Centene’s business is still impacted by Medicaid redeterminations, a process that began in early 2023, the company said during the Wells Fargo Healthcare Conference.
The insurer’s stock price dropped 8.69% upon hearing the news, Centene’s lowest price since July. It was the largest percentage decline in almost four years, reported MarketWatch.
CEO Sarah London said the company is on pace for a similar third quarter, as compared to its second quarter, and is on track for $6.80 earnings per share. Despite securing state Medicaid contracts in Iowa and Pennsylvania recently, Centene is still grappling with Medicaid unwinding.
“We are still seeing pressure in Medicaid, largely driven by the unprecedented redeterminations process that we’re now almost 18 months into,” said London. “That continues to be offset by a strong performance in our marketplace business as well as in selling, general and administrative expenses and investment income.”
Centene anticipates its Medicaid membership will eventually stabilize at 12.9 million to 13 million members, said Chief Financial Officer Drew Asher. The company previously projected at a recent investor day presentation the more likely estimate was 13.2 million to 13.6 million members.
Asher added that 30% of administrative terminations “are still making their way back to us.”
Other Medicaid payers, like Elevance Health and Molina Healthcare, also finished the day down. Molina’s stock dropped nearly 7%.
The company touched on the electoral appetite for enhanced subsidies extension through the Affordable Care Act and individual coverage health reimbursement arrangements (ICHRAs).
London said the company is seeing bipartisan support for the subsidies and that Republicans in rural communities are benefiting from the policy.
“There is an overwhelming constituency there that I think would be hard to abandon,” she said. But if they aren’t extended, she said Centene could modify its product design and utilize state-based exchanges to help offset the change.
As for ICHRAs, Centene highlighted the potential for small employers. This program’s benefits are “consistent” with Republican messaging on small businesses, said London.
Last week, the National Association of Benefits and Insurance Professionals criticized Centene for ending Part D compensation for agents beginning next year. During the conference, London said the decision was “difficult” but full commissions will still be paid in Medicare Advantage.