The nation's largest health insurers have signaled significant headwinds in recent months across their Medicare Advantage and Medicaid businesses as costs rise and the effect of redeterminations takes hold.
"Insurers were already having a rough year with government programs," Wall Street Journal columnist David Wainer wrote May 29. "The latest comments from the industry's largest company suggest the trouble is far from over."
On May 29, UnitedHealth Group CEO Andrew Witty told analysts the company is "watching" its Medicaid business.
"We've come through this prolonged redetermination cycle in Medicaid," he said. "Making sure the utilization, and the rate and everything else stay in perfect synchronicity during a multiquarter cycle — there's probably going to be some disturbance around that."
In April 2023, states began the process of disenrolling Medicaid beneficiaries for the first time since the COVID-19 public health emergency was declared, which prevented agencies from removing individuals from their Medicaid rolls.
As of June 4, at least 22.7 million people have lost Medicaid coverage — a direct hit to private insurers' enrollments. If Medicaid managed care organizations continue to lose members, but the enrollees they retain use healthcare at a high rate, profits could suffer.
"We are seeing pressure in our Medicaid book of business in April results," Centene CEO Sarah London said May 31. "And that is largely due to the impact of this redetermination process that we've been going through for more than a year now and the shift in acuity of the underlying population that remains after the redetermination process."
Health system-owned insurers with Medicaid contracts have also reported significant losses to their enrollments. Texas Children's Health Plan laid off "a few hundred" employees after it lost 30% of its members during redeterminations.
"As we've assessed the impact to our plan, we've come to the decision that a reduction in staffing levels is necessary to assure the future of the plan," president Michael Murphy told the Houston Chronicle.
On the Medicare Advantage front, major carriers such as CVS Health and Humana have said they are looking to shrink enrollments and exit markets in 2025 as the industry faces lower margins and rising utilization rates among older adults. On May 30, BCBS Kansas City said it is leaving the MA market at the end of 2024, citing increasing regulatory requirements and financial headwinds.
"I frequently say the golden days of Medicare Advantage are over," SCAN Group CEO Sachin Jain, MD, told Becker's. "We're taking a hard look at our products and trying to understand what's really needed and what's not."
Notably, UnitedHealthcare said it's not planning any major shakeups to its Medicare Advantage business in 2025, citing a long-term strategy to adjust to industry pressures.
"Right now, trying to pin the tail on the donkey of who gets what next year, I'm not sure there's much mileage in that," Mr. Witty told analysts inquiring about MA competitors.