Despite the Trump administration's recent moves to undermine the Affordable Care Act, Centene said on Tuesday that its ACA exchange business is well-insulated against such policy upheaval.
The insurer reported that it expects its 2017 revenue to be in the range of $47.4 billion to $48.2 billion, beating Wall Street’s consensus estimate of $47.3 billion.
Its adjusted diluted earnings per share were $1.35 for the third quarter of 2017, exceeding the consensus estimate by 8%. And its total revenues from the quarter were $11.9 billion, representing a 10% year-over-year increase.
That increase was primarily a result of growth in Centene’s health insurance marketplace business in 2017, as well as expansions and new programs in many states in 2016 and 2017, the company said.
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Centene still plans to expand its ACA exchange footprint next year, both within the states where it current operates and in three new states—Kansas, Missouri and Nevada—CEO Michael Neidorff said during a call with investors and analysts.
Neidorff said the insurer filed all of its 2018 individual market rates assuming that funding for CSR payments would end, a move that’s proven wise since the Trump administration has since decided to stop making the payments.
However, if Centene doesn’t receive CSR payments from the federal government for the fourth quarter of this year, the company to see a $0.07-$0.12 per diluted share impact on its 2017 earnings.
Neidorff noted, though, that the fight over CSR payments is far from finished, as some state officials are taking legal action to prevent the termination of payments. The Senate is also trying to pass a bill that would fund the subsidies for two years—though it’s unclear if the president would sign it.
He also pushed back against some Republicans’ characterization of CSR payments as “bailouts” that enrich insurers.
“They are not a profit contributor,” Neidorff said. “Instead, they cover the out-of-pocket healthcare costs for the country’s most vulnerable populations.”
As for Centene’s $3.75 billion deal to acquire New York-based insurer Fidelis Care, Neirdorff said the transaction is making headway toward achieving regulatory approval.
He said Centene is “disappointed,” however, by the recent results of the 2018 Medicare Advantage Star Ratings, as the company’s overall rating dipped from 4 to 3.5. That downgrade—which Centene intends to appeal—was due to a lower rating for one of Health Net of California’s MA plans, which experienced a 2015 program audit. Centene acquired Health Net in 2016.