Select publicly traded insurers that reported second-quarter
2019 earnings in late July were tracking elevated medical loss ratios (MLRs)
that were partly if not solely driven by their Medicaid businesses, while
seeing growth in other areas.
Second quarter earnings per share for Anthem, Inc. came in
slightly ahead of Wall Street expectations at $4.64, driven by growth in its
fully insured business, but analysts appeared concerned with an increased MLR
that the company said was mainly due to "elevated medical costs" in
its Medicaid segment. At 86.7%, that MLR was 330 basis points higher than the
83.4% it reported in the year-ago quarter.
Centene Corp. on July 23 reported an elevated MLR of 86.7%, up
100 basis points from the second quarter of 2018 and from the first quarter of
2019. The company said the MLR increase largely stemmed from a
"normalization" of its Affordable Care Act (ACA) marketplace
business, as well as the ACA health insurer fee holiday and the company's
mid-2018 acquisition of Fidelis Care.
But as a recent Milliman report on Medicaid managed care
financials observed, MLRs are prone to fluctuation and reflect the uniqueness
of a state's individual Medicaid program and the managed care organization's
reporting metrics.
According to the report tracking key financial metrics for 174
managed Medicaid companies, insurers in 2018 had an average MLR of 87.3%,
compared with 86% in 2014 and 88.2% in 2017.
The report also serves as a reminder of the "interesting
dynamics" going on in each state, and shows that while MLR has
"changed incrementally from previous years, it now starts to document a
decrease in managed care rates that we've seen for the expansion populations in
states that have already expanded," observes Alex Shekhdar, founder of
Sycamore Creek Healthcare Advisors.
From
RADAR on Medicare Advantage
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