medicaid benefits
medicaid benefits

Medicaid benefit loss not expected to impact health insurers

An estimated 15 million people will lose their Medicaid benefits this month as a result of the expiration of U.S. government’s emergency pandemic measures. While there’s little doubt the Medicaid benefits loss – what health care industry nerds call “disenrollment” and “redeterminations” – will negatively impact health insurance company revenues, the effect won’t be substantial thanks to a corresponding reduction in claims expenses, according to credit analysts and other industry watchers.

In announcing better-than-expected first quarter earnings on Tuesday, the nation’s largest Medicaid insurer, Centene, said its Medicaid premium revenue would drop to $77 billion in 2024, compared to $84 billion in 2023, and its earnings per share estimates were trimmed to $6.60, down from $7.15 in previous forecasts.

The company squarely put the blame on “redeterminations” of the Medicaid enrollments but said it does not expect a long-term impact. However, it said that the average cost per member of the those retaining Medicaid coverage after redetermination will be somewhat higher than before – what the company called “acuity.” This is likely due to the setting of state payment rates under cost trends of the current Medicaid population.

Rate adjustments anticipated

“We now believe it is prudent to build in a more conservative view of the potential disconnect between rates and acuity that could manifest in some of our states in 2024,” said Centene’s CEO Sarah London. “We view any disconnect as a temporary one. We fully expect that states will ultimately provide sufficient rate adjustments to reflect any changes in acuity of the Medicaid population, but we are building a provision in our 2024 target in case there is a gap in timing in some of our states. In the long term, rate has always equaled acuity in Medicaid.”

Fitch Ratings, the leading provider of credit ratings for global

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