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Big Insurance Q1 2026 Earnings Round Up

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https://healthcareuncovered.substack.com/p/big-insurance-q1-2026-earnings-round?utm_source=post-email-title&publication_id=255152&post_id=197291867&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

In Q1 2026, 7 Big Insurers did what their shareholders demanded: hike premiums, slash benefits and dump the sick.

The most recent numbers the nation’s largest for-profit health insurers have shared with investors tell a story the industry is eager to tell Wall Street: the worst is over. After two brutal years of earnings misses, executive firings, and stock price collapses driven by unexpectedly high medical spending, the seven biggest publicly traded health insurers have now completed their first-quarter earnings reports for 2026 and their shareholders are cheering.

Every one of them beat analysts’ expectations in various ways, and most raised their full-year 2026 guidance. But before you read the company-by-company results, it is worth examining the mechanisms behind that recovery because the story the earnings releases tell is not quite the same as the story they leave out.

To get back into Wall Street’s good graces, insurers have:

  • raised premiums
  • cut benefits
  • narrowed their provider networks
  • exited markets that weren’t meeting investors’ profit expectations, and
  • shed members they deemed too costly to cover.

Across the seven companies, total medical membership fell by roughly four million people between the first quarter of 2025 and the first quarter of 2026, and from what executives signaled to investors, many more people likely will be dumped by the end of the year. The patients who already have lost coverage through market exits or who found their benefits reduced this year do not appear as line items in an earnings release. They appear in the year-over-year membership declines and skimpier benefits that analysts note with approval.

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HEALTH CARE un-covered

Inside Big Insurance’s $1.7 Trillion Year | EP 2

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Inside Big Insurance’s $1.7 Trillion Year | EP 2

In second episode of the HEALTH CARE un-covered Show, we walk you through the full year 2025 earnings reports of seven of the largest for-profit health insurance corporations in the country.

The key metric driving the recovery is the medical loss ratio — the percentage of premium revenue that insurers actually spend on medical care. When that number falls, profits rise and investors get richer. Across the sector, medical loss ratios came down in the first quarter, or at least came in lower than Wall Street feared. Insurers credited tighter cost management, a milder flu season, and “repricing” — the practice of raising premiums and cutting benefits, particularly in Medicare Advantage plans, to close the gap between what they collect and what they pay out. (Financial analysts’ term for this is benefit buydown, which is unique among American industries.) Higher revenue coupled with devalued benefits produces better medical loss ratios from investors’ perspective.

The stock market has responded — but the picture is more complicated than a simple sector rebound. Most of these stocks are up year to date, measured from deeply depressed December 31 baselines. But look back a full year and a different story emerges: four of the seven companies are still worth less today than they were a year ago. Molina is down 43% over that period. Cigna and Elevance are each down about 6%. The “recovery” is real in the sense that stocks have bounced off their bottoms.

For much of the sector, it is not yet a return to full health, but the companies clearly are making good on their assurances to investors that they will do whatever it takes to improve their profit margins, regardless of the consequences to patients.

Here is what each of the seven reported — and what each report left out.

UnitedHealth Group

UNH Close (May 11): $384.44 YTD: +17.4% 1-year: +4.4% Dec 31: $327.56 | May 12, 2025: $368.36

UnitedHealth Group, the nation’s largest health insurer, reported first-quarter 2026 revenues of $111.7 billion, with adjusted earnings of $7.23 per share and a medical loss ratio of 83.9% — well below the 85.5% analysts had expected. The company raised its full-year adjusted earnings guidance to more than $18.25 per share.

UnitedHealth attributed the year-over-year declinedecline in its medical loss ratio to strong medical cost management and favorable reserve development, while acknowledging “consistently elevated utilization and unit cost trends.” In plain terms: patients are still using more care than the company would prefer, but UnitedHealth is getting better at managing around it.

The stock’s 17% year-to-date gain requires context. UnitedHealth ended 2025 at $327.56 — the result of a punishing year that included the Change Healthcare cyberattack, the killing of its insurance CEO, and mounting federal scrutiny of its Medicare Advantage risk-scoring practices. Then this past January, a disappointing fourth-quarter 2025 earnings report sent shares plunging nearly 20% in a single session, pushing the stock to its recent lows before the partial recovery began to take hold. The May 11 close of $384.44 leaves the stock about 4% above where it was a year ago — a modest gain that reflects recovery from a deep hole rather than a return to anything resembling its former heights.

CVS Health / Aetna

CVS Close (May 11): $92.23 YTD: +18.2% 1-year: +47.5% Dec 31: $78.03 | May 12, 2025: $62.52

CVS Health reported first-quarter net income of more than $2.9 billion as costs slowed for subscribers of its Aetna health plans. The company’s medical loss ratio fell to 84.6%, compared to 87.3% in the same period a year ago.

CVS attributed the decline primarily to better underlying performance in its government business and the absence of a premium deficiency reserve recorded in the prior year — a liability an insurer must set aside when anticipated claims are expected to exceed the premiums it has collected. Its absence is itself a sign of improved financial positioning.

Total revenue grew more than 6% to $100.4 billion. CVS raised its diluted earnings per share guidance and confirmed it is exiting the individual Affordable Care Act marketplace after this year. Total medical enrollment fell by roughly 600,000 members compared to year-end 2024, and more than one million year-over-year. This marked CVS’s fifth consecutive quarterly earnings beat.

CVS tells the clearest turnaround story in the group. Its stock is up 18% year to date and up nearly 48% from where it traded a year ago, when the company was in the depths of its earnings crisis and had just replaced its CEO. The trajectory is unambiguous — and so is the strategy behind it.

“Margins over membership”

That recovery was not an accident. It was a stated strategy. CVS CEO David Joyner has said repeatedly over the past year that the company is prioritizing “margins over membership” in its Medicare Advantage business. That means exactly what it says: CVS would rather have fewer, more profitable enrollees than a larger membership it cannot price to break even. On the commercial side, Joyner made the same calculus equally plain. “We do see elevated trends. We took a disciplined pricing approach to that in 2025, which has pressured membership, but we’re going to stay disciplined in our pricing approach,” he told investors last August.

“Pressured membership” is the corporate euphemism. What it describes is people being priced out of their plans, and what it means is that Aetna is once again purging customers it considers a drag on profit margins. (It has done that frequently over the past 25 years.)

The membership losses CVS reported this quarter — roughly 600,000 members gone, more than a million year-over-year — are the direct result of that strategy. Wall Street loved it.

Cigna

CI Close (May 11): $289.00 YTD: +5.6% 1-year: −6.5% Dec 31: $273.72 | May 12, 2025: $309.20

Cigna beat analysts on both earnings and revenue in the first quarter, posting $1.65 billion in profit. Its medical loss ratio came in at 79.8%, a favorable shift from the 82.2% posted a year earlier.

Cigna’s unusually low medical loss ratio reflects both aggressive cost management and a significant structural change. The MLR decline is partly attributable to the removal of its Medicare Advantage business, following Cigna’s sale of that book of business to Health Care Service Corporation. Medicare Advantage has been the primary driver of elevated medical costs across the industry. Cigna’s complete exit from MA made the numbers look cleaner.

