Elevance Health saw its Medicaid membership decline by 15% from 2023 to 2024, according to the company’s full-year results published Jan. 23. CFO Mark Kaye told investors on Jan. 23 that Medicaid costs remained elevated in the fourth quarter, especially in inpatient care and behavioral health.
The company’s medical expense ratio in the fourth quarter of 2024 was 92.4%, up 3.2 percentage points from the same time period last year.
Elevance and other insurers began describing a “mismatch” between the cost of care for Medicaid beneficiaries and rates from states in 2024. During the COVID-19 pandemic, states were prohibited from disenrolling any beneficiaries from the program, regardless of their eligibility. In 2023, states began the process of determining the eligibility of Medicaid beneficiaries.
Per KFF, more than 25 million people were disenrolled from Medicaid between April 2023 and June 2024, though insurers have said many of those disenrolled eventually reenroll in the program. Payer executives have said that Medicaid members who remain enrolled tend to have higher medical costs, which are not reflected in state rates.
Elevance Health CEO Gail Boudreaux said the company took quick action to address “unprecedented cost trends” in Medicaid.
“While rates today remain insufficient to cover the elevated levels of cost trend we are experiencing, we remain confident that rates will ultimately reflect the underlying acuity of our Medicaid membership over time,” she said.
UnitedHealth Group executives also told investors they expected state reimbursement rates to improve over time.
“In Medicaid, we see the gap between people’s health status and state rates narrowing over the course of the year,” CFO John Rex told investors on a Jan. 16 call.
