Recently, Anthem reported first-quarter operating revenue increased by over 20% to about $29.4 billion. Notably, this was driven by Medicaid membership growth, the launch of pharmacy benefit management arm IngenioRx, and premium rate increases. That beat Wall Street expectations for the quarter was “mainly unaffected” by the COVID-19 pandemic.
Nevertheless, as the payer evaluates further impact from the outbreak, it expects an extraordinary shift from a drop in commercial membership and upsurge in Medicaid and anthem exchange enrollment as unemployment soars. Anthem is maintaining its 2020 earnings guidance. On the other hand, it is pulling all other full-year expectations during the prevailing pandemic.
Like the rest of the industry, Anthem is modeling possible situations amid the intense uncertainty of the COVID-19 pandemic crisis. While payers are beneficial in the short term from deferred elective procedures, Anthem has suspended share repurchases and drawn on existing credit lines in preparation for the unknown future.
Anthem CFO retaliated that the company historically sees 30% to 40% of annual medical expenses associated with deferrable treatment but warned “there remains noteworthy uncertainty around the shape and timing” of a recovery. “We are in strange territory, and the future may look markedly different from what anyone expects,” he said.
Anthem has improved its Medicaid footprint and now operates plans in the District of Columbia and other 23 states. It is first or second in market share in most of those areas, and it has exchange plans in 14 states as well. Based on historical data, such as the recession about a decade ago, the payer expects 40% to 50% of those who lose employer coverage to move to Medicaid markets, and about 30% to the individual market, said Anthem CEO, Gail Boudreaux.
So far, drops in commercial membership have been muted as many employers leave employees instead of implementing layoffs, she said. Medical enrollment during the pandemic for the first quarter witnessed a 3.2% growth year over year to 42.1 million members.
Boudreaux also pointed to a rise in telehealth, especially for behavioral services. Anthem company has seen a 250% surge in virtual engagement through text and video visits. “the current crisis has made clear that telehealth and virtual care will continue to be a key component of how care is delivered going forward,” she said.
Notably, IngenioRx posted a $349 million operating gain in its first quarter as a separate reporting segment. As Anthem relaxed early prescription refill limitations, there is a spike in prescriptions this month that has helped performance.
Payers Brace For Shift to Medicaid, Exchange Plans Amid Record Unemployment
As unemployment hits new records, some insurers are preparing for greater Medicaid enrollment in their business as well as in Affordable Care Act exchange plans.
Policy experts show that the rising unemployment resulting from shuttering businesses to slow the spread of the virus could drastically change the health insurance landscape as a majority of Americans receive coverage through their work.
According to a study from the Urban Institute, it is unfortunate that between 25 million and 45 million Americans could lose their job-based coverage.
However, not all who lose job-based coverage will become uninsured, in large part since the ACA and the coverage options available. Depending on the state, some can turn to Medicaid while others may consider exchange plans.
“With historic levels of unemployment around the corner, millions of workers and their families are about to lose their employer coverage,” said Katherine Hempstead, the senior policy adviser at the Robert Wood Johnson Foundation. “Our safety net is about to be tested, and it is going to work a lot better in states that expanded Medicaid coverage.”
Molina indicated in April they already saw over 30,000 Medicaid members from the prior-year period, though CEO Joe Zubretsky said that is because states suspended eligibility determinations or not kicking people off coverage who may no longer be eligible. If states plan to suspend those programs, there will be less mix of members from Medicaid. For more information, contact health insurance today!
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