Cigna also announced it will exit the individual ACA exchange market beginning in 2027. The company raised its full-year 2026 adjusted earnings guidance to at least $30.35 per share.

Evernorth, Cigna’s pharmacy benefit management and health services arm, generated $58.4 billion in revenue for the quarter, far more than the company’s health plan division. Like its peers, Cigna is increasingly a pharmacy and services company that also sells health insurance — not the other way around. (CVS now takes in more revenue from its PBM, Caremark, than from Aetna’s health plans and the company’s 9,000 retail stores.) Cigna’s stock has recovered to a 5.6% year-to-date gain but remains down about 6.5% from a year ago. A strong quarter has not answered the underlying question investors are asking: now that Cigna has exited Medicare Advantage and is exiting the ACA market, where does future growth come from?

Elevance

ELV Close (May 11): $381.84 YTD: +9.6% 1-year: −6.4% Dec 31: $348.40 | May 12, 2025: $407.98

Elevance Health (previously known as Anthem) reported $1.8 billion in first-quarter profit, down about 19% from the same period a year earlier, though the results exceeded Wall Street expectations. The company, which operates Blue Cross plans in 14 states, posted a medical loss ratio of 86.8% — slightly higher than a year ago, reflecting elevated costs in its Medicaid business, but better than analysts had feared.

Adjusted earnings per share came in at $12.58, above analysts’ consensus expectations. Elevance also raised its full-year 2026 adjusted earnings guidance.

One significant complication: Elevance’s results included a $935 million accrual tied to Medicare Advantage risk-adjustment data the company had previously submitted to federal regulators, where the ultimate liability remains uncertain. Risk-adjustment data — the system by which Medicare Advantage plans submit diagnosis codes to justify higher payments — has come under increasing regulatory scrutiny as a driver of what federal analysts estimate are tens of billions of dollars in annual overpayments to private insurers.

CEO Gail Boudreaux told investors that the company saw “moderately stronger retention” in its ACA segment and attributed better-than-expected results partly to a shift by remaining enrollees toward bronze-tier coverage — lower-premium, higher-deductible plans that tend to see lower utilization in the early months of the year. The stock is up nearly 10% year to date but remains about 6% below where it traded a year ago, with the risk-adjustment liability an unresolved overhang.

Humana

HUM Close (May 11): $274.24 YTD: +7.6% 1-year: +10.2% Dec 31: $254.84 | May 12, 2025: $248.93

Humana’s first-quarter results were the most complicated of the group — a beat on paper, but with enough asterisks to keep analysts cautious.

The company’s insurance segment MLR came in at 89.4%, edging out its own target of just under 90%, with medical and pharmacy cost trends running somewhat lower than anticipated. Revenue for the quarter reached $39.6 billion, up sharply from $32.1 billion a year earlier, driven largely by a 25% surge in Medicare Advantage enrollment.

But Humana did not raise its full-year guidance, unlike most of its peers. The company said it expects its second-quarter medical loss ratio to come in slightly above 91%, a deterioration from the first quarter — a signal that the cost pressures driving last year’s sector-wide crisis have not fully abated – and the expectation that Humana picked up many of the more costly MA enrollees that its competitors dropped.

Humana confirmed it expects to earn at least $9 per share for the full year and projects a full-year medical loss ratio of 92.75%, far higher than its rivals. Humana executives said the company’s primary objective is returning to a sustainable individual Medicare Advantage margin of at least 3% by 2028. Getting there will require continued benefit cuts, premium increases, and geographic retreats — all of which bear directly on the Medicare beneficiaries enrolled in Humana’s plans. What that means is that Humana likely will purge many of its new MA enrollees in the same way it did in 2025 after it disappointed Wall Street the year before.

Humana’s stock recovered sharply after the Q1 report, closing Monday at $274.24 — up nearly 8% year to date and up about 10% from a year ago. But investors’ enthusiasm should be tempered by one number: Humana’s aggressive Medicare Advantage membership growth this quarter mirrors exactly what CVS did in 2024, just before badly missing its cost targets as expenses came in far higher than expected. If that pattern repeats, the recovery will be short-lived.

Centene

CNC Close (May 11): $56.35 YTD: +36.9% 1-year: −10.4% Dec 31: $41.15 | May 12, 2025: $62.87

Centene kicked off the year with better-than-expected revenue and adjusted earnings, signaling a recovery from a rough 2025. Its stock rose more than 13% the day after its earnings call — and at nearly 37% year to date, it is the strongest year-to-date performer in the sector so far in 2026.

The company posted total revenues of $49.9 billion, with its consolidated medical loss ratio falling slightly to 87.3%. Adjusted diluted earnings per share came in at $3.37, and Centene raised its full-year adjusted EPS guidance to above $3.40.

Centene is primarily a Medicaid and ACA marketplace insurer, and its recovery story is rooted in those markets. The company’s Medicaid medical loss ratio fell half a percentage point — driven by rate increases from states and continued cost management.

The ACA marketplace, however, remains a source of volatility. Centene’s ACA enrollment fell sharply as the expiration of enhanced premium tax credits pushed many lower-income consumers out of the market — a policy shift that, for Centene, paradoxically helped near-term financial results by reducing exposure to a segment that had been generating losses.

As with the rest of the sector, context matters. Centene ended 2025 at $41.15, deeply depressed from its year-ago price of $62.87. The stock has bounced hard off that bottom but remains down more than 10% from where it stood a year ago. The recovery is real but the hole it is recovering from is also real.

Molina

MOH Close (May 11): $185.17 YTD: +6.7% 1-year: −43.5% Dec 31: $173.54 | May 12, 2025: $327.69

Molina is the outlier in the sector’s recovery narrative — the one company whose headline numbers looked genuinely bad, even as management insisted the underlying story was better than it appeared.

Molina reported a 95% year-over-year drop in net income for the first quarter, falling to just $14 million from $298 million in the same period last year. The collapse was driven primarily by a one-time charge: a $93 million impairment of intangible assets tied to the company’s planned 2027 exit from the Medicare Advantage–Part D market.

Total revenue was $10.8 billion, with premium revenue down about 4% year over year. The consolidated medical loss ratio rose to 91.1%, up from 89.2% in the first quarter of 2025.

The company’s executives reaffirmed full-year guidance for about $42 billion in premium revenue and at least $5 in adjusted earnings per share, and CEO Joe Zubretsky called the quarter “solid under the circumstances.” Molina has described 2026 as a “trough year” for its Medicaid margins, with the expectation that new contracts and the exit from unprofitable Medicare lines will improve results in 2027.

The stock market has rendered a harsher verdict. Molina’s shares are down 43% from where they traded a year ago — by far the worst one-year performance in the sector. The 7% year-to-date gain is recovery from a floor, not a foundation. Investors who held the stock through 2025 have lost nearly half their money.

The Second Quarter Will Be the Real Test

From Wall Street’s perspective, the industry has stabilized. Whether the companies’ management teams have learned anything different is a question the second quarter will begin to answer.

Analysts have flagged Q2 as especially critical — particularly for Humana, whose aggressive Medicare Advantage membership growth while holding benefits stable mirrors a pattern CVS followed in 2024, before badly missing its medical loss ratio targets. If that pattern repeats, the stock gains of recent months will not hold.

