MLR Pressures Continued to Irk Select Medicaid, Medicare Insurers in 3Q

As major publicly traded insurers reported third-quarter 2024 earnings results in recent weeks, familiar issues continued to impact select government players. For one, Medicaid managed care organizations are still feeling the pain of a sicker population resulting from redetermination efforts, although executives during recent earnings calls hinted at signs of stabilization. At the same time, medical loss ratios (MLRs) continued to be affected by higher-than-expected utilization in Medicare Advantage, which was particularly pronounced for CVS Health Corp. 

Reporting third-quarter earnings on Nov. 6, CVS Health said its MLR soared to 95.2%, compared with 85.7% a year ago. During a conference call held the same day, Chief Financial Officer Thomas Cowhey explained that the increase was largely due to increased utilization, higher acuity in Medicaid and the impact of lower Star Ratings for payment year 2024. The MLR increase included a 220-basis point impact from $1.1 billion in premium deficiency reserves recorded in the quarter, which is related to expected losses in the fourth quarter within the Medicare and individual exchange product lines, he added.