The “Big Five” earnings results for Q4 of 2024 are now in. The “Big Five” are the publicly-held companies that together control half of the Medicaid managed care market: Centene, CVSHealth/Aetna, Elevance Health, Molina Healthcare, and UnitedHealth Group. (There are five nonprofit Medicaid managed care organizations (MCOs) with significant regional or single-state market footprints, but these entities are not required to report earnings to the Securities and Exchange Commission on a quarterly basis so we do not present their results here). For the “Big Five” as a group, net Medicaid enrollment effectively plateaued after a long decline; company managements continued to voice concerns about the “mismatch” between capitation rates and the acuity of the remaining enrollees; and during the earnings calls, only one CEO addressed the headwind in the room.
Figure 1 shows Medicaid enrollment for all five companies for each quarter beginning with the start of the COVID-19 Public Health Emergency in March 2020 through the start of the unwinding of the PHE continuous enrollment period in April 2023 through December 2024, by which point all the states contracting with MCOs other than North Carolina and the District of Columbia had completed their redeterminations of eligibility. Total net Medicaid enrollment in the “Big Five,” reflecting not just the PHE unwinding but also contract procurements, acquisitions, divestitures, and normal enrollment/disenrollment patterns, stood at 36.8 million. This represents a 17 percent decline from the peak of 44.2 million in March 2023 but a 22 percent increase from the 30.1 million total enrollment at the beginning of the PHE. (The net increase in “Big Five” enrollment nationally since the beginning of the PHE masks state-to-state variation in Medicaid program participation rates both pre- and post-PHE, as Joan Alker and colleagues have explained).
Table 1 presents net Q4 2024 enrollment results for each of the “Big Five.” Four of the companies reported enrollment in Q4 well below enrollment as of Q1 2023. Centene, with the largest Medicaid enrollment at the beginning of the PHE, experienced the largest absolute decline (3.3 million). Elevance experienced the largest percentage decline (25 percent). Only Molina reported an increase in net enrollment over this period, a modest 1.2 percent.
Only three of the “Big Five” reported revenues from their Medicaid lines of business (Table 2). In total, Medicaid revenues of these three companies were $49.0 billion in Q4, compared to $47.3 in Q1 2023, an increase of 3.6%. The results for the companies varied. Centene’s Medicaid revenues in Q4 2024 were $1.4 billion (6.3 percent) lower than in Q1 2023, immediately before the start of the PHE unwinding. In contrast, Molina and UnitedHealth Group’s Medicaid revenues were 26.6 percent and 7.4 percent higher, respectively. UHG’s Medicaid revenues increased despite an 11.3 percent decline in its Medicaid enrollment over that same period.
During the earnings calls, each of the company’s CEOs gave their assessments of their firm’s prospects for 2025. But only one financial analyst—A.J. Rice (UBS)—and only one CEO—Joseph Zubretsky (Molina)—spoke to the revenue headwind in the room. Here is our transcription of their exchange.
Rice: “I know you guys mentioned in the prepared remarks about keeping an eye on what’s going on in Washington. Obviously there’s a lot of chatter about potential Medicaid reform. Is it a situation where, at this point, you’re having some discussions with the states about how they might respond to some of these scenarios? And, maybe relying on history, does it tend to push the states to put more of the people that they haven’t put in managed Medicaid into managed Medicaid? Is there enough flexibility in the benefit design that if there’s pressure on Medicaid funding that they tweak benefits and how does that impact your business? Any thoughts you can give us along those lines?”
Zubretsky: “I can. I can’t give you any answers, but I can give you our thinking. And you’re absolutely right about the way you’re focused on it. Look– the market really focuses on the ‘how.’ You know, if you come up with a per capita cap scheme, FMAP match for a reduction, FMAP match reduction on expansion, block grants– whatever the mechanism is, the CBO can score it.
That’s not the issue. The issue is: what are you going to reduce in terms of where the money goes? You’ve got 25 million people in Marketplace, 92 percent subsidized; 20 million people in expansion, 100 percent subsidized at 90 percent; and 25 million uninsured population, 9.5 percent of the eligibles. Tell me which number you want to see changed?
Neither side of the aisle wants to see more uninsured. It’s below 10 percent of eligibles for the first time in decades. Reduction in benefits, reduction in enrollment, reduction in payments to providers, or none of the above and I either have to, as a state, decrease my education budget or raise taxes.
None of those solutions is politically tenable– that’s what to focus on.
The way to cut a cost is actuarially and financially determinable. Where that would go is where the political tension exists– it’s either got to be membership, benefits to existing membership, reductions of payments to providers, or higher taxes for the citizens in the state. Neither of those approaches is politically tenable. That’s why we conclude that any changes to managed Medicaid as we know it today would be marginal.”
We shall see if that prediction is correct. Initial indications are not promising. On February 13, the House Budget Committee approved a budget resolution providing for a reduction in federal Medicaid spending over the next ten years of at least 11 percent. On February 25, the House of Representatives approved that resolution by a vote of 217-215.