More broadly, the mechanisms driving this quarter’s “recovery” — premium hikes, benefit cuts, member shedding, and structural exits from unprofitable markets — are not cost reductions. They are cost shifts. The medical spending did not go away. It was simply transferred: onto patients through higher out-of-pocket costs, onto states through Medicaid pressure, and onto the federal government through the ongoing overpayment dynamics in Medicare Advantage that regulators have not yet fully addressed.

Wall Street calls this a recovery but it is worth being precise about what has actually been recovered and what has simply been moved off the balance sheet and onto someone else’s.

Is HCA the Exception or the Rule?

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Is HCA the Exception or the Rule?

Last Tuesday, HCA, the largest investor-owned hospital system, released their Q4 2025 and year-end earnings and they’re impressive. The 190-hospital system reported:

  • Net income of $6.8 billion in 2025, a 17.8% increase year over year.
  • Revenue of $75.6 billion, a 7.1% increase year over year.
  • On a same facility basis, growth in revenue of 6.6%, equivalent admissions of 2.4% and net revenue per equivalent admission of 4.1% versus prior year.
  • For 2026, projected a net income between $6.5 billion and $7 billion and adjusted EBITDA between $15.6 and $16.5 billion on revenue between $76.5 billion and $80 billion.

CFO Mike Marks told the 16 analysts on the investor call “Consolidated adjusted EBITDA increased 12.1% over prior year, and we delivered a 90-basis point improvement in adjusted EBITDA margin. Cash flow from operations was $2.4 billion in the (4th) quarter and $12.6 billion for the year. This represents a 20% increase in operating cash flow in 2025 over full year 2024.”

And CEO Sam Hazen added “Let me add to just the whole resiliency agenda. This is not an episodic event for us. It just happens to be a maturation of what in my estimation is cultural within HCA, and that is being cost effective in finding ways to leverage scale, utilize best practices. Now we have tools… that are in front of us as opportunities to create even more consistency, efficiencies and transparency in the company’s overall cost. And that’s why the program is lining up in a well-timed manner with some of the enhanced premium tax credit challenges.

But we see this program continuing to mature. And as we get more capable at using these tools, it’s going to help us find even more opportunities. But this is not a onetime event. It’s a cultural dynamic in our company around being cost effective, being high quality and finding ways to improve from a process standpoint and a leverage standpoint with our overall scale.”

Shares of HCA closed at $488.27 last week, down from its peak at $527.55 (January27). Per MarketWatch, “shares of HCA Healthcare Inc rose $1.19% to $488.27 Friday on what proved to be an around grim trading session for the stock market, with the S&P Index falling 0.43% to 6939.03 and Dow (DJIA) falling 0.36% to 48,892.47. The stock demonstrated a mixed performance when compared to some of its competitors Friday, as Community Health Systems (CYH) rose 1.26% to $3.21 and Tenet (THC) fell 0.11% to $189.28.”

Hospital stock market analysts are keen to gauge how companies like these are navigating choppy waters for healthcare.  It’s understandable: Healthcare is one of the 11 sectors that comprises the overall S&P 500 and is 9.6% of its weighting. Historically, the healthcare index had beaten the S&P (30-year average 9% vs. 8% overall) but in recent years, it has lagged largely because regulatory policy changes and healthcare budget volatility dampened investor confidence.

Investors are increasingly hedging their bets in healthcare services reasoning even market bell-weathers like HCA face headwinds. And that sentiment has profound impact on operators in not-for-profit health sectors like community and rural hospitals, nursing and home care and ancillary services like EMS, hospice care and others that see their credit-worthiness slipping and costs for debt capital increasing.

My take

HCA is not an exception. It is culturally geared to the business of running hospitals and amassing scale in its markets vis a vis outpatient services and physician relationships. It follows a playbook geared to earnings per share and strategic deployment of capital to optimize its ROC, and it rewards its leaders accordingly. These are not unique to HCA.

And, like other systems, HCA is a lightning rod for critics. Studies have shown for-profit hospitals lean on staffing, aggressive on procurement, concerning to physicians and increasingly problematic to private insurers. Those same studies have shown quality of care to be comparable and charity care to be at or above same-market competitors. But this discipline also enables a higher price to cost ratio, a better payer mix and pruning of clinical services where margins are thin. Again, leverage in payer contracts and high pricing are not unique to the HCA playbook. Some not-for-profit systems have done the same or better.

What’s unique for each system like HCA are 1-the markets in which they enjoy leverage by virtue of scale and 2-the aggressiveness whereby they use their leverage. Ownership status—not for profit vs. investor-owned—matters in some markets and organizations more than others. But market dominance by any system, and how it’s leveraged, is a differentiator.

Case in point: In Asheville NC, HCA’s Mission Health dominates. HCA paid $1.5 billion for the legacy Mission-St. Joseph’s system in 2019. Despite, difficult media coverage and 3 warnings from CMS about quality shortcomings, it’s profitable.

On December 10, 2025, I had quadruple by-pass surgery there. Over the course 2 ED visits in November, the 5-day inpatient stay and post-surgical interactions since, I had the opportunity to see its operations firsthand. The bottom line for me is this: HCA Healthcare is a successful business. It operates Mission aggressively and profitably. Every employee knows it. Staffing is lean. There are no frills. Coordination of care is a crap shoot: connectivity between offices, services, and physicians is limited; price transparency is a joke and care navigation for patients like me is haphazard.  But all say patient care is not compromised as my surgical experience confirmed. Every hospital aspires for the same. All are trying to do more with less.

HCA’s financial success is not the exception in acute care, but it’s certain to draw attention to business practices that enable results like it enjoyed last year across the spectrum of hospital care. And it’s certain to intensify competition between hospitals to get the upper hand.

References in addition to citations in the sections that follow:

HCA faces up to $1.4B hit from ACA, Medicaid headwinds Beckers January 27, 2026 https://www.beckershospitalreview.com/finance/why-hca-says-it-can-navigate-2026-policy-uncertainty

Companies are tired of absorbing tarifffs

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https://www.axios.com/newsletters/axios-macro-b58c6840-0108-11f1-ab61-6f9a2442ad79.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosmacro&stream=business

Businesses that held the line on tariff-related price increases last year might be passing more of those costs on to consumers at the start of 2026.

Why it matters: 

The Trump administration is celebrating how little its huge levies have impacted inflation. But new signs indicate the policies are appearing with a lag, complicating their push to address affordability concerns.

Zoom out: 

Many companies reassess pricing at the start of the year — one factor that historically makes January a month of above-average price increases.

  • Tariffs could be supercharging that historic trend: Companies might finally be raising prices to address the costs they ate throughout much of last year.
  • Adobe’s Digital Price Index rose by the most, month on month, in its 12-year history in January — even faster than at the height of the inflation shock in 2022.
  • “The strong increase could be a sign of greater tariff pass-through to start off the new year,” with large price changes for electronics, furniture, bedding and appliances, economists at UBS wrote in a note.

Yes, but: 

The bank’s economists caution that the series can be volatile, and it was down sharply in November, so it could be a head fake.

State of play: 

Official government inflation data for January is not scheduled to be released until next week, pending a government shutdown. Still, there’s other evidence that January could be a spicy month for price hikes.

