Associated Press
One of the biggest insurers in the
Affordable Care Act's marketplaces is warning the federal government that it
must preserve cost-sharing payments for low-income customers to avoid hurting
millions of people.
Centene Corp. said Tuesday that a
better-than-expected performance in those individual insurance markets prompted
it to beat Wall Street expectations in the second quarter and raise its
forecast for 2017.
But Chairman and CEO Michael
Neidorff, like other insurance executives, is worried about the fate of
cost-sharing reduction payments that ease expenses like deductibles for people
with low incomes. Money for those payments has made it into Congressional bills
that aim to dismantle the Obama-era law, but the fate of that legislation is
uncertain.
Republicans have challenged those
payments in court, and President Donald Trump has offered no guarantees that
they will continue beyond this month.
Neidorff said those payments and some
other government support will be crucial to stabilize the exchanges, which have
been marred by dwindling choices and soaring prices.
"Any intentional act to stop
these ... payments does not advance the debate on how to fix our health care
delivery system," he said. "It only hurts the millions of Americans
who currently have affordable health care insurance in the marketplace.
"The leadership in Washington
bears the responsibility to ensure that is not happening."
Centene covers more than 1 million
people through the law's state-based health insurance exchanges, which let
people shop for coverage and then buy a plan with help from an income-based tax
credit. While big national carriers like UnitedHealth and Aetna have retreated
from this market, Centene has switched to growth mode.
The St. Louis-based insurer plans to
expand next year into exchanges in Nevada, Kansas and Missouri, with growth in
its home state filling a void in 25 counties that had no exchange choices for
shoppers.
Analysts have said Centene does well
on the exchanges because it sticks with customers it knows. The insurer
specializes in managing the state and federally funded Medicaid program for the
poor. On the exchanges, it markets to low-income customers in areas where it
has a Medicaid presence.
"They came at the exchanges from
a core Medicaid business and built (care) networks around largely the same
providers," said Jefferies analyst David Windley.
People with low incomes are eligible
for large tax credits that help keep their premiums affordable and shield them
from big tax hikes. That makes it more likely they keep up with their insurance
payments and renew their coverage.
Neidorff didn't spell out on Tuesday
what his company would do if the cost-sharing reduction payments end. But other
insurers have said premiums will soar in many markets.
Leerink analyst Ana Gupte said in
recent note that she expects more insurers to leave the markets if the future
of payments isn't clarified by September, and that could include Centene
reducing its presence. But both she and Neidorff think the funding ultimately
will be preserved.
Neidorff said that he thinks
congressional leaders won't have the appetite to leave the "most
vulnerable populations" without coverage.
"I am personally, and I think
corporately we are, convinced that when all the dust settles there will be
subsidies in some form," he said.
Centene said it earned $254 million,
or $1.44 per share, in the second quarter, as results adjusted to exclude
one-time gains and costs totaled $1.59 per share. Total revenue grew nearly 10
percent, helped by the ACA business, to $11.95 billion.
Analysts expected earnings of $1.30
per share on $11.66 billion in revenue, according to Zacks Investment Research.
The insurer forecasts full-year
earnings in the range of $4.70 to $5.06 per share.
Analysts expect $4.79 per share, on
average, according to FactSet.
https://insurancenewsnet.com/oarticle/key-aca-insurer-urges-govt-to-keep-customer-subsidies
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