** Brokerage J.P.Morgan expects the U.S. healthcare services sector to improve in 2026, helped by better margins and clearer policy signals after two years of uneven performance

** "Most MCOs will reach a trough in earnings in 2026," the brokerage said, adding that Medicare Advantage plans could drive margin gains even as Medicaid and ACA exchanges remain under pressure

** Commercial insurance is expected to stay steady, while distributors such as McKesson MCK.N and Cencora COR.N remain "defensive picks" thanks to strong prescription trends and specialty drug growth - J.P.Morgan

** Brokerage also expects a healthy outlook for diagnostic labs, citing stronger demand and improved pricing, though uncertainty around PAMA reimbursement rules remains a risk

** Brokerage says it prefers names with greater insulation to rate pressure, balance sheet flexibility, and organizational resilience through available offsets from business diversification and M&A

** On policy, brokerage expects gridlock after the 2026 midterms, reducing chances of major legislative changes outside of routine CMS rulemaking

** J.P.Morgan sees UnitedHealth UNH.N, CVS Health CVS.N, Alignment Healthcare ALHC.O, McKesson MCK.N, Cencora COR.N, Labcorp LH.N and Tenet Healthcare THC.N as attractive opportunities with some "moving pieces"

(Reporting by Kamal Choudhury and Padmanabhan Ananthan in Bengaluru)

((Kamal.Choudhury@thomsonreuters.com;))