  • The Institute for Supply Management’s manufacturing survey sub-index for prices ticked up to 59 in January, from 58.5, the highest since September.

Zoom in: 

While there is still caution that higher prices could crimp demand, several references in the Federal Reserve’s compilation of anecdotal information from across the U.S. point to price increases in the new year.

  • In Atlanta, for instance, “many contacts expect to implement price increases in the first half of 2026 to preserve margins, especially those who held prices steady in 2025,” according to the most recent Beige Book.
  • The Philadelphia Fed notes that many businesses anticipated “tariffs to seep into general price levels.”

In a speech this morning, Richmond Fed president Tom Barkin said that he has spoken with about 75 companies since the start of the year, and described a dynamic within companies regarding price-setting.

  • “In boardrooms around the country, sales and finance teams are debating how aggressively to increase prices, for example, in the context of increased tariff-driven input costs,” Barkin said.
  • “If I can stereotype: Sales doesn’t want to pass through those costs at the risk of lost volume; finance doesn’t want to eat the cost at the risk of reduced margins,” Barkin said.
  • “I imagine some finance teams have done well recently (at least based on the increases I’ve seen in my streaming services and homeowners insurance),” he added.

What they’re saying: 

“The Fed is telling us, ‘Don’t worry, the inflationary effects of [tariffs] will subside,’ but I am a little bit skeptical of that,” James Knightley, chief international economist at ING, told reporters in Washington, D.C., this morning.

  • “I do get the sense that there is some delay related to the Supreme Court decision — a lot of companies are hoping it will just disappear,” Knightley said, referring to a pending decision about the legality of the bulk of President Trump’s tariffs.
  • “There is a risk that costs end up getting passed along to you and I in time … it just will come through more slowly,” Knightley said.

The bond market keeps the score

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https://www.axios.com/newsletters/axios-macro-c0ce6d60-f79f-11f0-8ec7-a77fc28c0dad.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosmacro&stream=business

The bond market isn’t as responsive to Federal Reserve interest-rate policy as President Trump’s rhetoric might suggest. That makes the market a powerful check on the president.

  • We explore the tension — and what it means for this volatile week in geopolitics — below. 🏔
  • Plus, a dark horse to be the next Fed chair looks to be gaining ground. 🐎

Situational awareness: 

The Commerce Department released shutdown-delayed data that showed solid growth in incomes and spending for October and November.

  • Consumption expenditures were up 0.5% both months (0.3% inflation-adjusted), pointing to steady underlying demand.
  • The Fed’s preferred inflation measure rose 0.2% both months, and in November was up 2.8% over the previous year.
  • Q3 GDP was revised slightly higher, to a 4.4% annual growth rate (from 4.3% previously), reflecting an upward adjustment to exports.

Trump really, really wants lower interest rates, and the Federal Reserve and other tools of state power have tried to deliver them. The bond market isn’t cooperating.

Why it matters: 

Longer-term borrowing rates are set on global markets, as savvy players who together deploy trillions of dollars make bets on the future of growth and inflation.

  • In an era of vast power concentrated in the Oval Office, that makes it one of the few forces even Trump can’t control. It is a constraint on his actions that will not respond to insults or threats.
  • That, in turn, shows why the TACO trade — the bet that Trump Always Chickens Out when his rhetoric or actions start to ripple across global markets — has been in full force this week.

Driving the news: 

Trump sees the Fed as the main mechanism to bring rates down. That was evident in his latest plea for lower rates, which he brought to the global stage yesterday in Davos, Switzerland.

  • “I’ll be announcing a new Fed chairman in the not-too-distant future. I think he’ll do a very good job,” Trump told a room of global CEOs and government leaders at the World Economic Forum.
  • “Problem is, they change once they get the job. You know they’re saying everything I want to hear and then they get the job … and all of a sudden, it’s ‘let’s raise rates a little.'”
  • Trump said he hopes his pick “does the right thing” with lowering rates. He later added that the U.S. should be paying “the lowest interest rate of any country in the world” on its debt “because without the United States, you don’t have a country.”

Reality check: 

The Fed cut interest rates by a full percentage point in 2024 and another three-quarters of a percentage point in 2025. Yet longer-term borrowing costs are up in that time.

  • The day that rate-cutting began, Sept. 18, 2024, the 10-year U.S. Treasury yielded 3.7%. When the second wave of cutting began this past September, it was 4.06%.
  • This morning, the 10-year yield was 4.27%.
  • The rise in longer-term borrowing costs has happened for a mix of good reasons (higher growth prospects) and bad (higher inflation being priced in). But regardless, the swing shows the limit of the Fed’s ability to cater to the president’s wishes.

What they’re saying: 

“The Fed doesn’t really set interest rates,” JPMorgan Chase CEO Jamie Dimon said in Davos.

  • “What happens if inflation goes up? They raise interest rates. What happens if inflation goes down? They reduce interest rates. They are a follower.”

Yes, but: 

That doesn’t mean the president has no power over long-term interest rates. Tax and spending policy determines government deficits and, in turn, bond issuance and supply.

  • And this administration in particular has been creative in using the tools of government to try to encourage demand for longer-term securities, including directing Fannie Mae and Freddie Mac to buy hundreds of billions of dollars in mortgage bonds and tweaking regulations to encourage banks to hold more Treasuries.
  • Fed appointments also matter — though not necessarily in the way Trump emphasizes. A key to longer-term rates remaining low is investor confidence that the Fed will do what it takes to prevent inflation from taking off — even if that means rate increases in the near term.

Between the lines: 

Last April, a bond market sell-off was a big factor in Trump backing away from “Liberation Day” tariffs.

  • This week’s threats of military force against Greenland and new tariffs on Europe — followed by backtracking — seemingly had echoes of that episode.
  • Treasury Secretary Scott Bessent, however, said on a podcast that “the bond market didn’t change the calculus” and that “President Trump always knew where he was going.”

The year the U.S. economy bent but didn’t break

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https://www.axios.com/2025/12/30/economy-trump-jobs-inflation

The U.S. economy was beaten and battered in 2025, and powered ahead despite it all.

The big picture: 

The question for 2026 is whether the underlying sources of weakness that are already evident will broaden out into something that threatens to undermine its overall resilience.

Threat level: 

Beneath buoyant growth in GDP and asset prices are serious worries.

  • The labor market is looking softer by the month.
  • Elevated inflation is pinching family budgets.
  • And fears are rising that the AI-fueled boom could leave ordinary workers worse off.

The big picture: 

Those pain points have already caused public opinion on the economy to turn sharply negative.

  • At the same time, one lesson of 2025 is that the U.S. economy is awfully adaptable and can withstand more challenges than you might expect.

Zoom in: 

In April, President Trump’s “Liberation Day” tariffs sent the stock market swooning and economists upgrading their recession odds.

  • It wasn’t the only sign of trouble. Job growth came to a near-halt over the summer. Deportations and restrictionist immigration are part of the story, along with the aging of the native-born workforce. But part of it is that companies are trying to get leaner.
  • Inflation, meanwhile, has become the fire that will not be fully doused. While the sky-high inflation of 2022 is a thing of the past, inflation has been above the Federal Reserve’s target 2% target every single month since March 2021.
  • Affordability is top of mind in public opinion.

