- Despite the COVID-19 public health crisis that has now sickened more than 4.2 million Americans, Centene on Tuesday reported a profit of $1.2 billion, more than double its profit from the second quarter of 2019. The results were aided by the pandemic as medical use was depressed due to stay-at-home orders and patients delaying care.
- The St. Louis-based insurer reported revenue of $27.71 billion, beating Wall Street's expectations. The managed care giant reported an increase of 9.6 million members for the quarter, largely driven by Medicaid, for a total of 24.6 million members at quarter's end, slightly below what analysts had expected.
- The medical loss ratio experienced a significant drop from the prior-year period, landing at 82.1% from 86.7% in 2019. The improved MLR is also due to the lower use among members that was fueled by the pandemic.
The steep decline in patient volumes that has squeezed hospitals and primary care providers has largely been a boon for insurers, though they've been sensitive to appearing like they're benefiting from a public health crisis.
As patients prolong care either voluntarily or due to mandates from local and state governments, it means insurers are not paying for care either.
They have worked at mitigating the appearance of gaining from the virus by waiving co-pays for treatment both related and unrelated to COVID-19, such as behavioral health and telehealth visits. Centene specifically has donated more than one million meals, 50,000 gift cards for people to purchase health items, and has donated $500,000 to the National Domestic Violence Hotline.
However, there is still some risk for insurers as millions of Americans have lost their jobs, thereby severing access to insurance coverage made available by their employers. Centene though is largely focused on government-sponsored healthcare such as Medicare, Medicaid and the exchange population — not commercial insurance.
Centene executives said Tuesday the jump in membership they had expected as a result of the pandemic is coming in slower than projected for a variety of reasons, including employers choosing to furlough workers instead of terminating employment.
The payer said it now expects an enrollment peak to come in the fourth quarter, generating 1.4 million new members instead of an earlier projected 1.9 million members. This will also lower Centene's revenue projections by $500 million at the midpoint, executives said Tuesday. Still, the company expects $3.5 billion in COVID-driven revenue.
As coronavirus case counts continue to swell, Centene said it has paid $550 million for COVID-19 related claims through the end of June. Though the pandemic has put downward pressure on utilization, June was virtually a normal month. However, early July figures do indicate a step down, though executives warned those figures are preliminary.
UnitedHealth Group's insurance unit, UnitedHealthcare, did report a dip in second quarter enrollment earlier this month as job numbers have fallen.
The Minnesota-based insurer also experienced a steep drop in its medical loss ratio to 70.2% for the second quarter as patient care was delayed due to the novel coronavirus.
The medical cost ratio is an important measure for insurers as it details the amount a company spends on medical claims compared to the amount its brings in from premiums.
Centene CEO Michael Neidorff did warn earlier that performance from quarter to quarter may be "choppy" as the nation navigates the outbreak.
On Tuesday, he said that earlier assessment was spot on. "Nothing can be truer from that today. It is increasingly clear that we are going to be living with this pandemic for some time," he said.