designed. For 2026, pricing and benefit designs anticipate these trends will continue to accelerate meaningfully to nearly 10%.
Here’s the critical insight: health insurance companies can pass these costs directly to customers. They’re not hoping for future monetization of their investments. They’re not waiting for technology to prove its value. They’re raising premiums today to cover costs today, and those premiums are being paid by employers and individuals who have no alternative.
The industry projects revenues of $1.4 trillion in 2025. National health spending is expected to reach 20.3% of GDP by 2033, up from 17.6% in 2023.
This isn’t speculative growth. This is guaranteed, contractual, recurring revenue growth driven by structural forces in the American healthcare system.
Follow the Smart Money
When billionaire investors start buying aggressively into a beaten-down sector, you should pay attention.
In the second quarter of 2025, Warren Buffett’s Berkshire Hathaway purchased approximately 5 million shares of UnitedHealth Group, establishing a stake worth over $1.5 billion. This marked a significant move for Buffett, who had been a net seller of stocks for 11 consecutive quarters.
David Tepper increased his Appaloosa hedge fund’s stake in UnitedHealth by a staggering 1,300% in the second quarter. The healthcare giant now ranks as the hedge fund’s second-largest position, making up nearly 12% of its total portfolio.
Michael Burry – the famous investor from “The Big Short” who made his fortune betting against subprime mortgages – took a long position in UnitedHealth via both shares and call options.
Even Andrew Left of Citron Research, known primarily for short positions, announced a long position in UnitedHealth stock.
These aren’t naive investors. They’re buying while fully aware of the company’s challenges, including a major cyberattack, CEO resignation, withdrawn guidance, and federal investigations. They’re buying because the stock has been punished, dropping more than 50% from its peak despite having fundamentally strong business prospects.
Congress Can’t Help Themselves
Perhaps the most telling signal comes from Washington.
Members of Congress – who have an uncanny ability to time their stock trades – have been aggressively buying UnitedHealth stock throughout 2025. There have been 19 separate Congressional purchases of UnitedHealth in 2025 alone, spanning both sides of the aisle.
Representative Marjorie Taylor Greene, whose portfolio returned over 30% in 2024 (ranking 23rd among all members of Congress), made multiple purchases of UnitedHealth stock in May and August 2025. Her timing has proven remarkably prescient, with shares rising more than 25% after her August purchase.
Texas Republican Representative Michael McCaul made several large purchases ranging from $15,000 to $100,000. Democratic Representatives Ro Khanna and Gilbert Cisneros also bought shares. Senator John Boozman purchased between $9,000 and $135,000 worth of stock. Representatives Tim Moore and John McGuire disclosed purchases in the $1,000 to $15,000 range.
What do these politicians know that the broader market doesn’t?
They understand the structural advantages of health insurance companies. They sit on committees that oversee healthcare policy. They know that despite public anger over premium increases and claim denials, the fundamental business model is extraordinarily profitable and protected by regulation.
The STOCK Act of 2012 was supposed to prevent members of Congress from trading on insider information. Yet somehow, Congressional members continue to outperform the market with suspicious consistency. Their collective buying of UnitedHealth stock – even as it faced its worst challenges in years – suggests they see a compelling recovery ahead.
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The Insurance Model That Mints Money
Here’s what most people don’t understand about health insurance: it’s one of the most powerful business models ever created.
Insurance companies collect premiums upfront, creating what’s called “float” – capital that can be invested before claims are paid. For a company the size of UnitedHealth, this float amounts to billions of dollars generating additional returns.
This is the same reason Warren Buffett built Berkshire Hathaway’s empire on insurance companies like GEICO. The float functions as a built-in investment fund, providing capital at essentially no cost that can be deployed into higher-returning assets.
But health insurance has an additional advantage that property and casualty insurance doesn’t: far more predictable claims. While a P&C insurer might face an unexpected hurricane or earthquake, health insurers can model medical costs with remarkable precision. They know, within a tight range, what their claims will be. And when those claims start rising faster than expected, they simply raise premiums for the next year.
It’s a model that essentially guarantees profitability over time.
The Recovery is Already Underway
UnitedHealth Group reported revenues of $400.3 billion in 2024, representing 8% growth year-over-year. For 2025, the company initially projected revenues of $450 billion to $455 billion.
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The company serves 146 million unique individuals across all businesses. It added 2.4 million people with domestic commercial benefits in 2024. Its Medicare and Retirement offerings grew to serve 9.4 million people.
Yes, the company has faced challenges. Medical costs ran higher than anticipated in 2025, particularly in Medicare Advantage plans. CEO Andrew Witty resigned in May. The company withdrew and then revised its guidance.
But here’s the key: these are operational issues, not structural problems. UnitedHealth has a simple remedy to higher medical costs – raising premiums. And as the data clearly shows, they’re doing exactly that. The pricing and benefit designs for 2026 anticipate medical cost trends accelerating meaningfully, and premiums are being raised accordingly.
