Membership Growth

Although UnitedHealth Group’s executives touted “strong and well-balanced” growth in the first quarter of 2023, the company’s stock dropped following its April 14 earnings report. Equities analysts suggested that a decline in the days claims payable (DCP) metric led to the sell-off, as well as concerns about Medicare Advantage-related business risks — but their views differ about how concerned investors should be.

SVB Securities analyst Whit Mayo, for example, suggested in an April 17 research note that the risks to UnitedHealth’s valuation are overblown.

The company’s first-quarter results “brought forth continued themes of consistency, strong MA and self-funded growth, along with noticeable top-line strength within Optum Health,” Mayo wrote. “Noise around trend, lower DCP, 2024 MA risk balanced against the recent run-up, and a historically high relative valuation premium presumably pushed shares lower on Friday,” he suggested, but added that “1Q results generally and historically present few new details to reshape investors’ views on the full-year earnings curve for the sector.”

UnitedHealth Group on April 14 said revenue for the first quarter of 2023 rose 15% from the prior year to $92 billion, reflecting double-digit growth at both Optum and UnitedHealthcare. The insurance segment, which served about 1.2 million more people in the first three months of the year with broad-based growth across its commercial, Medicare and Medicaid lines of business, saw revenues climb 13% to $70.5 billion, according to the company’s earnings press release. And the insurer said it expects to “exceed the upper end” of its Medicare Advantage membership growth expectations for the year. The company stated in November that it anticipated adding between 800,000 and 900,000 new MA members in 2023. As of March 31, the company served more than 7.54 million MA enrollees, compared with 6.89 million a year ago. UnitedHealth recorded first-quarter adjusted earnings per share of $6.26, an increase of 14% from first quarter 2022, and raised its full-year adjusted EPS outlook to between $24.50 and $25.00. During an April 14 conference call to discuss first quarter earnings, CEO Andrew Witty commended CMS for deciding to phase in changes to the MA risk adjustment system. “The phase-in will allow for more time to minimize impacts on beneficiaries as we lean on the multiple levers available to us, including our ability to manage costs and our relentless focus on member and patient needs,” he stated, according to a transcript of the call from The Motley Fool.

Since its inception as a technology-based “disruptor” in the Medicare Advantage space, Clover Health Investments Corp. has struggled to turn a profit. But after showing signs of momentum at the end of 2022, Clover leadership has declared 2023 as a year focused on profitability rather than growth. To speed that path, the insurtech this week unveiled two “business transformation initiatives”: (1) an agreement to transfer its core plan operations to UST HealthProof’s integrated technology platform, and (2) additional corporate restructuring actions that included a recent 10% workforce reduction.

While “benchmark” Affordable Care Act premiums rose in 2023 after declining for multiple years, greater insurer competition in heavily populated regions is still helping to keep rates in check, according to a new analysis from the Urban Institute. Yet some rural areas and smaller cities often don’t attract enough insurers to create meaningful competition — a market dynamic that remains challenging to overcome, one of the report’s authors says.

To produce the analysis, researchers examined premium and insurer participation data from HealthCare.gov for 33 states and from 18 state-based marketplace websites. They zeroed in on “benchmark” premiums — or the rates for the second-lowest-cost silver plans available — because those determine the level of premium tax credits consumers receive.

Managed care plans, particularly Dual Eligible Special Needs Plans (D-SNPs), are showing promise in improving health outcomes and reducing health care utilization among Medicare-eligible individuals who qualify as partial Medicare-Medicaid dual eligibles, according to a March 2023 study published by Elevance Health’s Public Policy Institute. Elevance’s analysis of 2020 CMS data found that 5% of the 65.9 million Medicaid eligibles that year were partial duals — those who are eligible for Medicare but are not yet enrolled in or do not qualify for the full range of Medicaid benefits in their state. 