Reality check: 

It’s important to remember, though, that the $30 trillion U.S. economy, for all its flaws, can weather a lot, at least at the macro level. It is, as RSM chief economist Joe Brusuelas puts it, a “dynamic and resilient beast.”

By the numbers: 

The headline data numbers have held up just fine, a trend punctuated by Tuesday’s report that GDP rose at a 4.3% annual rate in Q3, amid strong consumer spending and the AI-investment surge.

  • The S&P 500 is up more than 17% so far this year.
  • The unemployment rate edged up over the course of the year, to 4.6% in November. But that’s still lower than it has been in 69% of months dating back to 1948.

Yes, but: 

You can’t eat GDP, or points of the S&P. And the biggest issues for the U.S. economy — and the things that look like pre-eminent risks for 2026, are in what you might call the peripheral data.

  • While layoffs are still few, employers have slowed their hiring rates, which means those who do lose their jobs face hard sledding.
  • Job creation has been overwhelmingly driven by health care, with usual cyclical sectors like manufacturing and transportation and warehousing shedding jobs.
  • Consumer demand is displaying “K-shaped” trends, being highly concentrated among the affluent Americans enjoying surging stock wealth — while the household finances of lower earners are increasingly on a razor’s edge.

What they’re saying: 

The fact that strong third-quarter GDP growth coincided with weak job creation, Brusuelas writes in a note, “implies a decoupling between robust topline growth and soft jobs creation which in our estimation is likely to be the major economic narrative looking forward into 2026.”

What we’re watching: 

The 2026 economy is set to receive a boost from Washington, as the signature tax law passed in July — the One Big, Beautiful Bill Act — acts as a fiscal stimulus alongside the delayed impact of the Federal Reserve three interest-rate cuts since September.

  • It’s hard for companies to experience the kind of robust demand for goods and services they’ve seen in 2025 and not eventually have to hire more workers to help fulfill it.

The bottom line: 

There are plenty of risks on the horizon for 2026, but the economy’s striking resilience in 2025 is a reminder that doom-and-gloom predictions for the U.S. economy often prove wrong.

Consensus-driven leadership prevails

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A striking thing about this week’s flow of news out of the Federal Reserve is how normal it was — at least compared to some of the possibilities that appeared in play last month for a breakdown in the institution’s longstanding norms.

Why it matters: 

In the Fed’s decision to cut interest rates on Wednesday, and the unanimous reappointment of 11 of 12 reserve bank presidents announced yesterday, it was clear that Powell has retained his ability to steer a seemingly fractious organization toward consensus.

  • The next chair may yet shift the institution toward a process with more open dissent and count-the-votes proceduralism, as is seen at the Bank of England and as some Trump associates have advocated.
  • But for now, Powell looks clearly in charge despite lame-duck status (his term is up in May).

State of play: 

Just a few weeks ago, it looked plausible that there would be the most open dissent from the Fed’s December interest rate decision in decades. Five officials of 12 Federal Open Market Committee voting members had expressed significant reservations about a rate cut.

  • Three officials who were publicly skeptical of cutting rates further — reserve bank presidents Susan Collins (Boston) and Alberto Musalem (St. Louis), and governor Michael Barr — elected to follow the leader when it was time to cast their vote.
  • While there were three dissents — two opposing the cut, one favoring going further — that’s not terribly abnormal. There were three dissents in September 2019, for example, also in opposite directions.

What they’re saying: 

“After the high drama/psychodrama from the October press conference onwards, the end result was more business-as-usual on the part of the Powell Fed,” wrote Krishna Guha and colleagues at Evercore ISI in a note.

  • In his news conference, “Powell was calm and poised, not on the ropes as in October, with a governance crisis averted,” they wrote.

The big picture: 

Fed watchers were braced for the possibility that the every-five-years process of reappointing reserve bank presidents would generate fireworks, an opportunity for Trump-appointed governors to try to create some upheaval at the Fed (or at least make some noise).

  • It came and went yesterday without signs of public dissent, as the board announced that 11 of 12 reserve bank presidents had been reappointed with “unanimous concurrence” by members of the Board of Governors.
  • Not only were the 11 officials re-upped, the three Trump-appointed governors did not object.
  • The odd man out, Atlanta Fed president Raphael Bostic, had previously announced his retirement at the end of his term in February. But one bank president stepping down at the end of a term is not unheard of; it last happened at the end of 2015 with Minneapolis Fed president Narayana Kocherlakota.

Between the lines: 

On paper, the Fed chair holds only one vote out of seven on the Board of Governors and one of 12 on the FOMC. Their ability to lead the institution depends on a mix of hard and soft power.

  • In the hard power department, the chair oversees the staff and sets meeting agendas. In the soft power department, they must persuade their colleagues to line up with the policy path they believe is correct.
  • Powell has been skilled at using both — and displayed those skills this week.

America’s Three Economies: Vibes Sinking, Data Treading Water, Elites Sailing Away

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Roosevelt Forward bar chart showing the share of jobs added in Health Care and Social Assistance from 2015 to 2025. 2024 has a large spike near 90%, while other years, except 2020-2021, are below 30%. 2020 and 2021 data are missing.

As we approach the end of 2025, it’s a good time to take stock of the US economy. There’s justifiable concern that this year has entrenched a K-shaped economy, where the have-mores leave the haves and have-nots behind. But there are more than two stories going on right now.

First, the vibes are bad (just ask anyone coming out of a grocery store). Second, the real economy—prices, jobs, and consumer and business spending, among other factors—is worse than it was a year ago, but holding up OK (4.4 percent unemployment, GDP growth over 2 percent, and inflation around 3 percent is hardly the stuff of recession). Third, a small number of people and companies are doing extremely well.

Depending on where you stand, you’re hearing very different things about the economy, but a pretty consistent theme is an administration that has not delivered on promises made to voters—while delivering to the president’s family and friends.

Under the Hood, the Story Gets More Complicated

It’s been a predictably rough year for the US economy. Tariffs have raised goods prices and hit manufacturing jobs, immigration crackdowns have crippled the labor force, and reversing energy policies dramatically has unwound an energy investment boom. As a result, the job market is softer, prices are still high, and inflation is up and apparently rising based on the data flow that has (finally) started to trickle back in.

That said, if the data are weaker, the economic mood of the country is, in a word, awful. Consumer sentiment in October was only exceeded by lows from the worst of the early 1980s recession, the peak of the 2022 inflation, and the months following the “Liberation Day” tariff announcement this year. Since January, consumer sentiment has plunged, giving up essentially all gains from a steady rise after the inflation peak of 2022.

That pessimism isn’t purely emotional—it reflects months of higher grocery and utility bills. In fact, across both the major household expectations surveys, families expect inflation to keep going up next year—which most economists expect as well. And roughly twice as many consumers surveyed by the Conference Board expect the jobs picture to be weaker rather than stronger in the next six months.

This view is both pessimistic and realistic given the data we’ve seen so far this year. It’s unmistakably true that the labor market and the inflation picture are weaker than last fall. What’s worrying to the wonkier economy watchers, however, is that the pressures on both inflation and unemployment are in the wrong direction. There are real risks that both inflation and the jobs picture could get worse, but (short of policy reversals) few predictable shocks are likely to make either improve in the near term.

