Centene CEO Sarah London foresees major disruption opportunities ahead in the employer group insurance market by way of individual marketplace coverage.
At a Centene investor conference Dec. 12, Ms. London detailed the company's long-term strategies for the managed Medicaid, Medicare Advantage and ACA markets. Through dynamics such as Medicaid redeterminations, an increasing population of gig economy workers and trends in the small group insurance market, she predicted positive momentum in the ACA market moving forward.
"Over the long-term, we believe that consumers' desire for individual choice, customized products and flexibility, in addition to employers' desire for budget predictability, will drive increasing momentum into the individual market," Ms. London said. "Put simply, it means that 45% of the health insurance market currently under an employer group model is a long-term disruption opportunity."
Centene is the largest individual marketplace insurer in the country, offering coverage on 28 state exchanges through its Ambetter Health subsidiary. As of Sept. 30, the company's individual marketplace business grew 75% year over year, adding 1.6 million members since the third quarter of 2022. Centene CFO Drew Asher told investors the company's marketplace business is bringing in more revenue than its Medicare Advantage plans.
Centene predicts $28 billion in revenue from its marketplace segment by the end of 2024. Total national spending on the segment is expected to grow from $84 billion in 2021 to $170 billion by 2030.
"We see opportunities beyond the existing framework," Ms. London said. "As the commercial insurance market continues to evolve, disruption of the small group market via ICHRAs presents Centene with the potential to widen the aperture."
ICHRAs, or individual coverage health reimbursement arrangements, allow employers to offer a defined contribution to employees to purchase health coverage on their state's respective marketplace. Centene will begin offering ICHRAs to employers in Indiana starting next year.
In September, Ms. London said she believes the individual marketplace will eventually be the dominant way that consumers shop for health insurance.
"Smaller businesses that don't or can't afford to scalably provide insurance for their employees are encouraging them to move over and purchase individually on the exchanges," she said. "Many of them are actually eligible for subsidies, so it's more affordable for both parties to consume in that way."
The Inflation Reduction Act extended subsidies for marketplace coverage through 2025. On-exchange enrollment reached a record high in 2023 of 15.7 million, driven by subsidies, according to KFF.