As the newly unemployed look for health coverage, Centene Corp. expects to see an uptick in membership. The St. Louis-based insurer offers ACA marketplace plans across several states, and is the top Medicaid managed care organization by market share.

More than 26.5 Americans had filed for unemployment since mid-March. Many of them will be turning to Medicaid or individual market plans for coverage.

“We expect the economic impact and resulting unemployment to drive increases to members. These increases will be partially reversed when the economy reaches the recovery stage,” Centene CEO Michael Neidorff said in a Tuesday earnings call.

The company has already seen early evidence of membership growth in April, Neidorff said. Part of that was chalked up to states opening special enrollment periods that would allow people who had previously been uninsured to enroll in marketplace plans.

For the first quarter of 2020, Centene reported revenues of $26 billion, a 46% increase from last year. The company reported net earnings of $46 million, down from $519 million in the first quarter of 2019. Both of those changes were attributed to Centene’s acquisition of WellCare, which operates Medicare Advantage and Medicaid plans in 16 states.

Centene’s medical loss ratio, or the percentage of premium dollars the company spent on care, was 88%.

With the expected influx of members, investors asked if Centene expected to see its medical loss ratio increase. Neidorff said that wasn’t necessarily the case.

“These are people who have just lost their jobs and they may have had insurance previously. So, they may not have a lot of pent-up demand (for health services). That’s part of the variable we’re dealing with,” Neidorff said.

Like other insurers, Centene is trying to do the math of how many patients that had cancelled appointments or procedures will seek care once states begin to lift restrictions.  Right now, Centene and other payers have seen a decline in claims from cancelled elective procedures.

Neidorff said he expected to see the demand for health services come back in the third and fourth quarter of 2020, though some hospitals are already taking steps to reopen their services.  But it’s not clear how many of those cancelled procedures will be rescheduled.

“I can’t say that other care will not return. In other words, if someone needs back surgery, they may have delayed it … but it’s going to come back. There’s a balance; there may be some cases that they say, ‘well, I’ve lived with that, I can do without it,’” he said.

Centene is also expecting to see some costs related to waiving out-of-pocket spending for Covid-19 treatment and testing. But so far, the company hasn’t seen enough claims to calculate an average cost of care for Covid-19.

“It’s not been significant. It’s been more the testing and – we haven’t seen a lot,” Neidorff said.

Looking to the end of 2020, Centene said it plans to bring in $6 billion more in revenue than originally expected, with $4 billion of that chalked up to the current economic environment. The company plans to bring in a total of $110 to $112 billion for the year, while its earnings forecast remains unchanged, at $2.89 to $3.03 per share.

Photo credit: Nuthawut Somsuk, Getty Images



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