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Key Takeaways
- Health insurance provider stocks fell after Centene executives raised concerns about Medicaid enrollments.
- Centene CEO Sarah London warned that the firm continues to see the impact of the so-called “unwinding” process of determining who is eligible for Medicaid.
- CFO Drew Asher said Centene’s outlook for the number of Medicaid clients this year would be fewer than previously estimated.
Shares of health insurers lost ground Wednesday as executives at Centene (CNC) warned about a pullback in the number of people receiving Medicaid benefits.
Centene Chief Executive Officer (CEO) Sarah London told the Wells Fargo 2024 Healthcare Conference in Everett, Mass., that the company is “still seeing pressure in Medicaid, largely driven by the unprecedented redeterminations process,” referring to how recipient eligibility is determined.
Chief Financial Officer (CFO) Drew Asher said Centene expects its Medicaid membership to be about 12.9 million to 13.0 million in 2024. That’s down from the company’s previous estimate of a low of 13.2 million, which it anticipated would climb to 13.6 million by the end of the year. Asher added that Centene’s current-quarter Medicaid medical costs, as a percentage of premiums, would be higher than in the second quarter.
Medicaid Enrollments Have Fallen Significantly Since March 2023
According to the non-profit health research organization KFF, Medicaid enrollments have fallen by 25.1 million since March 2023, when states could begin “unwinding” their Medicaid rolls of those no longer qualified. Asher noted that while about 30% of those terminated eventually return to Centene, the gap in time negatively impacts the company’s revenue.
Shares of Centene and rivals Molina Healthcare (MOH) and Elevance (ELV) were among the biggest decliners in the S&P 500 today.
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