Following a trough year for Medicaid margins, leaders at Elevance Health and Molina Healthcare are more optimistic about their Medicaid businesses in 2027.
In August, Elevance’s Medicaid subsidiary Wellpoint DC left the District of Columbia’s managed care program, with 85 job cuts coming in the aftermath. The departure was mutually agreed upon with the District of Columbia Department of Health Care Finance, and the insurer has suggested more Medicaid pullbacks in the coming months.
However, during the company’s third-quarter earnings call on Oct. 21, executives signaled that Medicaid is now moving in the right direction.
Elevance CFO Mark Kaye said the company’s 90.6% medical loss ratio was favorable and driven by Medicare Advantage, individual ACA and Medicaid. He said that Elevance expects improvement with Medicaid margins in 2027.
“Medicaid is moving from stabilization to improvement,” Elevance CEO Gail Boudreaux said on the call. “We are seeing better rate alignment, but we’re also executing on actions that are within our control and feel the business is performing, and we have much greater visibility.”
Molina President and CEO Joseph Zubretsky previously said the imbalance between Medicaid rates and medical cost trend has steadied, and the company anticipated corrections with future rate increases.
“With the apparent plateauing of medical cost trend, which remains at elevated levels, and the strength of recent rate updates, we believe we are likely observing the beginning of the turn in Medicaid margins,” Mr. Zubretsky said during the company’s third-quarter earnings call on Oct. 22.
Even as HR 1’s Medicaid work requirements and more frequent redeterminations come down the pipeline, six states that Molina serves have explicitly factored these changes into their rate adjustments, Molina CFO Mark Keim said.
The company’s preliminary 2027 outlook is at least $45 billion in premium revenue, up from about $42 billion in 2026. Mr. Keim cited “modest growth in our current Medicaid segment, as rate expectations should more than offset our initial view of Medicaid member attrition stemming from work requirements and semiannual reverifications.” He also pointed to strong growth in Medicaid duals, including state program changes in Ohio, Texas and California, and a full year of its Florida contract, which he expects to break even or better in 2027. However, there are delays with the company’s new Medicaid contracts in Georgia and Texas.
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