Health Plan Weekly

With Affordable Care Act premium rate requests now filed for 2025, industry observers are eagerly awaiting data from the federal government detailing how exchange insurers are pricing their health plans. In the meantime, a new analysis that combs through some of the earliest rate filings offers insights into the various factors insurers and their actuaries are considering.  

“One piece of good news is that there’s just not the turbulence that we’ve seen in past years,” Sabrina Corlette, co-founder of the Georgetown University Center on Health Insurance Reforms (CHIR), tells AIS Health, a division of MMIT. In a July 29 CHIR blog post, Corlette detailed what she learned from a deep dive into insurers’ rate requests in Maine, Maryland, Oregon, Vermont and Washington, D.C. — states where regulators require health plans to submit their rate filings one to two months before the July 17 federal deadline that applies to most states.  

Although The Cigna Group reported second-quarter 2024 results on Aug. 1 that were strong on paper, the company’s decision to reaffirm — not raise — its full-year earnings guidance and executives’ remarks regarding health care utilization trends appear to have led to a mild stock selloff. 

For the quarter ending June 30, Cigna reported adjusted earnings per share (EPS) of $6.72 and total revenues of $60.5 billion, beating Wall Street’s consensus estimates of $6.43 and $58.5 billion and representing 25% and 10% year-over-year growth, respectively. Cigna said its revenue increase was “primarily driven by significant growth in Evernorth Health Services, reflecting large client wins.” 

Despite Humana Inc. beating second-quarter earnings and revenue expectations, Wall Street did not react kindly to the insurer’s latest financial results. Humana shares closed at $361.61 on July 31, the day the results were released, a 10.6% decline from the previous day. Wells Fargo analyst Stephen Baxter primarily attributed the negative sentiment to higher-than-expected inpatient admissions and the company not raising its full-year guidance as many had expected it would do. 

Humana had adjusted earnings per share (EPS) of $6.96 in the second quarter, well above the Wall Street consensus estimate of $5.92. Still, Humana reaffirmed its full-year EPS of about $16, which CEO James Rechtin said “prudently assumes that the higher inpatient costs will continue even as we work to mitigate that pressure.” Humana in January surprised investors by lowering its EPS guidance to about $16 for the year, down from its previous estimate of about $25, which it attributed to elevated care utilization.  

Health insurers, like most companies, are experimenting with how to incorporate artificial intelligence into their work processes to help them make more timely decisions, cut costs, improve profitability and help members. While it is still early to assess how AI will be most effective, plans should make sure they apply AI in an ethical manner and involve multiple stakeholders in any efforts, according to three executives who spoke during a July 26 webinar sponsored by consulting firm ZS. 

Onyinyechi Daniel, Ph.D., who until recently was Highmark Health’s vice president of data and analytics strategy, noted that using AI was “nothing new” for employees in companies’ data and analytics departments. But she added that “the onset of generative AI brought a lot more visibility and really amplified efforts,” especially among executives who are leading the charge in pushing for the adoption of AI throughout their organizations.  

Participants in the Affordable Care Act risk adjustment program will pay a record $10.3 billion for the 2023 benefit year, according to CMS. CVS Health Corp.’s Aetna is estimated to owe the highest amount, while several not-for-profit Blue Cross Blue Shield plans are slated to receive significant payments.

The ACA’s risk adjustment program, launched in 2014, transfers funds from insurers that cover lower-risk enrollees to insurers that cover higher-cost and higher-risk populations in the individual and small group health insurance markets.