Private Medicaid health plans lost millions of members last year as pandemic protections that barred states from dropping anyone from the government program expired.
But even as Medicaid unraveled, as it’s known, at least two of the five largest publicly traded companies that sell plans have continued to grow the program’s revenue, according to their latest earnings reports.
It’s a very interesting paradox, said Andy Schneider, a research professor at Georgetown University’s McCourt School of Public Policy, of plans that increase Medicaid revenue despite enrollment declines.
Medicaid, the federal-state health care program for low-income and disabled people, is administered by the states. But most people enrolled in the program get their health care through state-contracted insurers, such as UnitedHealthcare, Centene and Molina.
The companies persuaded states to pay them more money for each Medicaid enrollee on the assumption that younger, healthier people were presumably leaving for Obamacare coverage or employer-based health insurance, or because they didn’t see the need to get coverage by leaving behind an older, sicker person. population to cover, its executives have told investors.
Several of the companies reported that states have made midyear and retrospective changes to their payments to plans to account for members’ worsening health status.
On an April 25 earnings call with analysts, Molina Healthcare CEO Joe Zubretsky said 19 states increased their payment rates this year to adjust for sicker Medicaid enrollees. States have been very responsive, Zubretsky said. We couldn’t be more pleased with how our state customers have responded to keep rates commensurate with normal cost trends and trends that have been influenced by the change in acuity.
Health plans have faced a lot of uncertainty during the rollout of Medicaid, as states began reassessing the eligibility of enrollees and dropping those deemed no longer eligible or who lost coverage due to procedural errors. Before the deactivation, the plans said they expected the overall risk profile of their members to increase because those who remained in the program would be sicker.
UnitedHealthcare, Centene and Molina had Medicaid revenue increases ranging from 3 percent to 18 percent by 2023, according to KFF. The other two large Medicaid insurers, Elevance and CVS Health, do not draw specific revenue from Medicaid.
KFF data shows that Medicaid enrollment for the five companies collectively declined 10% from the end of March 2023 to the end of December 2023, from 44.2 million people to 39.9 million .
In the first quarter of 2024, UnitedHealths Medicaid revenue increased to $20.5 billion, up from $18.8 billion in the same quarter of 2023.
Molina on April 24 reported nearly $7.5 billion in Medicaid revenue in the first quarter of 2024, up from $6.3 billion in the same quarter a year earlier.
On April 26, Centene reported that its Medicaid enrollment fell 18.5% to 13.3 million in the first quarter of 2024 compared to the same period a year ago. The company’s Medicaid revenue fell 3% to $22.2 billion.
Unlike UnitedHealthcare, whose Medicaid enrollment fell to 7.7 million in March 2024 from 8.4 million a year earlier, Molinas’ Medicaid enrollment increased in the first quarter of 2024 to 5.1 million from 4.8 million in March 2023. The jump in enrollment at Molinas last year was partly a result of it has bought a Medicaid plan in Wisconsin and obtained a new Medicaid contract in Iowa, the company said in its earnings press release.
Molina added 1 million members because states were prohibited from ending Medicaid coverage during the pandemic. The company has lost 550,000 of those people during the shutdown and expects to lose another 50,000 in June.
About 90 percent of Molina Medicaid members have gone through the redetermination process, Zubretsky said.
The corporate giants also offset enrollment losses by getting more Medicaid money from states, which they use to shift higher payments to certain facilities or providers, Schneider said. By holding the money temporarily, companies can count these targeted payments as revenue.
Medicaid health plans were big winners during the pandemic after the federal government barred states from dropping people from the program, leading to an increase in enrollment of about 93 million Americans.
States made efforts to limit health plan benefits by clawing back some payments above certain thresholds, said Elizabeth Hinton, associate director of KFF.
But after the ban on dropping Medicaid enrollees was lifted last spring, the plans faced uncertainty. It was unclear how many people would lose coverage or when it would happen. Since the rollout began, more than 20 million people have been left off the rolls.
Health care costs for Medicaid enrollees were lower during the pandemic, and some states decided to exclude pandemic-era cost data as they considered how to set payment rates for 2024. This provided another win for Medicaid health plans.
Most states are expected to complete their Medicaid rollout processes this year.
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