Health insurance stocks are currently beaten down due to political concerns and rising claims costs, but present long-term investment opportunities. UnitedHealth Group and Oscar Health are highlighted as undervalued plays poised for recovery as the sector rebounds in 2026, supported by structural growth in U.S. healthcare spending.

Contrarian investors identify three beaten-down sectors with buying opportunities: financials (American Express, KKR, Apollo Global Management, Blue Owl Capital, Robinhood), healthcare (Molina Healthcare, Oscar Health, Hims Hers Health), and software (Microsoft, Oracle, ServiceNow, Figma). They recommend avoiding energy stocks, which have rallied too far on momentum and FOMO despite potential long-term gains.

The Centers for Medicare & Medicaid Services announced a 2.48% increase in 2027 Medicare Advantage capitation rates, exceeding initial expectations of 0.09%. The boost amounts to over $13 billion in additional payments and reflects a 4.98% increase when accounting for risk score trends. CMS retained the 2024 risk adjustment model, providing greater rate predictability for insurers. Major healthcare stocks surged on the positive announcement.

Oscar Health, an ACA marketplace health insurer, has gained significant market share despite a 50% stock decline from October 2025 highs. The company added 1.4 million members to reach 3.4 million total, and expects to return to profitability with $250-450 million in operating income on $18.7-19 billion in revenue for 2026. Trading at less than 10x forward earnings, the stock appears undervalued despite headwinds from reduced government subsidies and higher healthcare costs.

Amid Nasdaq correction concerns driven by geopolitical tensions and oil price fears, the article recommends three stocks trading at attractive valuations: Oscar Health, a technology-forward health insurer gaining market share; Adyen, a dominant enterprise payment processor; and Remitly Global, a leader in digital money transfers. All three companies are positioned to thrive regardless of broader economic conditions.

Oscar Health stock rose nearly 2% on Tuesday despite missing analyst estimates on revenue ($2.8B vs. $3.1B expected) and posting a deeper net loss ($1.24 per share vs. $0.89 expected). The stock gained on bullish full-year 2026 guidance projecting $18.7-19B in revenue and $250-450M in operating earnings, along with strong membership growth exceeding 2 million members.

Oscar Health reported Q4 2025 revenue of $2.81B, missing estimates of $3.12B, with a loss of $1.24 per share. The company faced challenges from higher medical costs and morbidity in 2025 but projects a significant turnaround in 2026, guiding for $18.7-19B in revenue and $250-450M in operating earnings. Membership grew to 2.04M, and the company secured a $475M credit facility to strengthen its balance sheet.

Oscar Health, a technology-focused health insurer, is gaining significant market share in the ACA marketplace with 2 million members and deploying AI tools like its Oswell chatbot. Despite short-term headwinds from rising healthcare costs and expiring subsidies, the company is raising prices 28% for 2026 and is positioned for profitability, with a $12 billion revenue projection against a sub-$4 billion market cap.

Oscar Health Inc. (NYSE:OSCR) is experiencing declining momentum with its Momentum score dropping from 62.07 to 13.22 in one week, amid a 19.14% monthly decline. The health insurance stock has underperformed with only 7% year-to-date gains. Health insurance stocks face pressure due to uncertainties regarding Affordable Care Act subsidy extensions. Despite current weakness, analysts expect a turnaround in 2026, with Piper Sandler upgrading the stock to 'Overweight' with a $25 price target, implying 72% upside potential.

The market is showing signs of rotation toward undervalued non-AI stocks. The article discusses two undervalued companies that have experienced significant pullbacks in 2025 and are expected to show fundamental improvements in 2026.

Oscar Health is planning significant price increases in 2026 to offset higher healthcare service costs after underestimating customer service expenses in 2025.

Oscar Health faces challenges in 2025 with rising medical costs and expiring healthcare subsidies, but is positioned to return to profitability in 2026 through strategic plan pricing increases and technology-driven customer experience.