Dive Brief:
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Publicly traded health insurers’ financial outlook remains stable despite financial pressures heading into the end of the year, according to a report by Moody’s Investors Service.
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Payers’ financial results — including those of Aetna, Centene, Cigna, Elevance, Humana, Molina and UnitedHealth — held steady in the third quarter, buoyed by strong net investment income even as utilization increased among Medicare Advantage seniors.
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Insurers’ earnings were also boosted by membership growth despite Medicaid redeterminations, including improved performance on the Affordable Care Act Exchanges and higher commercial enrollment.
Dive Insight:
Overall, financial results for the public insurers are in line with Moody’s expectations for the year, though not necessarily for the reasons the credit ratings agency predicted.
Membership growth has held strong, even as states began to check eligibility for Medicaid coverage in the spring after a period of continuous enrollment during the COVID-19 pandemic. Moody’s had estimated the Medicaid unwinding — along with commercial declines due to a potential recession — would hit insurers’ earnings.
But no recession emerged, and the impact from the ongoing redeterminations process has been “relatively small,” the agency said.
Nearly 11 million beneficiaries have been disenrolled from the safety-net program, according to health policy research firm KFF. But about 71% have been removed from coverage due to procedural reasons — meaning they didn’t complete the renewal process, but could be eligible.
Those people could re-enroll in Medicaid if paperwork is completed, Moody’s noted.
“As expected, this is somewhat reducing the earnings growth rate of the health insurers we rate, but it is only one of several drivers of this trend. We expect that most of the disenrollees will re-enroll in the individual market or in employer-based insurance,” analysts wrote.
Higher utilization in MA, which some insurers began flagging earlier this year, continued in the third quarter. The trend stabilized, but didn’t improve, according to Moody’s — though some insurers have incorporated higher utilization in the population into pricing for next year.
MA star ratings for 2024 were also released during the quarter, a key financial indicator for insurers as the quality rankings determine whether a plan receives a bonus and its ability to bid against a higher benchmark rate.