The earnings reports for the “Big Five” for the quarter ending March 31—known here as PHE Q13—are in. The “Big Five”—CVSHealth (Aetna), Centene, Elevance Health (formerly Anthem), Molina Healthcare, and United Health Group—need no introduction, either to state Medicaid agencies or investors. Together, they had 44.2 million Medicaid enrollees as of March 31. If children are represented among their enrollees in proportion to children’s share of total Medicaid enrollees (42%), then these companies are stewards for the health care of 34.7 million children. (Note that this figure does not include the children these companies enroll in states with separate CHIP programs).
As shown in Table 1, Medicaid enrollment for each of the “Big Five” increased during the first quarter of 2023. In total, the growth was 1.02 million, or 2.4 percent. Only three of the companies—Centene, Molina, and UnitedHealth Group—reported their Medicaid revenues. For two of these, Medicaid revenues declined slightly during the first quarter, while for UnitedHealth Group revenues increased by 13%. Only two of the companies reported what percentage of their Medicaid revenues they spent on medical costs: Centene (90.0%) and Molina (88.4%). (Due to different computational formulas, these percentages are similar but not necessarily identical to the companies’ Medicaid MLRs).
2023 Q1 (PHE Q13) Medicaid Enrollment and Revenue Results for “Big Five”
Q1 is the 13th quarter during which the COVID-19 Public Health Emergency (PHE), declared on January 31, 2020, has been in effect. It is also the last quarter during which the continuous coverage provisions tied to the PHE are in effect. Under those provisions, states suspended eligibility redeterminations, eliminating “churning” of beneficiaries on and off Medicaid due to income fluctuations and burdensome procedural requirements. Largely as a result, total Medicaid enrollment rose from 63.8 million in February 2022 to 85.9 million in January of 2023, an increase of 22.1 million, or 35 percent. Over that same period, the total Medicaid enrollment of the “Big Five” rose by 14.1 million or 47.8 percent. (See Figure 1). While some of that growth was related to acquisitions, most is attributable to the PHE continuous coverage provisions.
Medicaid Enrollment Growth for the “Big Five” During the Public Health Emergency
In December 2022, Congress decoupled the PHE from the continuous eligibility provisions. Effective April 1, states are able to disenroll ineligible individuals from their Medicaid programs, and some have begun to do so. (The PHE itself will expire on May 11.) In what has come to be known as the Medicaid “unwinding,” over the next 12 months all states will be redetermining eligibility for all of their Medicaid beneficiaries. There is some question as to how many beneficiaries will be disenrolled as a result; estimates range from 15 million (ASPE) to 17 million (KFF). But there is no question that millions will lose their Medicaid coverage, and that many of those are currently enrolled in subsidiaries of one of the “Big Five.”
In short, we’re looking at an inflection point. The slope of the curve in Figure 1 will start to descend, if not in 2023 Q2 then in 2023 Q3. The only uncertainty is how quickly and how deeply the descent will occur, both for the “Big Five” as a group, and for each of the companies. As you might expect, most of them have views on this matter.
This takes us into the realm of “forward looking statements”—investor-speak for projections about the future, usually accompanied by disclaimers that the projections may not come to pass. Here are some excerpts from what the companies have to say:
- Centene in its Form 10-Q: “We are taking decisive action to help ensure individuals take the state agency requested action to confirm eligibility in their Medicaid coverage or find other appropriate coverage that is best for themselves and their families. Our Ambetter Health [Marketplace] product covers the majority of our Medicaid states, and we believe we are among the best positioned in the healthcare market to capture those transitioning coverage through redeterminations.”
- CVSHealth (Aetna) in its Form 10-Q: “The Health Care Benefits segment is expected to continue to benefit from Medicare and Commercial membership growth, partially offset by declines in Medicaid due to the impact of redeterminations in 2023.”
- Elevance Health in its Form 10-Q: “As recertifications resume, we expect a decline in our Medicaid membership. At the same time, we expect growth in our commercial risk-based and fee-based plans and Medicare, including through the Public Exchanges, as members exiting Medicaid in our 14 commercial states seek coverage elsewhere.”
- Molina Healthcare in its Form 10-Q: “Medicaid enrollment continued to benefit from the pause on membership redeterminations through March 31, 2023, and then is expected to decline as states resume normal enrollment and renewal operations on April 1, 2023. We expect to retain approximately half the membership gained since March 31, 2020 through a variety of well-established operational protocols where allowed.”
- UnitedHealth Group’s CEO at an April 14 earnings call: “Now that the [resumption of redeterminations] has started, we are working with our state partners and others to provide as much information and support as possible, so people can understand and access their best coverage options. And we expect to be serving more people in our benefit programs when this process is completed.”
Since we’re in the forward-looking statement mode, here’s another. Medicaid is managed by states so it’s likely that coverage losses will vary from state to state. How many customers individual companies will retain and, more importantly, how many eligible people will successfully navigate the red tape and maintain their Medicaid coverage, will depend in large part on how well their state Medicaid agencies perform their responsibility to manage the redetermination process7. Our colleagues Tricia Brooks and Allie Gardner have prepared some tips and best practices for managing the unwinding that will help states minimize coverage losses for people who are still eligible. Unfortunately, as Joan Alker reports, some states are already hard at work terminating coverage for procedural reasons.