Though some major U.S. health insurers are sustaining financial losses tied to their Affordable Care Act individual policies, another aspect of the health law has proved more profitable--Medicaid expansion.
Fourth-quarter earnings reports from the "big five" insurers show some promising results from their Medicare and Medicaid business lines, even as they struggled to make a profit on ACA-compliant individual policies. The earnings reports from a few other insurers, though, are even more indicative of the trend of rising Medicaid profits.
Centene, which plans to merge with fellow insurer HealthNet, touted 2015 as "another year of growth and accomplishment … capped off by an especially strong fourth quarter." The insurer boosted its managed care membership by 1 million, or 26 percent, from 2014 to 2014, and its fourth-quarter premium and service revenues rose 33 percent to $5.9 billion.
Molina Healthcare, one of the nation's largest managed care companies, nearly doubled its net income from 2014 to 2015, and its aggregate membership rose 35 percent year over year, according to its latest earnings report.
What's more, WellCare reported that its quarter-over-quarter and year-over-year increases in premium revenues were driven primarily by membership growth in its Medicaid plans, which rose by 78,000 from 2014 to 2015. The company also successfully secured Medicaid contracts in Kentucky and Georgia in 2015.
Several factors may be responsible for the success of insurers' Medicaid business relative to their individual policies, a Forbes contributed post says. Medicaid plans can sign up new members throughout the year, not just during open enrollment periods, and more states choosing to expand Medicaid eligibility opens the door for even greater membership gains.
In addition, those who sign up for Medicaid plans tend to choose plans with minimal co-payments, giving insurers a more predictable revenue stream and a higher volume of patients, the post adds.