Dive Brief:
- Centene is offering its 61,000 employees buyouts as the insurer struggles with declining membership in its health plans.
- A spokesperson confirmed the buyouts to Healthcare Dive but declined to share the exact number of employees receiving the offer or how many Centene is hoping will accept.
- Though the voluntary separation program is designed for most employees to be eligible to apply, it doesn’t amount to a complete overhaul of the company, the spokesperson said.
Dive Insight:
Centene is the largest Medicaid and Affordable Care Act insurer in the U.S., covering more than 12.4 million people in the safety-net program and more than 3.5 million people in the exchanges set up by the Obama-era law.
But the rising cost of health insurance and unfavorable regulatory changes have winnowed both populations, with Centene’s Medicaid membership down 4% and the company’s ACA membership down 54% year over year as of March.
That attrition has hit Centene’s overall membership, despite growth in the insurer’s other business lines, including Medicare prescription drug plans and employer-sponsored coverage. Centene currently has almost 26.3 million at-risk members, down from 27.9 million the same time last year.
Those losses are now spurring Centene to shrink its operations, according to a message sent from CEO Sarah London to Centene employees obtained by Bloomberg, which first reported the buyouts.
“When our membership shifts, we need to shift our organization accordingly,” the message states.
"Centene is positioning the company to lead the future of healthcare — working to deliver a simpler and better experience for our members and partners while meeting the realities of today's healthcare environment,” the Centene spokesperson told Healthcare Dive.
Centene’s ACA losses have been particularly steep. The exchanges are currently experiencing historic volatility after more generous subsidies for coverage expired at the end of last year. The loss of that assistance caused premiums to double on average for subsidized enrollees, spurring many Americans to drop out of the exchanges altogether.
As a result, insurers are reporting smaller and generally sicker enrollees concentrated in less robust plans. And that attrition is expected to continue over the rest of the year, as more Americans elect not to pay high premiums and are removed from coverage.
In Medicaid — Centene’s bread and butter, accounting for the lion’s share of the company’s premiums — the brunt of membership losses to date have primarily been driven by states resuming eligibility checks coming out of the coronavirus pandemic. Much of that impact hit in 2023 and 2024.
However, the company is bracing for another contraction in the safety-net program stemming from billions of dollars in Medicaid cuts approved by the Republican-led Congress last summer. In particular, new work requirements next year are expected to boot about 5 million Americans from Medicaid.
About 20% of Centene’s Medicaid membership will be subject to the work requirements, and how many will lose coverage will vary state by state, according to the company’s leadership. But regardless of looming membership losses, top executives have promised investors they are laser-focused on improving margins.
“As we look ahead to 2027, our goal is to continue to drive margin improvement forward, and we obviously have work requirements, a number of policy changes that we’re looking ahead to,” London said in a call with investors in April.
