Health Plan Weekly
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At the Eleventh Hour, Democrats May Extend ACA Subsidies, Tackle Drug Pricing
Suddenly, the U.S. Senate may be about to pass a drug price reform package and extend enhanced individual marketplace subsidies through 2025. West Virginia centrist Democrat Joe Manchin — who has almost singlehandedly held up progress on the Biden administration’s agenda — in recent days reached a deal with Senate Majority Leader Chuck Schumer of New York to move on the administration’s top health care priorities, along with climate change mitigation and tax reforms, in a bill that the upper chamber may pass through budget reconciliation before its annual summer break.
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Health Policy Experts Warn of Consequences If ARPA Subsidies Expire and Medicaid Redeterminations Resume
During the past two years, the number of people enrolled in Medicaid and marketplace plans has significantly increased thanks to legislation meant to help people as the COVID-19 pandemic continues. But millions of those people may lose their health insurance coverage in the coming months if those policies end, which could lead to difficult circumstances for them and the health care industry as a whole, according to health policy experts who spoke during a July 15 webinar sponsored by Alliance for Health Policy, a Washington, D.C., nonprofit.
As of March 2022, nearly 87.9 million people were enrolled in Medicaid or the Children’s Health Insurance Program, up from just over 71.2 million in February 2020, according to the Kaiser Family Foundation (KFF). Sara Collins, Ph.D., vice president for health care coverage and access at the Commonwealth Fund, noted that much of the increase could be attributed to the Families First Coronavirus Response Act (FFCRA).
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Centene Reports Progress in Value Creation Plan, Despite Headwinds
Despite facing several headwinds over the next year, including anticipated deterioration in Medicare Advantage star ratings and falling Medicaid enrollment, Centene Corp. increased its full-year 2022 earnings projections and unveiled the latest steps in its ongoing value creation plan.
The moves pleased investors, who drove Centene shares to a 52-week high, closing at $93.15 on July 26, the day financial results were posted.
Centene posted second-quarter 2022 adjusted earnings per share (EPS) of $1.77 on revenues of $35.9 billion, besting analysts’ estimate of $1.69. Adjustments included a charge of $1.45 billion related to real-estate divestitures, with $744 million for leased space and $706 million for owned real estate assets. Including the charge and other adjustments, Centene reported a second-quarter 2022 loss of $129 million, or 29 cents per share.
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Boosted by Low Utilization, Humana Posts Robust Earnings for Second Quarter of 2022
Humana Inc. delivered robust financial results in the second quarter of 2020, with earnings far outstripping the Wall Street consensus. The Medicare Advantage-focused insurer credited lower-than-expected utilization for the strong result, provided investors with more detail about its plans to reorganize following several notable provider transactions, and touted plans to expand its Medicaid business.
Humana took in more than $23.7 billion in adjusted earnings in the second quarter, generating $959 million in adjusted cash flow and adjusted earnings per share of $8.67, beating the Street’s estimate by about $1.00 per share. The firm’s medical loss ratio (MLR) for the quarter was 85.8%. Executives raised the company’s end-of-year earnings projection by $0.25, a move that Oppenheimer & Co. analyst Michael Wiederhorn said “reflect[s] some conservatism” in a July 27 note to investors.
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What Happens if ARPA Subsidies Expire?
Approximately 3 million people currently enrolled in the individual marketplace could lose coverage, and more would see premiums double if the Congress fails to extend the American Rescue Plan Act’s subsidies, which are set to expire at the end of this year.
ARPA lowers the share of income enrollees need to contribute toward premiums for households making between 100% and 400% of the federal poverty level, and it temporarily caps enrollees with income above 400% of the FPL from paying more than 8.5% of their income for a silver plan premium. If the subsidies expire, 8.9 million people would be allowed to remain in the marketplace but experience premium subsidy loss. An additional 1.5 million may lose subsidies entirely but choose to remain insured, according to an HHS projection.
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