Forecasting ’21 Earnings, MCOs Plan for Medicaid Unknowns

As select insurers in recent weeks posted first-quarter 2021 earnings, the positive impact of lower-than-normal utilization, rising COVID-19 vaccination rates and increased Medicaid, Medicare and/or exchange enrollment was slightly tempered by post-pandemic unknowns, especially for those with a heavy Medicaid presence. Some examples of lingering questions include: What will utilization look like when it returns to normal? When will states’ Medicaid eligibility redetermination efforts resume? How will financially strapped states adjust Medicaid rates?

For Centene Corp., those uncertainties dominated the company’s first-quarter earnings conference call and were reflected in a conservative earnings outlook for full-year 2021. Centene on April 27 posted adjusted earnings per share (EPS) of $1.63, up from 86 cents per share in the first quarter of 2020, and revenue of $30 billion, compared with $26 billion a year ago. That 15% increase was due in part to the acquisition of WellCare, which was completed on Jan. 23, 2020, and the ongoing suspension of states’ eligibility redeterminations, which Centene does not expect to resume until at least Aug. 1. Revenue growth, however, was partly offset by an overall drop in exchange membership, state rate and risk-sharing actions, and the repeal of the health insurer fee (HIF) for 2021, explained Executive Vice President and Chief Financial Officer Jeff Schwaneke during an April 27 call to discuss quarterly earnings.

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