'Centene sets itself up for ‘equilibrium’ in 2025'

 

• On Tuesday, Centene touted healthy membership growth in Affordable Care Act plans, while arguing that Medicaid and Medicare — businesses that proved rocky last year — will stabilize in 2025.

• Already the largest marketplace carrier, Centene now has upwards of 5 million ACA members paying premiums, executives told investors during a call to discuss its fourth-quarter results. That’s compared to 4.8 million members at the end of 2024.

• Growth in ACA members was a major contributor to Centene’s $3.3 million in profit last year, according to the company. However, Centene expects enrollment to peak in the first quarter before sliding back down over the year, in part from efforts to improve program integrity, CEO Sarah London said.

Overall, Centene beat Wall Street expectations for earnings and revenue in the fourth quarter with a topline of $40.8 billion, up 3% year over year.

The St. Louis-based insurer’s profit was $283 million — more than six times larger than in the fourth quarter of 2023, when it was hit with higher taxes on premiums.

Centene’s bottom-line growth came despite elevated medical costs. The insurer reported a medical loss ratio, an important marker of spending on patient care, of 89.6% in the quarter, up slightly from 89.5% same time last year.

Centene chalked the increase up to higher acuity in Medicaid as the insurer continues to struggle with states’ payment rates not matching patients’ health needs in the safety-net insurance program.

The problem stems from Medicaid unwinding, a process in which states reviewed the eligibility of tens of millions of Americans for the safety-net program starting in spring 2023. Millions of people lost Medicaid coverage as a result, and individuals who remained in the program tended to be sicker and therefore more expensive for insurers that contract with states to manage Medicaid to cover.

Top insurance executives have said for months that they’re working with states to hike their rates. States are — Centene cited higher Medicaid rates as one driver of increasing revenue — but not as quickly or as dramatically as insurers may have hoped.

https://finance.yahoo.com/news/centene-sets-itself-equilibrium-2025-071937842.html