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There was a time my mum was in the hospital, and I remember how quickly health and money became two worries at once. You’re already concerned about someone you love getting better, and the last thing you want is to start thinking about hospital bills. 

That experience made me appreciate just how much financial peace of mind matters when someone needs medical care.

Millions of people live with those concerns. UnitedHealthcare served 48.3 million members in the third quarter. UnitedHealth Group (UNH) brought in $112.7 billion in revenue, slightly below $113.2 billion a year ago. Optum Health’s operating earnings rose to $735 million even as it exited some value-based care markets.

CEO Stephen Hemsley said the results reflect a push toward “a simpler, more supportive experience for patients” and clinicians. UnitedHealth now expects full-year earnings of at least $19.50 per share on a GAAP basis and $20.50 on an adjusted basis.

However, that progress has come at a cost, with the company reducing benefits and exiting certain markets.

Also Read: UnitedHealth CFO delivers blunt verdict on the company’s big reset

UnitedHealth’s margins recover, but costs stay high

In a note shared with TheStreet, Morgan Stanley said it hosted an investor lunch with CFO Wayne DeVeydt, UnitedHealthcare President Bobby Hunter and Medicare & Retirement CEO Betsy Chin.

It kept an Overweight rating and raised its price target to $531 from $529. Morgan Stanley said management’s recovery and visibility into 2027 and 2028 earnings raised its conviction.

Shares have returned 25.87% this year and 13.71% over one year through Oct. 28, according to Yahoo Finance. Morgan Stanley says UnitedHealth trades at 14.8x 2028 earnings, about 0.3 turns below its historical average.

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Medicare Advantage, the private plans for older Americans, is the clearest recovery. After years of pricing and product adjustments, margins are at the upper end of the company’s 2%-4% target. 

September’s federal landscape file showed benefit cuts and market exits, yet management believes enrollment can grow in 2027. Its HMO and special-needs plans have done well so far in open enrollment, which runs Oct. 15 to Dec. 7.

Where UnitedHealth’s costs still hurt

Employer-sponsored plans are harder. Specialty drugs, hospital care, and out-of-network billing disputes keep margins suppressed. Management is resetting plan design and pricing to return to 7%-9% margins. It may stay near the low end to protect enrollment, with 2027 a foundation year and growth likely in 2028.

People may feel Medicaid most. UnitedHealth expects a “steady stream” of membership attrition through 2027 as states trim rolls ahead of new work requirements and other provisions of the federal budget law known as OBBBA. It still calls Medicaid core and expects growth to restart in 2028.

Related: How many employees does UnitedHealth have? Its workforce, locations & layoffs explained

Thinking back to when my mum was hospitalized, I know how much having reliable financial support matters during a medical emergency. Few things are more worrying than losing health coverage when you need it most. For families already struggling with medical bills, even a small change in benefits can make a big difference.

AI is the biggest swing factor in 2027, management says, and it could be a “grand slam” if executed well. UnitedHealth plans to spend about $4 billion on capital investments in 2027, primarily on AI, following roughly $1.5 billion in AI spending in 2026. Management expects it to take about 12 months for those investments to break even.

In one example, AI cut the cost of its Sarbanes-Oxley internal controls from about $8 million a year to $15,000 a month. Administrative spending should fall in dollar terms in 2026 and 2027, and the CFO said 2027 would look much better if savings were converted to profit rather than reinvested.

UnitedHealthcare served 48.3 million members in the third quarter, bringing in $112.7 billion in revenue, slightly below $113.2 billion a year ago.Bill Clark / Getty Images

Morgan Stanley sees upside if the turnaround holds

Policy is the wild card. With midterms making investors anxious, management wants stability in funding across Star Ratings, which grade plan quality, and risk adjustment. It has engaged more than ever with the administration and CMS, whose leaders echoed that optimism at a Morgan Stanley conference. 

Morgan Stanley does not expect UnitedHealth to sue over its 2028 Star Ratings, as Centene, Alignment Healthcare and Clover have.

With debt back to about 40% of capital, management has a “green light” to restart acquisitions in 2027 and beyond, targeting value-based care and fintech-adjacent assets. Morgan Stanley’s illustrative bridges show 2027 earnings up to 15% above its estimates and 14% above consensus at the high end, and 2028 up to 13% and 15%, before any extra AI savings.

Its base case is $531. The bull case is $648 on faster margin recovery, and the bear case is $354 if medical use rises and the recovery slips.

For investors, the verdict is that the turnaround is further along than the share price suggests, but it depends on commercial costs, Medicaid attrition, and regulators. For members, the same fix shows in plans, benefits, and coverage.

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Millions of Americans have indirect exposure to Elon Musk’s business empire through index funds in their 401(k) accounts, even if they have never purchased shares of his companies directly.

A potential merger could change that exposure before the end of the year.

Senior Equity Research Analyst at Barclays, Dan Levy, told clients that Tesla and SpaceX could merge before December 2026, potentially creating one of the largest publicly traded companies by valuation, The Wealth Advisor reported.