The company generated $24.2 billion in cash flow from operations in 2024. It returned $4.5 billion to shareholders through dividends and share buybacks in the second quarter of 2025 alone. The business fundamentals remain incredibly strong.
New CEO Stephen Hemsley, who previously led UnitedHealth from 2006 to 2017, purchased $25 million worth of stock at an average price of $288.57 per share on May 16, 2025 – locking in 86,700 shares. CFO John Rex and Director Kristen Gill were also substantial buyers that same day.
When insiders are buying tens of millions of dollars of stock, they’re not hoping for a bounce. They’re positioning for a dramatic recovery.
The #1 Health Insurance Stock to Buy Now
UnitedHealth Group Inc. (NYSE: UNH)
Here’s why UnitedHealth stands out as the best opportunity in this sector:
Market Dominance: UnitedHealth is the largest health insurer in America, serving 146 million people. It’s the largest provider of Medicare Advantage plans with over 8 million customers. This scale provides unmatched negotiating power with hospitals and pharmaceutical companies.
Diversified Revenue: The company operates two major businesses – UnitedHealthcare (insurance) and Optum (health services). Optum generated $253 billion in revenue in 2024, growing 12% year-over-year. This diversification reduces dependence on insurance underwriting alone and creates multiple revenue streams.
Proven Management: New CEO Stephen Hemsley previously delivered exceptional results for shareholders during his earlier tenure leading the company. His return and his massive personal investment in the stock signal confidence in the turnaround.
Pricing Power: As demonstrated by the industry-wide premium increases, UnitedHealth can raise prices to offset higher costs. The company’s 2026 pricing already reflects accelerating medical cost trends.
Valuation: The stock trades at a price-to-earnings ratio of 13 – the lowest valuation in more than a decade. Shares remain more than 50% below the peak set in late 2024 despite strong revenue growth and recovering margins.
Smart Money Accumulation: Warren Buffett, David Tepper, Michael Burry, and numerous members of Congress have all been buyers. The cumulative smart money flowing into this stock is staggering.
Regulatory Protection: Despite investigations and regulatory scrutiny, the health insurance industry operates in a heavily regulated environment that creates barriers to entry and limits competition. UnitedHealth’s size and compliance infrastructure make it nearly impossible to displace.
The company projects returning to its long-term earnings growth rate target of 13% to 16%. If UnitedHealth can deliver even the low end of that range, the stock could double within five years from current levels.
More immediately, as operational issues stabilize and premiums continue rising through 2026, the stock should recover toward its historical valuation. That would put shares in the $500 to $600 range within 12 to 18 months – representing potential gains of 65% to 100% from current levels around $300.
Why This Matters Now
The convergence of rising premiums, structural cost pressures, smart money accumulation, and depressed valuations creates a rare opportunity.
While everyone remains fixated on artificial intelligence – and AI will certainly be important over the long term – the immediate returns in 2026 may come from a far less glamorous sector that’s simply doing what it does best: raising prices and passing costs to customers who have no choice but to pay.
This isn’t about hoping for technological breakthroughs or betting on future monetization. This is about investing in a proven business model that’s experiencing its most favorable pricing environment in years.
The premium increases hitting American families in 2026 are painful. They’re unfortunate. They represent a real burden on household budgets.
But they also represent extraordinary profit potential for insurance company shareholders.
That’s the uncomfortable truth that nobody in Washington wants to acknowledge – but that smart investors like Warren Buffett clearly understand.
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A Personal Note
I’ve spent my career analyzing markets and trying to identify opportunities before they become obvious to everyone else. That’s increasingly difficult in a world where information flows instantly and millions of traders compete for the same insights.
But sometimes the best opportunities hide in plain sight, masked by negative headlines and public anger.
Health insurance is one of those opportunities. Yes, the industry is unpopular. Yes, rising premiums hurt families. Yes, there are legitimate criticisms of how insurers operate.
None of that changes the fundamental investment thesis: health insurance companies are raising prices dramatically, they have the power to pass costs to customers, they generate enormous cash flows, and they’re trading at the cheapest valuations we’ve seen in more than a decade.
When Warren Buffett – who built a fortune on insurance stocks – comes out of an 11-quarter selling streak to buy $1.5 billion worth of a health insurer, that’s a signal worth heeding.
When members of Congress across both parties are buying aggressively despite having oversight of the industry, that tells you something about the profit outlook.
And when the math shows medical costs accelerating to nearly 10% while premiums are being raised by 18% to 20% or more, the profit margins become obvious.
Sometimes the best investments are the ones that make you slightly uncomfortable. This is one of those times.
To your wealth,
Tom Anderson
Editor, Wall Street Watchdogs
Wall Street Watchdogs is committed to uncovering the truth about financial markets and helping individual investors prepare for systemic risks that mainstream media won’t discuss. We receive no compensation from the companies or assets we analyze. This article is for educational purposes only and should not be construed as investment advice.