Job growth has stayed positive but slowed dramatically, from an average 167,000 jobs a month in January to just 109,000 in September (and will likely be revised down further with annual revisions early next year). Over 87 percent of all jobs added this year are in health care and social assistance (a given in an aging country), while the rest of the economy has added just 71,000 jobs all year. And there’s little sign that tariffs are about to bring down prices, nor are there signs that the demand side of the economy is about to pick up.

It’s Not Great, but There’s Plenty of Time to Panic Later

The closer you are to the data, the less pessimistic you probably are right now. But, as we can see in recent Fed meeting minutes, the debate is largely between two camps: The first is those who think the labor market is middling and the risks of rising inflation are serious. The second is those who think the risks of rising inflation are less worrisome than the chances the labor market deteriorates further.

It’s clearly too soon to panic about a recession, and the best labor market data we have say things are holding up well by historical standards—September’s 4.4 percent unemployment is better than about 80 percent of months since 2000—it’s just that there’s little to suggest things are about to improve significantly.

That said, the economy continues to chug along on the strength of spending by resilient, yet quite frustrated, consumers. The final reading on second quarter GDP shows US consumer spending keeping the economy going, even as savings deplete.

Early holiday spending numbers look strong, so it seems like US consumers are going to muddle through tariffs. The distribution of consumer spending remains pretty narrow—high earners are doing much more of the broad-based spending in the economy

However, if you get your news from stock markets, or even from retirement statements, the world is different entirely, and much more optimistic—at least from a high level. After a massive swoon in April, the US stock market has had a great year, powered by tax cuts for corporations and the wealthy and an AI investment boom that looks bubble-like to some inside it.

Yet, like in the real economy, the more you dig into the data the farther from the extremes your views can go. Job and corporate earnings growth are concentrated in increasingly narrow slices of the economy. Corporate earnings are notoriously concentrated at this point, with the top 1.4 percent of S&P 500 companies accounting for almost all of stock market gains this year—just seven companies are now one-third of the value of S&P 500.

How Do We Square These Takes?

Overall, the data are on a more even keel than either the awful vibes most Americans are feeling from an affordability crisis or the anxiously warm vibes of investors. We’re not living through the economic boom tech investors see everywhere, nor the near-term dystopia consumers are feeling. The economy is weaker than last year and likely to continue to soften a bit more over the first part of next year, but the good news is at least for now things are not as bad in the data as in the headlines. The bad news is . . . that’s the good news.

New Study Reveals UnitedHealth’s Hidden Hand

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Research suggests UnitedHealth may be running a shell game — one that lets insurers flout regulations and obscure the harmful consequences of their vertical integration strategies.

A new Health Affairs study has confirmed that UnitedHealth Group — the nation’s largest health care conglomerate — is doing more than dominating the market; it’s playing by a different set of rules.

Researchers Daniel Arnold of Brown University and Brent Fulton of UC Berkeley analyzed new federal “Transparency in Coverage” data and found that UnitedHealth’s insurance arm, UnitedHealthcare, pays its own Optum physicians 17% more on average than it pays other doctors for the same services. And in markets where UnitedHealthcare holds a large share — 25% or more — that gap explodes to 61%.

Research published by Health Affairs titled UnitedHealthcare Pays Optum Providers More Than Non-Optum Providers.

The Affordable Care Act’s medical loss ratio (MLR) rule requires insurers to spend at least 80–85% of premium revenue on patient care, rather than on administrative expenses and profits, but if an insurer can funnel “medical spending” to its own subsidiaries — in this case, the thousands of subsidiaries that now comprise Optum — it can appear to comply with the law while actually shifting massive amounts of revenue from one pocket to another.

Under the MLR rule, insurers are required to send rebate checks to their customers if they don’t comply with the MLR requirement. The Health Affairs research suggests that UnitedHealth may be flouting that rule by deliberately overpaying the health care delivery operations it owns to comply with the letter of the law if not the intent. Because physician practices and other provider entities are exempt from the MLR rule, regardless of ownership, UnitedHealth can avoid sending its customers the rebates they otherwise would get and pad the conglomerate’s bottom line.

As the researchers put it:

“The results suggest that intercompany transactions within health care conglomerates may warrant scrutiny, as they may be signals of regulatory gaming or attempted foreclosure.”

Another way to game the system

This study also highlights another consequence: independent physician practices are being squeezed out. When UnitedHealth pays Optum doctors more — and non-Optum doctors less — it creates an uneven playing field that could drive small and mid-sized practices out of business.

The authors warn that this pattern “could lead to independent practices closing or joining larger groups such as Optum”. Over the past decade, Optum has quietly amassed more than 90,000 doctors under its control — more than any other private organization in the country.

And it’s not just doctors – UnitedHealth owns nearly 2,700 entities – a pharmacy benefit manager, a data analytics firm, home health companies and even surgery centers. The study notes that in 2024, Optum reported $253 billion in revenue, but 60% of that was simply money moving internally from UnitedHealthcare. In other words, UnitedHealth’s empire is built on being able to feed itself by self-dealing.

The point

This research provides some of the strongest evidence yet that UnitedHealth’s “vertical integration” strategy is distorting the market — not to improve care but to maximize profits under the guise of “compliance.”

For regulators at the Department of Justice, the Department of Labor (which has jurisdiction over employer-sponsored plans administered by UnitedHealth and other insurers) and the Centers for Medicare and Medicaid Services, this should be a wake-up call. As the authors conclude, even a 1% artificial price increase through these internal transfers could significantly reduce the rebates insurers owe consumers under the medical loss ratio rule. That’s billions of dollars that patients, taxpayers and employers are entitled to but that never leave the company’s bank account – except to reward shareholders and top executives. During just the first nine months of this year, UnitedHealth reported making nearly $19 billion in profits on revenues of more than $334 billion. Both revenues and profits likely would have been considerably less if not for the apparent gaming the Health Affairs researchers uncovered.

How children are treated in the One Big Beautiful Bill Act

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How children are treated in the One Big Beautiful Bill Act

“The true character of society is revealed in how it treats its children.”- Nelson Mandela

Elected officials of both parties have proposed new and better government support for families with children. President Trump’s One Big Beautiful Bill Act includes some of these proposals, but overall, because of the law’s benefit cuts for working class and lower-income families, it will likely end up hurting roughly as many families with children as it helps.

  • Parts of the law increase help for families with children: The maximum Child Tax Credit was increased from $2,000 to $2,200 per child; however, the increase remains only partially refundable and thus will not be available to many low-wage working families. In addition, on a much smaller scale and with some questions remaining about its workability in practice, the One Big Beautiful Bill Act (OBBBA) created a new type of child savings, “Trump Accounts,” and a temporary program of $1,000 payments for each child born in President Trump’s presidential term. The adoption credit has also been improved. In each of these provisions, there are further changes that could enable these programs to help more children and more families.
  • However, many of the law’s most substantial changes will reduce help to children, particularly those in working class and poor families. The law imposes new legal and bureaucratic filing requirements to previously bipartisan programs, particularly the Supplemental Nutrition Assistance Program (SNAP, formerly known as “food stamps”) and Medicaid, that will keep many families from getting benefits, including benefits for which they are eligible.
  • Overall, OBBBA will likely end up reducing benefits for roughly as many families as it helps, with the greatest losses concentrated among the least well-off. By 2030 the 40% lowest-income households will experience a net loss on average, and the middle quintile will have roughly no net change; there will be ongoing net gains for the top 40% of households.