The prospect raises questions about how such a deal could affect passive index funds and the retirement savings tied to them.

Tesla is already part of the S&P 500, according to the S&P Dow Jones Indices’ SPY/SPX fact sheet, meaning its stock influences many broad-market and target-date funds held in workplace retirement plans. 

If a merger takes SpaceX public, index providers could adjust their holdings, potentially changing millions of Americans’ portfolio exposure without requiring them to take any action.

Also read: SpaceX is now in your 401(k), and Musk is the risk

Barclays maps a Tesla-SpaceX share-swap ratio before the December vote

Barclays laid out the share-swap arithmetic for a potential Tesla-SpaceX merger, The Wealth Advisor reported. Based on the analysis, Tesla shareholders could receive about 0.7 SpaceX shares for each Tesla share in an all-stock deal before any acquisition premium.

Barclays indicated the two companies combined would have a market value of roughly $3.6 trillion, with Tesla’s December 6, 2026, meeting as the possible approval window.

Each Tesla share would convert into a stake in the combined entity’s aerospace, artificial intelligence, and automotive revenue streams, which Barclays framed as a vertical-integration thesis.

Barclay’s ownership breakdown helps explain why SpaceX would likely be the acquiring entity in any proposed deal. Musk owns roughly 20% of Tesla and about 48% of SpaceX, but supervoting shares give him approximately 82% of SpaceX’s voting power.

Why passive index funds already own more Tesla than most savers realize

Tesla joined the S&P 500 in late 2020 and now accounts for about 2% of the benchmark powering millions of American 401(k) accounts, Quartz reported. 

That weighting means the stock’s daily moves ripple directly through target-date funds, total-market funds, and large-cap index funds that dominate workplace retirement menus.

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A Tesla-SpaceX merger would collapse two of the most-watched Musk-linked tickers into a single corporate structure, forcing mechanical adjustments across index funds.

S&P Dow Jones Indices would then determine how the new combined entity sits inside the benchmark, potentially expanding the Musk-related footprint across passive portfolios.

Pension managers across California and New York already flagged this concern before SpaceX even began trading on public markets this year.

The managers wrote to Musk, expressing concern that SpaceX could become an unavoidable holding in their public portfolios going forward, Quartz reported.

Passive index funds already expose retirement savers to Tesla, and a potential SpaceX merger could reshape their portfolios without their input.Nitat Termmee / Getty Images

Portfolio concentration risk now sits inside most retirement accounts

The merger math has direct implications for the broad-based benchmarks that currently dominate workplace retirement menus and brokerage portfolios across the country.

Advisors have begun flagging the combination as a dilution event with knock-on effects for anyone holding a market-weight index fund inside a retirement account.

Clint Sorenson, Co-Founder of Ascentis Asset Management, told InvestmentNews an all-equity merger would deepen dilution for portfolios heavy on tech names.

<strong>If it’s an all-equity deal, the whole game becomes dilution and position size. Most advisor portfolios are already overweight a handful of mega-cap tech names through their benchmarks, and a merger like this only compounds that,</strong>

Sorenson flagged a key-man risk inherent in portfolios holding Musk-linked positions, framing single-executive exposure as a concentration issue beyond standard sector weighting.

Barclays reinforced the structural concern by noting Musk would hold roughly 37% of the combined entity’s equity and 56% of its voting power.

Tesla and SpaceX each filed Form 8-K disclosures with the SEC on October 21, 2026, confirming their boards had formed special committees to evaluate a potential combination.

On SpaceX’s Q3 2026 earnings call, Musk told Tesla investors a merger would be “a good idea,” The Motley Fool reported

Jacob Tally, an advisor at Seattle-based Prospero Wealth, said Musk’s pattern of business consolidations leaves retirement investors more exposed to one executive’s decisions. The February 2026 xAI absorption by SpaceX pulled another large private valuation into the Musk footprint already tracked by index funds, as InvestmentNews noted.

What to check inside your 401(k) before any Musk deal closes

Each fund’s fact sheet, available through the plan portal, lists its ten largest holdings and the share of assets in each position, with the underlying data drawn from Securities and Exchange Commission (SEC) filings on Form N-PORT that become public 60 days after each fiscal quarter ends.

Holding an S&P 500 fund alongside a Nasdaq-100, large-cap growth, or technology fund can mean investing in the same major companies multiple times, a layering effect Sorenson flagged as an underappreciated source of concentration risk in an InvestmentNews analysis.

Some 401(k) plans also offer a self-directed brokerage account, allowing participants to buy individual stocks beyond the plan’s standard fund options.

The plan’s summary plan description explains whether this feature is available, and the Employee Retirement Income Security Act (ERISA) requires plans to provide this document to participants.

A potential Tesla-SpaceX merger could change how some retirement portfolios gain exposure to Musk’s businesses, but the extent of that change will depend on the final transaction terms and how index providers respond.

Until S&P Dow Jones Indices and fund managers establish the combined entity’s benchmark treatment, reviewing existing holdings through each fund’s fact sheet remains a practical first step.

Related: Bank of America backs SpaceX stock that may be in your 401(k)