Financial Results

After failing to meet minimum medical loss ratio (MLR) requirements for three years in a row, Centene Corp. is prohibited from enrolling new beneficiaries into its Medicare Advantage Prescription Drug (MA-PD) plan in Missouri, while a UnitedHealthcare (UHC) subsidiary regained enrollment abilities after a similar suspension. According to a Sept. 6 letter posted to CMS’s Parts C and D enforcement actions webpage, Centene’s Wellcare of Missouri Health Insurance Company, Inc. reported MLRs of 78.9%, 77.7% and 84.0% for contract years 2021, 2022 and 2023, respectively. When an MA organization has an MLR for a contract that is below 85.0% for three or more consecutive years, CMS must suspend the MAO’s ability to accept new enrollments in the second succeeding contract year after the third consecutive year of noncompliance, explained CMS. The enrollment freeze will take effect for any coverage beginning Jan. 1, 2025, through Dec. 31, 2025, and the contract will be removed from the Medicare Plan Finder list of available MA-PD plans during the 2025 Annual Election Period that begins on Oct. 15. According to CMS enrollment data for September, Wellcare of Missouri serves 4,254 MA enrollees, including 2,872 with Part D coverage. Meanwhile, UHC’s Care Improvement Plus South Central Insurance Co. was released from an enrollment suspension after reporting an MLR exceeding 85.0% for contract year 2023, according to a separate notice issued on Sept. 6. The UHC plan, which currently serves about 8,600 MA-PD enrollees, will be allowed to enroll beneficiaries during the upcoming AEP.

Senior-focused primary care organizations can enhance access to care for Medicare Advantage members, particularly among historically underserved groups, according to a new study of Humana plans that was conducted by the insurer’s research arm. The research, which was published in Health Affairs and co-authored with Harvard researcher J. Michael McWilliams, M.D., Ph.D., highlights the potential of population-based payment models to drive equity in health care delivery. Additionally, this research comes as Humana and other large insurers plan strategic exits from the MA market after experiencing sustained medical cost pressure in public sector insurance.

Elevance Health, Inc. has agreed to acquire Indiana University Health Plans, according to a Sept. 10 press release. IU Health Plans, a subsidiary of Indiana University Health, has 19,000 Medicare Advantage members and 12,000 fully insured commercial beneficiaries. It will become a part of Anthem Blue Cross and Blue Shield in Indiana, which is Elevance’s insurance affiliate in the state. The deal is subject to customary closing conditions and is expected to close by the end of the year.

Here’s how major U.S. health insurers performed financially in the second quarter of 2024. Health Plan Weekly subscribers can access more health plan financial data — including year-over-year comparisons of leading health plans’ net income, premium revenue, medical loss ratios and net margins. Just email support@aishealth.com to request spreadsheets for current and past quarters.

David Cordani, CEO of The Cigna Group, made it clear during a Sept. 5 presentation at the Morgan Stanley Healthcare Conference that the firm doesn’t view the elevated medical costs facing health insurers this year as a threat to its diversified portfolio.

Cigna Healthcare, the firm’s health insurance business, in the “recent timeframe” has been able to deliver “good, predictable” medical loss ratios (MLRs), Cordani said, referring to a closely watched metric that shows the percentage of premiums spent on medical claims.

Elevance Health, Inc. will offer Affordable Care Act exchange plans in three new states next year. The insurer’s Wellpoint-branded plans will expand into Florida, Maryland and Texas — all states where it has a managed Medicaid presence. According to AIS’s Directory of Health Plans, Elevance Health has approximately 1 million members enrolled in ACA exchange plans, making it the insurer’s smallest market segment. As of 2024, the insurer offered exchange plans in 10 states, with California, Virginia and New York representing its three largest markets.

The value of Affordable Care Act marketplace plans decreased from 2014 to 2023, according to a Paragon Health Institute report published on Sept. 3. The authors — actuaries Daniel Cruz and Greg Fann — noted that just 11% of exchange customers were enrolled in plans with broad provider networks in 2023, down from 36% in 2014. During that same period, gross premiums in the individual marketplace increased 50% more than premiums for people enrolled in employer plans. The authors argued that “the ACA insurance rules caused premiums to increase and led insurers to offer narrower and more restrictive networks over time” and that “the design of the ACA premium tax credits has also incentivized enrollees to select lower-quality plans.”

A Humana Inc. executive speaking at the Wells Fargo Healthcare Conference on Sept. 4 said the Medicare Advantage-focused insurer will exit 13 counties where membership was “insignificant” and reduce its plan offerings in other counties, impacting an estimated 560,000 MA members next year. The selected counties will leave Humana’s footprint largely intact, while impacted members in other counties will have Humana plans to choose from, Chief Financial Officer Susan Diamond told Wells Fargo analyst Stephen Baxter. “The exit itself is positive in the sense that those plans were not contributing,” said Diamond. And in the other counties, if Humana can “ultimately retain more of those members, that’s incrementally positive because the plan choices left behind are priced in such a way that they will be positively contributing.” Despite seeing elevated utilization and medical cost pressure in the first half of the year, the insurer on Sept. 3 reaffirmed its full-year guidance of approximately $16.00 adjusted earnings per share. Diamond during the conference added that Humana is seeing more prior authorization decision appeals than it has seen historically. She also disclosed that Humana anticipates greater utilization of supplemental benefits such as over-the-counter cards and dental services in the fourth quarter, "just recognizing the benefit changes we've made for 2025."

After major insurers reported second-quarter financial results that reflected continued medical cost pressure in the government business, analysts revisited their takes on expectations for CVS Health Corp.’s Aetna, Centene Corp. and industry peers. Two notable factors driving some of the headwinds in the back half of the year are the 2025 Medicare Annual Election Period (AEP), which kicks off on Oct. 15, and the impact of Medicaid redeterminations. The latter was of particular concern to analysts after Sept. 4, when Centene provided an update at the Wells Fargo Healthcare Conference signaling lower-than-expected Medicaid enrollment.

For managed care organizations with a large Medicaid footprint, the consistent takeaway for Barclays after second-quarter earnings reports was “incremental trend pressure relative to current expectations,” stemming from redeterminations picking up in the first half of the year “that put increased acuity pressure on state rates,” wrote equity research analysts on Aug. 22. “From here, membership should start to stabilize, which is the first step toward recovery.”

So far, 2024 has proven to be an eventful year for publicly traded health insurers — and not always in a good way.

Indeed, during the most recent quarter CVS Health Corp. made waves by adjusting its earnings outlook downward for the third time this year and dismissing the short-tenured president of its Aetna health benefits division due to ongoing Medicare cost pressures.

Other publicly traded firms, including Humana Inc. and Elevance Health, Inc., offered better second-quarter performances, but still saw their share prices fall amid investors’ concerns about how medical costs will shake out in the second half.

When CVS Health Corp. announced on Aug. 7 that Aetna President Brian Kane was leaving after less than a year on the job, it highlighted how severe the company’s struggles in its health benefits segment have become. The decision also drew mixed reactions from Wall Street analysts.

Barclays’ Andrew Mok wrote in an Aug. 7 note that Kane’s departure was “a big surprise” and added that Kane “was widely viewed as the fixer for the Medicare Advantage business,” which has been a drag on earnings.

“The accountability here is questionable and the change casts significant uncertainty on whether the company was able to capture developing cost trend pressure in 2025 Medicare bids,” Mok wrote.