This note describes some key changes embedded in OBBBA, some related proposals by Democrats, and some improvements that might be made in the future.

Is child policy becoming bipartisan?

Politicians of both parties, who once made a show of kissing babies, have progressed to making a range of proposals to improve children’s lives and prospects. In some cases, perhaps frustrated by ongoing political polarization, they’ve chosen to support the same or similar approaches, including extra tax credits or actual payments for children and child savings accounts. For example, both Senator Ted Cruz (R-TX) and Senator Cory Booker (D-NJ) have proposed savings accounts be started for every child at birth.

Although the recently enacted OBBBA was in no way bipartisan, it included some proposals endorsed by both Republicans and Democrats. At the same time, however, the Act reduced the scope of the previously bipartisan SNAP safety net program and of Medicaid.

The Brookings Institution

Furthermore, despite claims by representatives of both parties to support working families with children, the changes in OBBBA overwhelmingly help families that are already better off. After the temporary tax benefits end, roughly half of U.S. families will be worse off, with most benefits of the bill going to the top 40% of the income distribution.

Below, we discuss two kinds of assistance for families for children: those that provide immediate resources and those that support saving for children’s futures.

Money for children now: Child income tax credits, baby bonus checks

Congress has subsidized children through the tax code for at least a century, starting with dependent exemptions from income1 and following with the Earned Income Tax Credit in 1975 and the Child Tax Credit (CTC) in 1997. By far the most significant action benefitting some children in OBBBA is an increase in the CTC. However, most low-income children are excluded from these higher benefits. At the same time, the Act would dramatically reduce other previously bipartisan safety net programs that support low-income children, particularly SNAP.

Child Tax Credit

The CTC is a tax credit for families with children. It was originally conceived as an anti-poverty program, though for much of its history most of the CTC’s benefits have gone to middle class or wealthier families. The CTC phases in with earnings and the credit is only partially refundable, meaning that if the credit exceeds a filer’s tax liability, families can receive a portion of the credit as a tax refund. Approximately 60 million children benefit from the current credit. In response to the COVID-19 recession, for one year the credit provided families with as much as $3,600 per child and allowed low-earnings families to get the full benefit, but that expired and the maximum returned to the pre-OBBBA maximum of $2,000. Because of the phase-in and other limitations on refundability, an estimated 17 million children in families with low incomes receive less than the full $2,000-per-child credit or no credit at all.

OBBBA Changes

Under OBBBA, the maximum credit was raised to $2,200 per child and then indexed to inflation. Because the bill did not make any changes to the CTC’s refundability or phase-in with earnings, this change will not benefit any of the estimated 17 million children who were left out under pre-OBBBA law. Furthermore, the act’s increase in the standard tax deduction and other changes will increase the number of children whose families don’t get the full credit.

The Brookings Institution

The OBBBA CTC expansion primarily benefits families with above average income.  As this graph from the The Budget Lab shows, the bottom 40% receive little or no benefit.

Possible Improvements

There are many possible changes to broaden the CTC’s reach and help more children. (See Crandall-Hollick, Maag, & Jha 2025.):

  • CTC “Baby Bonus”: Make the full credit available for all newborns, so that every newborn child’s family would get the full credit for their first year. This could be considered a CTC-based “baby bonus”.
  • Allow full refundability as long as parent earnings are above the minimum ($2,500/year).
  • Start phasing in refundability from the first dollar of parent earnings.
  • Allow full refundability for families with multiple children.

Adoption Credit

Under current law, adoption expenses of up to $17,280 per child can be credited against income taxes. In practice, few families get the full credit because the credit is nonrefundable and few families have an income tax bill greater than this amount.

OBBBA Changes

Under OBBBA2 up to $5,000 of qualified adoption expenses will be refundable, thereby increasing the available adoption credit for approximately 45,000 children per year.3

Possible Improvements

Congress could broaden the benefits of the adoption credit by reducing the total credit and increasing the refundable amount, e.g., reducing the maximum to $12,000 while increasing the refundable amount to $6,000.

Direct cash grants: “Baby Bonuses,” SNAP, etc.

Some observers, concerned about declining birthrates, have proposed a cash payment for newborns soon after birth. Although President Trump has expressed support for a $5,000 “baby bonus”, the administration made no specific proposal and none was included in any version of the OBBBA. (A baby bonus could be implemented via a change in the CTC, as described above.)

Important safety net programs affecting children were cut by OBBBA

There are many federal safety net programs that provide cash or in-kind benefits to families based on having children and the number of children. The largest near-cash program, SNAP, will be cut back very substantially by OBBBA. An Urban Institute report estimated that the SNAP cuts would affect 3.3 million families with children and reduce their benefits by an average of $840 per year.

The Brookings Institution

Money for children’s futures: Baby bonds & Trump child savings accounts

With multiple rationales, policymakers with varying perspectives have concluded that children and their families would benefit from starting life with a nest egg, a savings account to be created early in a child’s life, to be then held and used well in the future for education, homebuying, or other purposes. States, cities, counties, and nonprofits have started programs that both establish child savings accounts and provide a starter contribution to those accounts. According to the Congressional Research Service, over 100 such programs had been started by 2023, in addition to the education savings account programs operated by many states under Section 529 of the Internal Revenue Code.

These programs draw from work in the early 1990s by academic Michael Sherraden which proposed a national program of “Individual Development Accounts” for the poor. This led to local programs in many cities and some states. A similar approach using the term “baby bonds” was proposed by scholars in 2010 as a means to reduce racial gaps in wealth, and this proposal was adapted into the American Opportunity Accounts Act introduced by Senator Cory Booker (D-NJ) in 2018. Under those proposals every child would receive a grant at birth, with additional government grants to children in poorer families in later years. Some child investment programs, such as New York City’s RISE program also incorporate philanthropic gifts.

The approach became bipartisan this year when Senator Ted Cruz (R-TX) proposed that each newborn child receive a one-time $1,000 grant in an “Invest America Account.” Cruz’s rationale was less about reducing wealth disparities and more that such accounts would give children a stake in the future and an understanding of investment markets. In place of ongoing government contributions, he proposed that parents, employers, philanthropies, and others could contribute to the child accounts. The Cruz proposal was, with modifications, adopted in OBBBA.

What are the benefits of child savings accounts?

Advocates of these accounts see several advantages. First, they note with some evidence that having a personal account early in life that can only be accessed later substantially increases a child’s and family’s interest in education and personal betterment. Some believe that these accounts will also improve financial literacy and understanding of the economy and investment.

Other advocates, noting that disparities in wealth are associated with differences in educational opportunities, attainment, and future income and that wide racial differences in wealth persist, believe these programs could reduce wealth disparities at the start of life. The original child savings programs focused on this rationale, with payments or participation incentives that favored the poor.  There is research that finds higher wealth associated with better educational and health outcomes, as well as stronger protection against material hardship following disruptive events, suggesting that policies that facilitate wealth-building could have profound effects.

