Centene Corp., a major player in government-backed health coverage, reported better-than-expected earnings results on Tuesday, and credited growth in Obamacare customers as well as its acquisition of rival Health Net.
Speaking in an earnings call about the company’s first-quarter results, chairman and CEO Michael Neidorff said Centene had benefitted from participating in the Obamacare exchanges. The tone was different from some other health insurers who have said they are losing money through the program and have been worried about the uncertainty ahead regarding Republicans’ stated intent to repeal Obamacare.
“I know it is easy to get caught up in the noise, however, I believe it is time to move past the unfounded headline volatility,” Neidorff said. “In the meantime, it’s business as usual for Centene.”
Centene was losing money a year earlier. In the first quarter last year, it reported a loss of $16 million, but this year it reported a net profit of $139 million for the first quarter.
According to the earnings report, its Obamacare exchange customers grew from 683,000 in 2016 to nearly 1.2 million in 2017, and its Medicaid customers grew from 984,900 to 1.1 million over the same period. In all, the company has increased its enrollees by 5 percent to 12.5 million people when factoring in other customers, including those from Tricare and Medicare.
Neidorff said Centene had not seen unanticipated medical costs in the exchanges despite the increase in those customers.
“We see nothing at this point to prevent us from proceeding from our 2018 marketplace participation,” he said.
Congress is returning to Capitol Tuesday after a two-week recess, and Republicans have said negotiations over a bill to repeal portions of Obamacare, called the American Health Care Act, are continuing. So far, centrist and conservative members of the party have been unable to come to a consensus on the details of the bill, and Neidorff detailed the disagreements during the call.
“The repeal and replace discussion in Washington has created headline volatility,” Neidorff said. “It will likely take some time to play out if a final bill is signed into law. And I emphasize ‘if.'”
The American Health Care Act would cut Medicaid by $880 billion, but Neidorff said that portions of the bill that call for shifting more people onto exchanges or giving Medicaid more flexibility were good for the company.
He also discussed another uncertainty about Obamacare’s future, a provision that allocates federal payments to insurers to help them reduce out-of-pocket medical expenses for low-income enrollees. Speaking to the potential loss of these payments, called “cost-sharing reduction subsidies,” Neidorff said the move would eliminate affordability and said he believed there was bipartisan support for allocating the funds.
“I don’t think it’s going to happen,” he said of losing the payments. “No one wants to take this population and put it on the streets.”
