It’s now been four corporate reporting quarters since the start of the PHE unwinding on April 1, 2023. During that time, net national Medicaid enrollment—the combination of disenrollments from redeterminations, re-enrollment by some of those terminated, and new enrollments—has fallen by 13.1 million, including 5.0 million children. Of the disenrollments, 70 percent have been for procedural reasons, not the result of an actual determination of ineligibility. Three fourths of all Medicaid enrollees are covered through managed care organizations (MCOs) in 42 states (including the District of Columbia). Five national companies together dominate half of this market: Centene, CVSHealth/Aetna, Elevance Health, Molina Healthcare, and UnitedHealth Group. The “Big Five” have now reported their Q1 2024 financial results. How has the PHE unwinding affected them?

Figure 1 tells the enrollment tale for the Big Five as a group. When the PHE began in March 2020, their total Medicaid enrollment stood at 30.1 million. By the time the unwinding began, their total Medicaid enrollment had increased by 14.1 million, to 44.2 million. A year later, their total enrollment was 37.8 million, a drop of 6.4 million, or 14.4 percent. Despite this decline, total Medicaid enrollment for the “Big Five” in March 2024 is still 7.7 million higher than it was in March 2020.

Table 1 tells the enrollment tale for each of the Big Five. Four of the companies reported Medicaid enrollment declines between the quarters ending March 31, 2023 and March 31, 2024. Centene, the company with the largest Medicaid enrollment, lost the largest number of enrollees, a little over 3 million, a drop of 18.5 percent. Aetna, now a business segment of CVSHealth, lost 375,000 Medicaid enrollees over that period, a decline of 13.4 percent.  Elevance Health, formerly Anthem, had the largest Medicaid enrollment decrease in percentage terms: 21.5 percent, reflecting a decline of 2.6 million. UnitedHealth Group lost 700,000 Medicaid enrollees over the year, a decline of 8.3 percent.

Only Molina Healthcare, the smallest of the Big Five, reported an increase in Medicaid enrollment, from 4.8 million in Q1 2023 to 5.1 million in Q1 2024 (6.0 percent). How did a receding tide not lower all five boats? Management’s explanation: disenrollments due to unwinding redeterminations (50,000 in Q1 2024, 550,000 to date) have been offset by enrollment increases due to the start of new contracts in Iowa and Nebraska as well as an “expanded California Medicaid platform including Los Angeles County.”

Molina’s results underscore the point that enrollment data reported by each of the companies are net numbers, reflecting a combination of enrollment losses and gains. Enrollment losses could result not just from the unwinding, but also from the failure to keep Medicaid contracts in state procurements as well as current enrollees switching to a different MCO. Enrollment gains could come from the enrollment of newly eligible individuals, the award of new contracts in state procurements, the launch of new state Medicaid managed care programs (e.g., Oklahoma on April 1), and/or the acquisition of competitors.

Table 2 tells the revenue tale, at least in part. (CVSHealth/Aetna and Elevance Health simply don’t report their Medicaid revenues; it’s unclear why investors would be uninterested in these payment streams). Between Q1 2023 and Q1 2024, Centene’s Medicaid revenues were down $767 million, or 3.5 percent; Molina’s were up $1.1 billion, or 18 percent; and UnitedHealth Group’s were up $1.7 billion, or 9.3 percent. Combined Medicaid revenues rose by $2.1 billion, or 4.5 percent.

This seems paradoxical. For all three companies, total Medicaid enrollment decreased by 3.4 million year-over-year, but total Medicaid revenues increased by $2.1 billion. At the individual company level, Centene’s Medicaid enrollment and revenues both decreased, while Molina’s both increased.

On the other hand, UnitedHealth Group’s Medicaid enrollment went down by 8.3 percent while its Medicaid revenues went up by 9.3 percent year-over-year. Can it be that every Medicaid enrollee United lost increased its revenues by $2,490? What kind of managerial magic produces that result? It’s a puzzlement. UnitedHealth Group’s 10-Q doesn’t give an explanation, and the financial analysts did not ask about it during the company’s earnings call (which is understandable given the Change Health debacle).

Only two of the Big Five disclosed medical loss ratios specific to their Medicaid lines of business for the quarter: Centene (90.9%) and Molina Health (89.7%). (The way in which these companies calculate MLR—costs of medical care as a percentage of premium revenue—differs somewhat from the way the federal regulations specify Medicaid MLRs should be determined).

While the financial analysts, as well as company managements, would prefer that these MLRs be lower, they nonetheless help to explain why the Medicaid managed care market continues to be attractive to the Big Five, among others. As Molina’s 10-Q report explains: “the underlying medical margin, or the amount earned by the Medicaid, Medicare, and Marketplace segments after medical costs are deducted from premium revenue, represents the most important measure of earnings reviewed by management….” Molina’s Medicaid margin in the quarter was $775 million.

And now for some forward-looking statements. Readers are advised that actual results may differ materially from these expectations.

We at CCF estimate that, by the end of June, the majority of states will have completed redeterminations of eligibility for all individuals enrolled in Medicaid at the time the unwinding began last year. There’s some uncertainty around this estimate, given the different cadences at which states have conducted and reported their redeterminations. Based on our analysis of CMS enrollment and unwinding data, we do know that as of February or March, 29 states had processed over 75 percent of their pre-unwinding caseload; another 19 states had processed between 50 and 75 percent; and one state (Alaska) had processed less than half. Some states have completed their unwinding redeterminations (e.g., Arizona, West Virginia) and some have begun conducting regular redeterminations at the same time as they continue their unwinding redeterminations.

The implications of the unwinding for each of the Big Five will continue to vary depending on the states in which they operate subsidiaries. Nonetheless, for the Big Five as a group, Medicaid enrollment is likely to continue to decline at least through Q2. Whether Medicaid revenues will continue to increase as Medicaid enrollment declines is anyone’s guess.