Medicaid Managed Care: Results of the PHE Unwinding for the Big Five in Q4 2023

Q4 2023 was also the third quarter of the PHE “unwinding”—the redetermination of eligibility for all 86.7 million Medicaid enrollees following the expiration of the Public Health Emergency continuous coverage provision in March 2023. These redeterminations have resulted in the disenrollment of over 16 million Medicaid enrollees as of January 2024, which translates into a net decline of nearly 10 million enrollees, including nearly 4 million children. Not surprisingly, the “Big Five” national companies that control half of the Medicaid managed care market have been impacted. As shown in Figure 1, total Big Five Medicaid enrollment dropped by 4.3 million, or 9.7 percent, from 44.2 million in March 2023 to 39.9 million in December 2023. This reflects the continuation of a trend that began in Q2 and continued in Q3.

In the 41 states (including the District of Columbia) that contract with managed care organizations (MCOs), total net Medicaid enrollment fell from 81.6 million in March 2023 to 77 million in September 2023, the latest month for which these data are available. (Total net Medicaid enrollment reflects disenrollment from redeterminations combined with re-enrollment by some of those terminated, as well as enrollment by those newly eligible).  That is a decrease of 4.6 million or 5.6 percent. In comparison, total Big Five Medicaid enrollment fell from 44.2 million in March 2023 to 41.7 million in September 2023, a decline of 2.5 million, also 5.6 percent. (By definition, parent company enrollment reflects a combination of Medicaid enrollees whom the state terminates from coverage, Medicaid enrollees who select or deselect the company’s MCOs, the awarding or loss of state Medicaid contracts, and the acquisition or sale of individual MCOs.) In short, over the first six months of the unwinding, a receding tide lowered all boats.

The company-specific Medicaid enrollment declines are presented in Table 1. Each of the Big Five lost Medicaid enrollees during the first three quarters of the unwinding, but the numbers and percentage of enrollees lost varied considerably. Two of the companies—Centene and Elevance Health—together accounted for three quarters of the 4.3 million decrease in Big Five Medicaid enrollment, experiencing declines of 1.8 million (11.3 percent) and 1.4 million (11.6 percent), respectively. The company with the lowest percentage decline in its Medicaid enrollment over the three quarters was Molina, which lost 292,000 Medicaid enrollees, or 6.0 percent of its March 2023 enrollment, followed closely by UnitedHealth Group at 6.4 percent (535,000 enrollees).

Again, these are net figures, and not all of the declines are necessarily attributable to the unwinding. For example, a company may have experienced declines in Medicaid enrollment due not just to the unwinding but also to the loss of a state contract or the exit of a subsidiary from a state market. Conversely, a company may have experienced higher enrollment losses due to the unwinding than its net figure indicates because its losses were partially offset by an influx of new enrollees due to an award of a new state contract or the acquisition of an MCO in a new state market. And because these are national companies with subsidiaries in multiple states, these net figures represent the combined enrollment experience of all the subsidiaries, which in turn reflect very different state Medicaid agency competencies in administering the unwinding.

As shown in Table 2, for three of the Big Five, the declines in Medicaid enrollment over the last three quarters of 2023 did not translate into a reduction in Medicaid revenues for the year as a whole. UnitedHealth Group’s Medicaid revenues rose from $63.8 billion in 2022 to $75.0 billion in 2023, an increase of $11.2 billion, or 17.5 percent. Centene’s Medicaid revenues rose by $2.7 billion, or 3.3%, to $86.8 billion in 2023 from $84.1 billion in 2022. Molina’s Medicaid revenues in 2023 were $26.3 billion, up $1.5 billion, or 6.0%, from $24.8 billion in 2022. The other two companies do not report Medicaid revenues in their quarterly earnings releases.

We are now roughly halfway through the unwinding nationally, although the pace of redeterminations varies from state to state. How will the unwinding play out? What does that imply for Big Five Medicaid enrollments? On the one hand, the rate of successful  automated (ex parte) renewals is up in many states, meaning that fewer eligible individuals will be disenrolled for procedural reasons. On the other, the volume of applications is also up in many states, leading to back-ups in eligibility systems that will delay re-enrollment by those incorrectly terminated for procedural reasons as well as enrollment by those newly eligible.

These trends suggest that net Medicaid enrollment will continue to decline nationally for the next three if not six months, although the rates will vary from state to state. As a result, Medicaid enrollment for the Big Five as a group will likely decline in Q1 2024 and again in Q2 2024, with variation among the companies based on the state markets in which they operate. Readers are cautioned that this is a forward-looking statement that involves risks and uncertainties; actual results may differ materially from these expectations.