Meanwhile, the D-SNP population has grown considerably in recent years, from just over 2 million members in 2017 to 5.1 million members in 2023, according to AIS’s Directory of Health Plans (DHP). (Elevance, for its part, is the third-largest D-SNP insurer nationally, serving just over 600,000 members as of DHP’s March 2023 update). A handful of states also participate in CMS’s Financial Alignment Initiative for duals, enrolling their qualifying duals in Medicare-Medicaid plans (MMPs). And the vast majority of people enrolled in the Program of All-Inclusive Care for the Elderly (PACE) are dual eligibles.  

Nearly 16.4 million people selected or were automatically reenrolled in coverage during the 2023 open enrollment period for Affordable Care Act marketplace plans, the Biden administration said on March 23. That represents a 13% increase compared to the 2022 open enrollment period and a 36% increase over enrollments during the signup window for 2021 coverage. Enrollment has also doubled compared to when the exchanges debuted in 2014, when there were about 8 million signups, CMS said. The administration revealed the final signup numbers on the 13th anniversary of the ACA, using the opportunity to tout the law’s positive effect on insurance coverage through both the exchanges and Medicaid expansion.

When Medicaid eligibility redeterminations start back up in April, about 9.6 million Medicaid enrollees could transition to employer-sponsored insurance, 2.6 million could move to Children’s Health Insurance Program (CHIP) coverage, and 3.8 million could become uninsured, according to a report released by AHIP. Based on an Urban Institute projection and data on historical coverage transitions from the Current Population Survey Annual Social and Economic Supplement, researchers at NORC at the University of Chicago estimated that in almost all states, the majority of Medicaid enrollees who become disenrolled will transition to ESI, ranging from 57.1% in Delaware to 48.9% in Georgia. Nationwide, over 20% of individuals losing Medicaid coverage during redetermination may become uninsured. Variation across states ranged from 26.2% in South Dakota to 17.7% in Massachusetts.

North Carolina at press time was close to passing legislation that would allow it to become the 40th state to expand Medicaid under the Affordable Care Act. The state transitioned to a Medicaid managed care structure in 2021, but recent public comments from one state official suggest that ongoing issues between MCOs and providers could pose challenges as the state prepares for expansion.

House Bill 76, Access to Healthcare Options, would require the state to extend Medicaid coverage to individuals with income at or below 133% of the federal poverty level (FPL) starting Jan. 1, 2024, and establish a fund allowing the state to provide direct payments to acute care hospitals based on assessments of hospital costs. Democratic Gov. Roy Cooper has been advocating for expansion, which could reduce the uninsured population by 30%, or 346,000 people, according to an Urban Institute analysis from November.

As the Medicare Advantage program saw slower enrollment during the 2023 Annual Election Period (AEP) than previous years, many insurers that enriched their benefits while maintaining affordability and effectively communicated these changes saw above-average growth. AIS Health, a division of MMIT, spoke with several plans that credited their localized approach, enhanced relationships with sales agents and new supplemental benefits with helping to increase their membership over the AEP.

Meanwhile, during the Open Enrollment Period (OEP) that allows MA enrollees to make a one-time coverage switch and ends on March 31, insurers have been working hard to ensure a positive experience, hosting member welcome calls and events and educating members on how to use their new benefits. According to AIS’s Directory of Health Plans, MA enrollment from February 2022 to February 2023 grew by 7.4%, compared with 8.5% in the year prior.

Washington’s “public option” has had a substantive downward impact on premium rates on the state’s individual exchange, according to state officials — encouraging news for policymakers who have tinkered with the insurance program after it disappointed in the first two years after it launched. Experts tell AIS Health, a division of MMIT, that the results bode well for other states’ public options, even though Washington is still adjusting important elements like network scope and reimbursement rates.

The Washington State Health Care Authority (HCA), one of the state agencies that administers the public option — called Cascade Select — said that in a February report enrollment more than tripled for plan year 2023, increasing from 8,000 in 2022 to 27,000 people statewide. The same report also said that “Cascade Select plans are the lowest cost Silver premiums available on the Exchange in 25 counties, up from 13 counties in 2022.” HCA said Cascade Select plans’ average gross premium rates this year decreased by 3%, compared to average rate increases of 8% for other exchange plans. According to a December 2022 HCA report, Cascade Select plans are available in 34 of 39 counties, up from 19 in 2021.