OBBBA’s Trump Accounts & $1,000 contribution pilot program

OBBBA permits4 the secretary of the Treasury and/or private financial institutions to offer “Trump accounts,” savings accounts for children under 18 that offer some limited tax benefits if invested and not used until age 18. Contributions to these accounts, limited to $5,000 per year from family members, would be taxed as ordinary income. In addition, there is a 10% penalty for withdrawals before age 59½, with certain exceptions for education, home buying, adoption, disaster relief, etc. Contributions are also permitted from employers, up to $2,500 per year, and as part of a general program from government or philanthropies supporting all children in an approved geographic area.

The act also creates a pilot program of $1,000 government grants for any child born in the years 2025-28 (with a Social Security number) if the parent or Treasury elects5 and if there is an account established for that child. Although the government funds to be provided are given only at birth and are generally much smaller than the CTC, if made universally available they will reach some poor families with children that the Child Tax Credit does not.

Will Trump Accounts work?

While both Republicans and Democrats have endorsed at least the outlines of child savings accounts and a universal starting grant, there are many potential supporters who have questioned the design of Trump Accounts as enacted by Congress. A comprehensive review of child savings accounts systems undertaken by the Aspen Institute’s Financial Security Program raised a series of challenges, only some of which were responded to by the Congress. The Aspen publication noted ominously that similar program in the U.K. had been regarded as a failure and had in effect “poisoned the well” so that other efforts were unlikely to be considered for many years. That may have been a warning for Trump accounts.

Making Trump Accounts and the $1,000 per newborn pilot program work will require:

  • Treasury to encourage all new parents to sign up for (“elect”) the $1,000 grant and/or the Treasury can do so itself. OBBBA does not auto-enroll children. It requires either the parent or the Treasury to “elect” newborn participation in the grant program.
  • Treasury to establish and pay for the millions of accounts for all newborns. Although the law permits private financial institutions to establish these accounts, in practice they are unlikely to do so on their own. The administrative costs of setting up millions of individual private accounts will be large and, after receiving the $1,000 initial grant, many families will conclude that they cannot afford further contributions. Private firms will see little benefit in maintaining millions of individual accounts holding $1,000 with little prospect for more contributions. For that reason alone, Treasury will likely need to set up the program at least initially, perhaps by managing the funds in a single investment pool and having the individual accounts administered centrally. Treasury may also have to subsidize at least part of account administrative costs.For those families that can afford additional contributions, the existing nationwide programs of tuition savings accounts (“529 Plans”) are likely to be preferred: Investment earnings within Trump Accounts will be taxed at the ordinary income tax rate (plus a possible 10% penalty unless used for approved purposes), whereas proceeds from 529 plans if used for tuition expenses are not taxed at all.

Possible changes

Since the program has the president’s name on it, Treasury is likely to make every effort to help Trump Accounts succeed and be widely adopted and used. Some changes have already been suggested:

  • Provide additional government contributions for children of less well-off working families. This could be done several ways: Under the approach proposed by Senator Booker, the government could make smaller grants annually to children in families below an income limit. Alternatively, this could be done by allowing a full refund of the Child Tax Credit regardless of income while requiring the increased refund be invested in a Trump Account or something similar.
  • Ensure that child savings don’t penalize other public support. Retirement accounts and tuition assistance 529 program savings are generally not considered assets in setting eligibility for SNAP and other programs, and they are given preferential treatment in determining student loans. Trump Accounts could get similar treatment, as the Aspen Institute working group proposed for early wealth building policies.
  • Consolidate the many different tax-favored savings accounts into a single account type. (Muresianu & Cluggish, 2025) Since the Trump accounts are in some respects tax-disadvantaged compared to 529 school savings and also to several retirement accounts, a way to ensure the success of the effort might be to incorporate those accounts into the Trump account program.  

What’s the right balance between helping children now versus saving for the future?

Unsurprisingly, there are differences of opinion whether additional resources should be devoted to immediate financial relief (using the CTC or a child grant) or instead to child savings accounts and wealth building for the longer term. There are advocates of both approaches and both have been shown to benefit children and families. However, there isn’t yet enough experience with child savings accounts to form judgments about the appropriate balance of resources between them.

We can do better

Given the broad public support to help children and families with children, elected officials from both parties will claim their efforts do so. As the distinctly non-bipartisan experience with OBBBA shows, however, many programs fall short of the rhetoric: overall, OBBBA seems likely to harm as many families with children as it helps.

Future bipartisan efforts can and should do better, supporting all families with children, including those who are more in need. 

UnitedHealth CEO Says Company is Cutting Thousand of Doctors Out of Network to Boost Profits

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“Value-based care” in UnitedHealth’s Optum division apparently means fewer doctors for fatter margins.

UnitedHealth Group announced last week that it plans to cut thousands of doctors from its network, a move CEO Stephen Hemsley said will increase profits for the country’s richest health care conglomerate.

UnitedHealth assembled a network of nearly 90,000 physicians across the country as it bought hundreds of physician practices, began managing the Medicaid program in many states and became the biggest Medicare Advantage company. It also owns one of the nation’s largest pharmacy benefit managers, Optum Rx.

Of those 90,000 doctors, the company says fewer than 10,000 are currently directly employed by UnitedHealth. The company has been gobbling up a broad range of medical facilities in recent years, buying or creating nearly 2,700 subsidiaries and gaining direct control or affiliation with 10% of doctors working in the U.S. in the process.

The announcement by Hemsley came during a third-quarter earnings call with investors last week, when UnitedHealth announced it made $4.3 billion in profit in the last three months by generating revenues of $113 billion.

Read more here on how they did that. Spoiler alert: It involves raising health care premiums and collecting billions more from the Medicare Trust Fund and seniors.

Hemsley said the company’s health care services division, Optum Health, needed to consolidate its physician rolls to improve its bottom line.

He passed questions about how that will be done to Optum’s CEO Patrick Conway, who said too many doctors in the network weren’t aligned with UnitedHealth’s business model, which he called “value-based care.”

“We are moving to employed or contractually dedicated physicians wherever possible,” Conway said.

Overseeing an empire that offers health insurance, pharmacy benefits and doctors who provide care and write prescriptions, UnitedHealth has become America’s third-richest company behind Walmart and Amazon. There are 29.9 million Americans enrolled in UnitedHealthcare’s commercial plans, 8.4 million in its Medicare Advantage plans and 7.5 million in state-run Medicaid programs.

In 2024, the company brought in more than $400 billion in revenue, according to its financial filings.

Americans’ health care premiums are expected to rise drastically in 2026 after climbing as much as 6% on average this year compared to 2024.

UnitedHealth’s decision to remove doctors from networks means that many of its patients will have to find new, in-network physicians unless they change their insurers.

UnitedHealth isn’t alone in taking steps to trim its medical expenses to boost its bottom line. Both CVS Health, which owns Aetna, the PBM CVS Caremark and more than 9,000 retail pharmacies, and Cigna, which owns the PBM Express Scripts, also told investors they are implementing plans to improve earnings next year.

CVS Health is just behind UnitedHealth at No. 5 on the country’s Fortune 500 list, bringing in nearly $373 billion in revenue last year. Cigna is 13th with $247 billion in revenue.