Centene to stay on ACA exchanges; WellCare grows Medicaid membership

finance earnings
Centene expects its ACA exchange business to continue to be profitable this year.

Unlike some of the other major for-profit health insurers, Centene has no plans to consider exiting the Affordable Care Act exchanges in 2018.

“I’m not backing off at all,” CEO Michael Neidorff said during the company’s fourth-quarter earnings call Tuesday. In recent discussions with the company’s board members, he said, “everybody is of one mind; you maintain business as usual.”

Recently, the CEOs of Anthem and Cigna both indicated they are still deciding whether to participate on the exchanges in 2018. Aetna, meanwhile, does not plan to re-enter any markets in 2018 after pulling out of many in 2017.

As of Dec. 31, Centene served about 540,000 exchange members, in line with its expectations, and it anticipates having a little more than 1 million paid members in 2017. Indications are that the demographics of these members will be consistent with years past, with 90% of them subsidy-eligible and most on silver-tier plans, Neidorff said.

While Centene is folding an “extra level of conservativism” into its expectations for its exchange products to guard against any uncertainty, it continues to expect that line of business to be profitable this year, he added.

Another ACA provision, Medicaid expansion, has also proved profitable for Centene. At the end of 2016, it had 1,080,500 members in Medicaid expansion programs in 10 states, compared to 449,000 members at the end of 2015, according to the company’s earnings statement.

Though Medicaid expansion would disappear with a repeal of the healthcare law, Neidorff said he expects Centene can weather the coming policy changes.

Republicans are likely to give states additional flexibility to manage their populations, he noted, “which aligns nicely with Centene’s local approach to healthcare.” The company also believes it can adapt to any major change in Medicaid funding, such as move to block grants or per capita caps, Neidorff said.

Centene is not the only insurer with a background in managed care to find success on the exchanges; Molina said in September that it plans to expand its marketplace footprint after exceeding its growth targets.

WellCare’s Medicaid business grows

Business is also booming  for another insurer focused primarily on Medicaid managed care. WellCare grew its Medicaid membership to 2.5 million by the end of 2016, a 6.5% increase from the year prior, the company said in its Q4 earnings report.

WellCare's acquisition of Care1st Arizona and some of Advicare Corp.'s Medicaid assets helped drive that growth, the company said. Its adjusted premium revenue from Medicaid health plans totaled $9.1 billion for 2016, a 4.4% increase over 2015.