Many big health insurers are fretting over losses and questioning their future involvement in the Affordable Care Act insurance exchanges, but at Centene, it’s “business as usual,” CEO Michael Neidorff told investors on Tuesday.
The St. Louis-based insurer said it will continue selling plans on the exchanges in 2018 and will adapt to any changes that come under the new administration, as it did when the administration led by President Barack Obama ushered in healthcare reform. “I’m not backing off at all,” Neidorff said of Centene’s future involvement in the exchanges.
His plans for Centene stand in stark contrast to the insurer’s peers. Aetna, Anthem and Cigna have all said they aren’t sure if they’ll play ball on the exchanges in 2018 or beyond, and can’t make the decision until they have a clear idea of where health insurance regulation is headed.
But Republican lawmakers haven’t settled on a replacement plan for the ACA, and it’s unclear if insurers will get the information they need by spring, when they have to turn in marketplace plan and premium proposals.
Other insurers have sustained big losses from plans they’ve sold on the exchanges. Centene, on the other hand, has done well. The St. Louis-based insurer built up revenue in 2016 as it raked in new members from the marketplaces and through the Medicaid expansion.
At the end of 2016, Centene served almost 1.1 million members through the Medicaid expansion in 10 states, compared with 449,000 members in 2015. On the marketplaces, it had 537,200 members, up from 146,100 in 2015. The ACA’s open enrollment ended last week, and Centene said it expects to have over 1 million members on the exchanges in 2017.
Centene has succeeded in the exchanges thanks to its low-premium, high-deductible plans, which appeal to the low-income exchange demographic. About 90% of Centene’s marketplace enrollees are eligible for premium subsidies.
The future of the Medicaid expansion is also up in the air under President Donald Trump’s administration. Some GOP lawmakers, including Wisconsin Rep. Paul Ryan, and several Republican governors favor turning Medicaid into a block grant or per capita grant program, where states will be given a set amount of money to run Medicaid how they see fit. Many health policy experts say such a system will lead to funding cuts for the nation’s low-income and disabled population.
Neidorff said such an approach would give states more flexibility, and that fits in with Centene’s local approach to healthcare. “We believe we can work on any basis whether it’s block grants or per capita caps,” he said, adding that per capita caps would be a better route for states that have expanded Medicaid.
Centene’s $6 billion takeover of Health Net—a Medicare, Medicaid, Tricare and ACA marketplace insurer—also helped bolster its earnings in 2016 and diversify its product line. Thanks to Health Net, Centene’s Medicare Advantage enrollment exploded to more than 302,000 as of Dec. 1, 2016, from about 34,000 the previous year, according to federal data.
Centene’s total membership was 11.4 million, an increase of 6.3 million members over the same time in 2015.
It reported $11.9 billion in revenue in the fourth quarter, up 89% over the same period a year ago. Revenue soared to $40.6 billion for the year, an increase of 78.4% over 2015.
The health benefits ratio, which shows how much of the collected premiums go toward paying for healthcare and quality initiatives, was much improved at 84.8% in the fourth quarter, compared with 88% a year ago. For the year, the health benefits ratio was 86.5%, down from 88.9% in 2015.
Centene’s net income grew 135% to $261 million in the fourth quarter year over year. The insurer’s 2016 net income was $562 million, up 58.3%.