Anthem Reports Strong 1Q Membership Growth in Public Sector

by Jane Anderson

Anthem, Inc. reported strong membership growth in its Medicare and Medicaid segments along with a lower-than-expected medical loss ratio (MLR) of 85.6% in its 2021 first-quarter earnings report. The MLR results, which handily beat analysts' expectations of an 87.7% MLR, reflected lower utilization of non-COVID-19-related medical services, the company said.

The insurer isn't necessarily expecting utilization to jump as the pandemic winds down, Chief Financial Officer John Gallina said April 21 during the company's earnings conference call. Members who needed care in 2020 mostly were able to obtain it, Gallina said, and so there likely isn't "a giant backlog." But Anthem did see some increased costs associated with COVID-19 testing and vaccine administration in the first quarter.

Overall, Anthem's operating revenue grew by 9% year over year to $32.1 billion. The increase was 10.7% after adjusting for the health insurance tax, and it was driven by higher premium revenue due to growth in Medicare and Medicaid, along with an increase in Anthem's pharmacy product revenue, company officials said.

Medical enrollment grew by 1.4 million lives, or 3.3%, from the first quarter of 2020, Anthem said. That increase was propelled by Medicare and Medicaid, where enrollment increased by 1.8 million lives compared to the same quarter in 2020. Commercial and specialty business enrollment fell by 411,000 lives.

Selling activity is picking up for the 2022 plan year after the pandemic stalled the pipeline last year, noted Jefferies analysts David Windley and David Styblo. "This is true of both national accounts and [Anthem PBM] IngenioRx," they wrote in an April 21 investor note.

Anthem President and CEO Gail Boudreaux said the extended individual marketplace open enrollment period also could benefit Anthem: "We feel that there will be some solid membership growth in the individual exchanges." There's also increasing demand in the commercial market among large and mid-sized groups for integrated medical-PBM products including IngenioRx, she said.

Citi equities analyst Ralph Giacobbe said in an April 21 investor note that Anthem enrollment trends "appear generally inline with commercial…perhaps speaking to stabilizing of the employment market after some declines driven by [the] impact of COVID on the economy. Overall, we view the 1Q results as a strong start to the year."

From Health Plan Weekly