Centene Corporation announced its second quarter numbers on Tuesday, which showed a 10% increase in total revenues to $12 billion, compared to the second quarter of last year. The company said the increase was “primarily a result of growth” of the Affordable Care Act (ACA) exchanges. Total revenues also increased 2% over the first quarter of 2017.
Centene reported that its health benefits ratio (HBR), also known as medical loss ratio (MLR), improved to 86.3%, which was better than the 86.6% posted last year. The company said the improved HBR was also because of its ACA business, which is operating at a lower HBR. The second quarter HBR percentage is also better than the 87.6% in the first quarter of this year.
The company’s managed care membership increased 7% from the second quarter of last year to 12.2 million members this year.
While other payers are pulling back or completely out of the ACA exchanges, Centene is not only prospering, but looking to expand its ACA offerings next year.
Centene Corporation, which focuses on low-income and disabled Medicaid beneficiaries, has about 1.1 million members in ACA exchanges and that number is expected to grow next year. Centene committed to providing coverage to 25 “bare counties” in Missouri with no ACA exchanges plans after Blue Cross Blue Shield of Kansas City announced it is pulling out of the exchanges next year. In addition to Missouri, the payer also plans to enter Kansas and Nevada next year and expand its footprints in six existing markets: Florida, Georgia, Indiana, Ohio, Texas and Washington.
St. Louis-based Centene has enjoyed a strong year and saw a 69% revenue growth in the first quarter.
The news of Centene’s strong quarter comes as the Republican-led Senate tries to figure out a plan that can get enough Republican support. Both the House’s American Health Care Act and the Senate’s multiple versions of the Better Care Reconciliation Act would both make major changes to Centene’s bread and butter — Medicaid and the ACA exchanges.
In addition to the issues with healthcare reform, payers are also worried that the White House will stop funding cost-sharing reduction (CSR) payments, which helps insurance companies cover lower income Americans. President Donald Trump has threatened to stop CSR payments, which insurance companies warn will cause companies to pull out of the ACA market or request large premium hikes in 2018.
All of this makes for an unstable market, but claims that is its failing are overblown. It is true that some payers have lost millions on the ACA exchanges, but recent studies from the Kaiser Family Foundation (KFF) showed that the ACA market is actually beginning to stabilize. The latest KFF report of the first quarter of the year highlighted that the individual market’s MLR averaged 75%, which is an improvement over the past two years.
Though there are signs of stability, there have also been huge premium increases. KFF found the premiums per enrollee grew 20% on average from the first quarter of last year. The average first quarter individual market monthly premium this year increased to $403 compared to $337 last year.
So, there are signs of stability, but higher premiums show that payers are still leery about the individual market. Those fears won’t subside until there is action on healthcare reform and/or commitment from the White House to pay CSR payments.