The 2022 earnings reports for the “Big Five”—CVS Health (Aetna), Centene, Elevance Health (formerly Anthem), Molina, and United Health Group—are now in. As expected, combined Medicaid enrollment for the “Big Five” increased during 2022 by 3.3 million to 43.2 million, an increase of 8.2 percent (Table 1). (If children are enrolled in “Big Five” MCOs in the same proportion as they are enrolled in Medicaid overall, these companies are stewards for over 16 million children). And, for three of the companies—Centene, Molina, and UnitedHealth Group—combined Medicaid revenues in 2022 were $181.8 billion, an increase of $23.2 billion, or 14.6 percent from 2021.

Overall, enrollment growth was driven largely by the suspension of eligibility redeterminations during the COVID-19 Public Health Emergency. Continuous eligibility eliminated “churning” of beneficiaries on and off Medicaid due to income fluctuations and state procedural errors in most states. Of course, there are other drivers of the enrollment growth that these companies reported, including state expansion of Medicaid eligibility, company mergers and acquisitions, and re-procurements of state Medicaid agency contracts with MCOs. But the suspension of eligibility determinations was the primary “tailwind” for enrollment growth.

Figure 1 tells the tale. During 2020, the first year of the pandemic, combined “Big Five” enrollments grew by 8.6 million, or 32.3%. (The 2020 data are somewhat skewed by the Centene acquisition of Wellcare). In 2021, their combined Medicaid enrollment grew by 4.5 million, or 14.8 percent. The rate of growth in combined enrollment slowed somewhat to 8.2 percent in 2022, but as a group, the five companies added just over 3 million enrollees that year even though one of them (CVS Health/Aetna) experienced a decline in Medicaid enrollment due to the loss of a contract.

As a result of Congressional action at the end of 2022, states will begin terminating Medicaid coverage of beneficiaries who are no longer eligible starting as early as April 1. This leaves Medicaid MCOs with just the current calendar quarter—PHE Q13—to realize what is, as a practical matter, guaranteed growth in enrollment and revenues. Centene, for example, projects an additional $1.5 billion in Medicaid premium revenues for 2023 due to these additional months of continuous enrollment in the first part of the year.

But when the PHE unwinding begins on April 1, Medicaid enrollment is expected to decline in all states, managed care and fee-for-service alike. The only issue is how quickly and how deeply the decline will go, and whether the children and adults whose Medicaid coverage is terminated will find alternative coverage. For beneficiaries, there is obvious reason for concern about the implications for access to care.

For investors, there is also reason for concern—or as one analyst put it, “angst”—that the PHE unwinding will be a “headwind” on growth and margins on the companies’ Medicaid lines of business. Will healthier beneficiaries be more likely to be disenrolled, leaving the MCOs with a sicker, more costly pool of enrollees? If so, will the capitation rates that states pay the MCOs be adjusted upward to reflect this higher risk, ensuring continued margins for the MCOs? And if large numbers of MCO enrollees transition into Marketplace plans during the Special Enrollment Period for those losing Medicaid or CHIP eligibility, what are the implications for the risk pools (and the margins) of those Marketplace plans?

Different companies had different answers for inquiring financial analysts:

• The CFO of Centene on February 7: “By April 1, we expect to have grown by 3.4 million Medicaid members since the onset of the pandemic (excluding new markets), and we expect to lose approximately 2.2 million of those members in the redetemination process over the next year and a half—in other words, about 65 percent of that growth.”
• The head of Health Benefits at CVS Health on February 8: “We do expect some modest growth in that [Medicaid] book of business through the first quarter but as anticipated, at the end of the first quarter, we do expect some of the redetermined members to fall off the roster and so we're working closely with the states around our opportunities to regain that membership.”
• The CFO of Elevance on January 25: “As you look at the Medicaid redeterminations, there's certainly a lot of variables associated with the pace and timing, on a state-by-state basis, where they go, which lines of business they ultimately reside in. I think one of the great things about the balance and resilience of our membership base is that we end up with the members somewhere. We have a product offering for every member regardless of age, regardless of employment status, regardless of health condition and I feel very, very good [about that].”
• The CFO of Molina on February 9: “In Medicaid, we expect organic growth from [the 2022 acquisitions of plans in Iowa and Wisconsin] to be largely offset by the second quarter resumption of redeterminations.” He confirmed the guidance in the company’s earnings release that Medicaid enrollment at the end of 2023 will be 4.7 million—the same as at the end of 2022.
• The CFO of UnitedHealth Group on January 13: “And, when all redetermination activities are eventually completed, we expect to serve even more people than we do today across our state-based, commercial and exchange-based offerings.”

Of course, these projections are just that—projections. And they focus just on the potential effects of the PHE unwinding on the enrollment and revenues of the company in question, not on beneficiary coverage losses more broadly. But the large Medicaid footprints of these companies means that the actions they take will likely affect coverage outcomes in managed care states. CMS has laid out four strategies that MCOs and state Medicaid agencies can implement to minimize coverage losses by eligible individuals for procedural reasons and, when an individuals are correctly determined to be ineligible for Medicaid, to facilitate transitions to Marketplace coverage. And in response to a request from the Secretary of HHS, the Federal Communications Commission recently issued guidance allowing state Medicaid agencies and the MCOs with which they contract to make calls and send text messages to enrollee without violating prohibitions against robocalls and robotexts.

Whether the state agencies and MCOs take up the CMS strategies and the FCC-approved communications pathways and if so, how effective they are in reducing coverage loss, remains to be seen. But one thing is clear: the financial analysts are watching closely. And so are the rest of us.